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TMI Blog2018 (12) TMI 1454X X X X Extracts X X X X X X X X Extracts X X X X ..... n from the LIC then there is no requirement of a separate approval of the fund for allowing the claim U/s 36(1)(v) of the Act. Accordingly, following the earlier decision of this Tribunal, we allow the claim of the assessee and the disallowance made by the authorities below on this account is deleted. - Decided in favour of assessee - ITA No. 723/JP/2018 - - - Dated:- 19-12-2018 - SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri Deepak Sethi (CA) For The Revenue : Shri Ashok Khanna (JCIT) ORDER PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 08/01/2018 of ld. CIT(A), Kota for the A.Y. 2013-14. 2. There is a delay of 26 days in fili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the bank has taken a very casual approach in explaining the delay. However, since the issue raised by the bank in this appeal are covered in favour of the assessee, therefore, taking a lenient view, we condone the delay of 26 days in filing the appeal subject to cost of ₹ 5,000/- (five thousands). 4. In this appeal, the assessee has raised following grounds: 1. On the facts and circumstances of the case and in law, the Ld. CIT (Appeal) was not justified in holding the addition of ₹ 31,53,596/- under the head Income From Business Profession made by the A.O. with reference to disallowance the claim of provision of leave salary encashment expense paid to LIC. The action of Ld. CIT (Appeal) is illegal and deserved to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees based on the length of their service, therefore, the payment to LIC is only a liability which is allowable. In support of his contention, he has relied upon the decision of this Tribunal dated 14/08/2014 in the cross appeals in the case of Jhalawar Kendriya Sahakari Bank Ltd. Vs ACIT in ITA Nos. 1032/JP/2011 and 1051/JP/2011. Thus, the ld AR has submitted that there are series of decisions on this point whereby the claim of leave encashment expenditure on account of payment to LIC is held as an allowable claim. 7. On the other hand, the ld DR has relied upon the orders of the authorities below and submitted that it is only a provision and not the crystallization of liability, therefore, it is not allowable. 8. Having conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve encashment is payable on the period of services already rendered, for which employees are entitled for leave encashment, however, it is payable periodically or at the time of retirement. Thus, a certain liability crystallized on account of service already rendered by the employees. It is a present liability, which is going to be paid in future. The LIC has worked out the accrued amount of the liability as on 31.3.2008 on the basis of service already rendered by the different employees towards leave encashment liability. It is clear that to the extent of payment made to the LIC, the existing liability towards leave encashment of the Appellant ceased to exists and employees became entitled to receive the same from the LIC. Jhalawar K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me is within the frame work of the scheme. In our considered view, the same is an allowable deduction. This view further supported by the Hon'ble Supreme Court in the case of Textool Co. Ltd. (supra) and ITAT judgment in the case of Nainital bank Ltd. (supra). Respectfully following the same, we hold that the assessee is eligible for this deduction. Thus, it is clear that the Tribunal while deciding the issue has followed the decision of Hon'ble Supreme Court in the case of CIT Vs. Textool Co. Ltd. 263 ITR 257 and the payment made to LIC was held to be allowable deduction. In absence of any contrary precedent we follow the decision of the Coordinate Bench and accordingly the claim of expenditure on account of payment to LIC fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see directly to LIC for group gratuity fund was held to be allowable deduction U/s 36(1)(v) of the Act. This decision has been followed by the Delhi Bench of ITAT in the case of Heihin Penalfa Ltd. Vs ACIT vide ITA No. 4309/Del/2011 (supra) to which one us (learned J.M.) is a party. In view thereof, we are inclined to hold that the assessee is entitled to deduction of payment of gratuity to the LIC. Accordingly, ground No. 2 of the assessee is allowed. Thus, it is clear that once the payment was made to the LIC against the group gratuity fund policy taken from the LIC then there is no requirement of a separate approval of the fund for allowing the claim U/s 36(1)(v) of the Act. Accordingly, following the earlier decision of this Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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