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TMI Blog2012 (6) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... hment. The assessee being covered by a valid insurance policy and premium being regularly paid, incurs no liability towards leave encashment. The liability; being covered by a valid insurance policy, is solely that of the insurer. Even if Section 43 B(f) stands, in the case of the assessee, where the liability is borne by the insurer, there can be no situation wherein assessee could make a valid claim for deduction u/s 43B(f) since the actual liability is not incurred in any of the years. However, premium paid towards the renewal and continued validity of the insurance policy necessarily becomes business expenditure wholly and exclusively incurred for the business purpose and allowable as a deduction u/s 37. Therefore, order passed u/s 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the judgment of the Calcutta High Court striking down the same. Primarily the assessee contended that the exercise of jurisdiction under Section 263 in the above case could not be sustained for the reason that the finding of the Commissioner with respect to the claim falling under Section 43B(f) would only constitute a mere change of opinion. While conceding the position that the provision conferring powers on the Commissioner to revise orders prejudicial to the interest of the Revenue could be invoked in the event of incorrect appreciation of the facts or incorrect application of law; it has to be noticed that the same cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer. The provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into the merits of the case and observed that the decision made by the CIT is on the basis of the provisions contained in the relevant section of Income Tax Act and that the view expressed by the assessee is not correct. D. The Tribunal has failed to appreciate that the CIT had discussed the relevant facts in detail in the order and had also considered the objections that had been raised by the assessee. E. The Tribunal should have found that the only possible view is the one taken by the Commissioner. 4. Section 43 B was introduced by the Finance Act 1983 with effect from 1.4.1984 and clause (f) was inserted by the Finance Act 2001 with effect from 1.4.2002. The introduction of Clause (f) was purportedly to restrict ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consistent with the object disclosed while inserting the original Section 43 B. The Calcutta High Court in the decision reported in Exide Industries Ltd. And another v. Union of India and others 2007 292 ITR 470 held Clause (f) of Section 43 B to be unconstitutional. The provision was found to be arbitrary, unsustainable and de hors the Supreme Court decision in the case of Bharat Earth Movers. In effect the amendment was held to be incompetent and the law declared by the Supreme Court in Bharat Earth Movers remained as such. Obviously, there is no challenge made to the Supreme Court from the aforesaid decision, by the department; as there is nothing mentioned about any such challenge in the appeal memorandum. We are also in respectful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be an incorrect assumption of fact or incorrect application of law. The view taken by the Assessing Officer cannot be said to be unsustainable in law. The only reason quoted by the Commissioner to initiate and conclude proceedings under Section 263 was that the amounts paid in lieu of leave as 'leave encashment' to employees, could only be claimed as a deduction on the actual liability being suffered in the previous year as per Section 43 B (f). The said view cannot be sustained. The finding of the Tribunal is that the proceedings taken under Section 263 of the Act to revise the order of the Assessing Officer on grounds of the same being prejudicial to the Revenue cannot be sustained on the principles laid down by the Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the original enactment. Section 43 B, it was held, was originally inserted to plug evasion of statutory liabilities and the introduction of clause (f) was found to be inconsistent with the said object. The learned Judges held that the amendment brought in could not have nullified the dictum laid down in Bharat Earth Movers case ( Supra ). As noticed earlier there is nothing in the appeal memorandum to indicate that the Revenue has challenged the said decision before the Supreme Court. In the circumstances of the Revenue having not challenged the correctness of the law laid down by the Calcutta High Court, it is not open to the Revenue to challenge its correctness in the case of another assessee. The Supreme Court in AIR 2004 1743 SC Ber ..... X X X X Extracts X X X X X X X X Extracts X X X X
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