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TMI Blog2013 (4) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... e leave encashment scheme proportionate with the entitlement earned by employees of the company, inclusive of the officers and the staff, subject to the ceiling on accumulation as applicable on the relevant date, is entitled to deduction out of the gross receipts for the accounting year during which the provision is made for the liability. The liability is not a contingent liability - in favour of assessee. - I.T.A. Nos. 3212 & 3213/Mum/2011 - - - Dated:- 15-2-2013 - Shri Dinesh Kumar Agarwal, JM And Shri Sanjay Arora, AM,JJ. For the Appellant : Shri Mohit Jain For the Respondent : Shri H. P. Mahajani ORDER These two appeals preferred by the Revenue are directed against the separate orders dtd. 9-2-2011 passed by the ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he quantification of the same. Hence, the liability worked out by an independent authority (i.e. Actuary) on scientific basis should be allowed as deduction in consonance with the decision of the Supreme Court as mentioned above." However, the A.O. did not accept the assessee's explanation and treated the impugned liability as contingent liability and accordingly disallowed the claim of the assessee. On appeal, the ld. CIT(A) after distinguishing the decision of the Hon'ble Supreme Court in Bharat Earth Movers vs. CIT (2000) 245 ITR 428 (SC) has observed that the assessee has not been able to bring on record any material to show that the tests laid down in the said judgment were actually satisfied by the assessee and accordingly confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case and in law, the Ld. CIT (A) erred in allowing the assessee's appeal without giving a finding as to whether the assessee satisfies the test laid down by the Hon'ble Apex Court in its judgment in the case of M/s. Bharat Earth Movers Ltd., 245 ITR 428. 3. The appellant prays that the order of Ld. CIT (A) on the above grounds be set aside and that of the Assessing Officer be restored." 4. At the time of hearing the ld. D.R. submits that the ld. CIT(A) is erred in allowing the claim of the assessee without giving finding as to whether the assessee satisfies the tests laid down by the Hon'ble Apex Court in the case of Bharat Earth Movers (supra). He, therefore, submits that the disallowance made by the A.O. be restored. 5. On t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought in for income-tax assessment, so also liabilities accrued due would be taken into account while working out the profits and gains of the business ; (iii) A condition subsequent, the fulfilment of which may result in the reduction or even extinction of the liability, would not have the effect of converting that liability into a contingent liability ; (iv) A trader computing his taxable profits for a particular year may properly deduct not only the payments actually made to his employees but also the present value of any payments in respect of their services in that year to be made in a subsequent year if it can be satisfactorily esti- mated". It has been held (page 432) :- "Applying the abovesaid settled principles to the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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