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TMI Blog2012 (11) TMI 1108X X X X Extracts X X X X X X X X Extracts X X X X ..... POOJARI, AM: This appeal by the Revenue is directed against the order of the CIT(A)-II, Hyderabad dated 11.7.2011 for assessment year 2008-09. 2. The Revenue raised the following grounds of appeal: 2. The learned CIT(A) ought to have appreciated the fact that the Assessing Officer rightly disallowed provision for EL encashment of Rs. 40,79,506 u/s. 43B(f) of the Income-tax Act, 1961 as it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment and it was observed in this judgement that the original section 43B in IT Act 1961, the intention of which was to curb unreasonable deduction on the basis of mercantile system of account without discharging statutory liability. It was observed by the legislature, that such enactment was necessary as there had been trend to evade statutory liability on one hand and claim appropriate benefit u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision for the said amount. Once the employee retires he/she has to be paid such sum on cumulative basis with the employee earns throughout his/her service career unless he/she avails of the leave earned by him or her. That does not have any nexus with the original enactment. An employer is entitled for deduction for the expenditure he incurs for running his business which includes payment of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT (245 ITR 428) (SC). 6. As discussed above, Section 43B(f) already struck down by the Calcutta High Court in the judgement cited supra and as per judgment of the Supreme Court in the case of Bharat Earth Movers Ltd. (supra), the provisions made on account of leave encashment should be allowed although the liability may have to be quantified and discharged at a future date". 4. Respectfully fol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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