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TMI Blog2018 (9) TMI 1411X X X X Extracts X X X X X X X X Extracts X X X X ..... r on the facts and circumstances of the case the Tribunal was right in holding that interest under section 234D cannot be charged in respect of the refund granted prior to the insertion of the section 234D, when the regular assessment was completed only subsequent to the insertion of section 234D?". 3. Two issues arise for consideration in this appeal. Firstly, with regard to deduction claimed on account of the provision for wages to the tune of Rs. 12 Crores and the second substantial question of law would be as to whether it would be allowable as a deduction since it was quantified based on a consultant's advise. 4. The undisputed facts, which are relevant for the purpose of this appeal, are that the assessee claimed the amount of Rs. 13,55,95,879/-, being an amount towards the expenditure incurred in pay on account of the Wage Board recommendations. During 1998, the process was initiated for fixing or raising the rate of wages in respect of working journalists and non-journalists. The Wage Board authorities directed all the newspaper establishments, including the assessee, to produce the details required for the proposed revision in wage rates. The assessee submitted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000, though the liability became effective from April 1998. Thus, the Assessing Officer concluded that the liability cannot be said to have arisen on any date prior to 05.12.2000, the date of notification of the Government of India. Accordingly, the provision made by the assessee in the accounts towards wage revision was rejected. 8. Aggrieved by the said order, the assessee preferred an appeal before the Commissioner Income Tax (Appeals)-III (in short "the CIT(A)"). The CIT(A) dismissed the appeal vide order dated 17.11.2006. 9. Challenging the said order, the assessee preferred an appeal before the Tribunal. The Tribunal by the impugned order allowed, the assessee's appeal. Challenging the same, the present appeal has been filed by the Revenue. 10. So far as the first two substantial questions of law raised by the Revenue, it is the submission of Mr.Karthik Ranganathan, Senior Standing Counsel appearing for the Revenue, that unless the recommendations of the Wage Board was accepted by the Government and notified in accordance with the Newspapers Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955, it cannot be said that the liability has actually accru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Identical objections were raised by the Revenue before the said Court contending that the deduction is not permissible in the light of section 43B of the Income Tax Act, 1961 (in short "the Act"). The Court, rejecting the contentions raised by the Revenue held in favour of the assessee on the following terms: ".... Such liabilities are not contributions to provident fund, superannuation or any other fund or plan which the employer is obliged to extend to its employees to fulfill its statutory or contractual obligations. The character of the amounts in this case is pure and simple arrears of wages, which were directed to be paid as a result of wage revision exercise mandated by an award. There is no doubt that the liability arose during the year covered by the Assessment Year. However, the award itself required payment in installments. It is not as if the assessee voluntarily deposited the amounts, when they were not payable, or claimed it when no such liabilities existed as a matter of fact. Having regard to these facts, the Court is of opinion that the Tribunal was justified in holding that the liabilities arising out of the Monesana Wage Board award were justifiably deductib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approved the wage settlement subsequently and the Assessing Officer was not justified in disallowing the claim. The Court held that what is important is not the date of signing the agreement nor the later approval granted by the Government, but the effective date of commencement of the wage revision under the agreement and it was held that the liability for wage increase really accrued for the assessee would be the effective date. In the instant case, on the advise given by the Consultant, the assessee estimated the liability, which became payable with retrospective effect, i.e., from April 1998. 18. For the above reasons, we hold that the finding rendered by the Tribunal is perfectly right in holding the deduction was allowable. Thus, the substantial questions of law No. 1 and 2 are answered in favour of the assessee and against the Revenue. 19. With regard to the substantial questions of law No.3 is concerned, which pertains to levy of interest under section 234D of the Act, the assessee does not dispute the fact that the decision in the case of Infrastructure Development Finance Company Ltd. (cited supra), has answered the question in favour of the Revenue and against the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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