9911796707
TMI Blog2015 (12) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... ntical, these three appeals are disposed off by this common order. 2. The disallowances for the respective years of provision of leave encashment made by assessee which is unpaid is as under : Serial No. A.Y Amount Rs.) 01. 2008-09 26,66,363/- 02. 2009-10 77,68,640/- 03. 2010-11 62,37,756/- 3. The brief facts as gathered from the assessment year 2008-09 is that the assessee has made a provision leave encashment for its employees on the basis of actuarial valuation payable to the employees on their retirement, death or termination of employment. The assessing officer has disallowed this expenditure applying provisions of section 43B (f) of the Act holding that such amount of provisioning is allowable only if paid. AO wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore disallowance of actuarial leave encashment which is admittedly unpaid may be upheld. 6. We have carefully considered the rival submission and are of the view that with effect from 01.04.2002, clause (f) has been added in section 43B of The Income Tax Act which provides that deduction of provision of earned leave of employees made by the assessee shall not be allowed as deduction in computing the business income of the assessee provided such sum is actually paid. If same is not paid in the year of provisioning same shall be allowed subsequently in the year of payment. Hon'ble Calcutta High Court in Exide Industries Ltd. vs. Union of India, 292 ITR 470 has struck down the constitutional validity of section 43B(f) being arbitrary, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f law is that we should read the statute as if those provisions are there on the statute book. This Tribunal being a quasi-judicial authority has to decide the appeal only based on the provisions of section 43B (f) of the Act. In other words, the provisions of section 43B(f) cannot be ignored since the judgment of the Calcutta High Court in the case of Exide Industries Ltd. was stayed by the apex court. Therefore, the claim of the assessee could be allowed only if it is actually paid on the due date for filing the return of income. It is not the case of the assessee that the amount claimed as leave encashment was paid before the due date for filing the return of income. Our view is further strengthened by decision of Honourable Kerala high ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees. 10. We have considered the above argument but reject it at threshold because of the reason that leave encashment is not a scheme where employer and employee contributes but is a provision to be made according to accrual method of accounting where payment due to employees on their retirement or otherwise for their accrued leave for the tenure of the service. Further it is not for the welfare of the employees but it is wages due to the employees for the services rendered by them according to the terms of employment. It is also not a statutory payment but a contractual payment. Further finance Act 2001 has introduced section 43B (f) wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
