9911796707
TMI Blog2015 (9) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2011 for Assessment Year (AY) 2004-05. 2. The issue arising in the instant appeal is the maintainability or otherwise in law of the invocation of section 154 of the Act by the Assessing Officer (AO) in the facts and circumstances of the case and, consequently, the resulting order there-under passed by him, since approved by the first appellate authority. 3. The brief facts of the case are that the assessment in the instant case was made by making a disallowance of Rs. 89,058/- (on account of ESIC payment) u/s. 43B in computing the assessee's business income vide order u/s. 143(3) dated 29.12.2006 (PB pages 1-3). This was followed by a notice u/s. 154 dated 13.01.2011 requiring the assessee to show-cause as to why the liability on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3B by the Assessing Officer (AO) being thus confirmed, the assessee is in second appeal. 4. Like contentions were raised before us. The assessment order u/s. 143(3) had been passed after considering all the details and information, so that it was a case of change of opinion, impermissible u/s. 154. The transfer of liabilities, along with assets, on the sale of the Undertaking on 'as is where is basis', as a going concern, would amount to an effective discharge of the relevant liability as far as the assessee is concerned. Even if another view of the matter is possible, the same lends a debatable character to the assessee's claim, taking it outside the ambit of section 154. As regards the claim qua leave salary, covered u/s. 43B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and how could, where so, the law give cognizance thereto. This aspect stands, in fact, unambiguously clarified by clauses 3(b), 3(c) and 3(k) of the agreement to sell dated 29.07.2003 between the assessee-company (PEPL) and (GL) (at PB pages 8-21), referred to during the course of hearing. All the liabilities as on the date of transfer (31.10.2003) are that of the assessee-company, which is/undertakes to settle the same. True, the liability stands taken into account in reckoning the sale consideration, but that does not alter the fact that the liability is, in law, of PEPL, which is also to bear all the litigation costs in relation thereto, i.e., where and to the extent the liability is contested. There is, as made abundantly clear in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there is no concept of deemed payment. This in fact is the crux of the matter, and represents the fundamental fallacy in the assessee's argument. There is nothing on record to show that the payment qua the impugned liabilities stands made to the concerned employees, much less during the year, which alone is relevant for its deduction for the current year. There is in fact no contention by the assessee to that effect at any stage, and which is the only condition or criterion that is required to be satisfied to meet the embargo of section 43B, providing for, in effect, a deferment of the deduction to the year of actual payment. This being, thus, admittedly not met, there is no question of its satisfaction, for the brought forward imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on a concession, do not even otherwise lay down any precedent (Lakshmi Shanker Srivastava v. State (Delhi Administration) AIR 1979 SC 451). Pending its final decision, which would be binding on all the authorities and courts, the only effective order is that by the Apex Court, staying the operation of the decision of the Hon'ble Calcutta High Court, and shall obtain. We may finally, though not referred to during hearing, also advert to the appellate order in Pembril India Industrial & Engg. Co. (P.) Ltd. dated 26.03.2014 (PB pages 22-25), wherein a similar action u/s. 154 by the Revenue was struck down by the first appellate authority. The basis of the said decision is that it was not clear if the liability/s under reference had b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arge of the liability, implying payment to the beneficiaries, the employees to whom it is due/payable, and for payment to whom the sum/s is set aside, either by the assessee or on its behalf by the transferee company, has not been shown or even claimed, much less during the relevant previous year, which alone is relevant for claiming or being allowed deduction u/s. 43B, i.e., the provision under which the allowance had been earlier made, and stands reversed subsequently through recourse to s. 154. The primary condition of s. 43B, thus, stands not met - a fact which is not denied and, besides, is borne out of the record. A mistake, rectifiable u/s. 154, it is trite, could be either of fact or of law. The allowance of deduction of the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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