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TMI Blog2019 (10) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... . While passing the subsequent order Tribunal has concurred with the findings of the Tribunal given in the impugned. Hence in view of the facts and circumstances that when no mistake apparent on record is pointed out by the assessee then the miscellaneous application for seeking the relief which was not granted by the AO is not maintainable. - M.A. No. 52/JP/2019 (Arising out of ITA No. 272/JP/2018) - - - Dated:- 18-10-2019 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri Ajay Somani (CA) For the Revenue : Smt. Runi Pal (JCIT) ORDER PER VIJAY PAL RAO, JM : This Miscellaneous Application is filed by the assessee though has not pointed out any mistake in the order dated 17.05.2018 of this Tribunal. 2. We have heard the ld. A/R as well as the ld. D/R and carefully perused the impugned order dated 17.05.2018 of the Tribunal. The ld. A/R of the assessee has submitted that since the AO has misunderstood the order and mis-interpreted the finding of the Tribunal, therefore, the assessee has filed this miscellaneous application. He has also submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employees then the assessee bank shall furnish the documentary proof for the same. The assessee bank submitted reply of the above query vide letter No. 18028 dated 29-12-2016 which has been considered by the AO. However, the AO did not find the assessee bank s reply acceptable on the following grounds:- (i) It is seen that the assessee bank has been claiming this deduction on the basis of investment made for this purpose with the LIC, Bajaj Allianz, future generali, Aviva, HDFC, India first and Birla. Any payment for leave encashment in future has to be made out of that fund. However, no such deduction is allowable under any of the provisions of the Income Tax Act and deduction if any has to be allowed only on the actual payment made to the employees. (ii) The contention of the assessee bank was duly considered but was not acceptable for the reason that section 37(1) provides for the allowing of any expenditure laid out or expended wholly and exclusively for the purpose of the business. It does not cover any provision made for the purpose of any future liability. (iii) The provisions made by the assessee for leave encashment expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT vs Textool Company Ltd (262 iktr 257) and the decision in the case of Associated Electrical Industries (India) Pvt. Ltd. I have gone through the decision of the Supreme Court in the case of Textool Company Ltd. carefully. The issue decided by the Hon'ble Supreme Court in that case was admissibility of deduction of the payment made to LIC towards gratuity fund u/s 36(1)(v) of the I.T. Act, 1961. The issue of allowability of deduction u/s 43(B)(f) of leave encashment was not there before the Hon'ble Supreme Court. The Hon'ble Supreme Court allowed the claim of the appellant observing as under:- Having considered the matter in the light of the background facts, we are of the opinion that there is no merit in the appeal. True that a fiscal statute is to be construed strictly and nothing should be added or subtracted to the language employed in the Section, yet a strict construction of a provision does not rule out the application of the principles of reasonable construction to give effect to the purpose and intention of any particular provision of the Act (See: Shri Sajjan Mills Ltd. vs LD. CIT, M.P. Anr.(1985) 156 ITR 585). From a bare reading of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Profit Loss Account under the head Other income . Therefore, I find no justification for claiming investment of same nature as expenditure in the A.Y. 2014-15. 4.14 As per information furnished by the appellant, the actual amount paid towards leave encashment to employees through LIC was ₹ 99,76,056/-, therefore, in view of the discussion made above, the deduction of ₹ 99,76,056/- is held to be allowable u/s 43B(f) because this was the sum payable and actually paid by the assessee as employer in lieu of any leave at the credit of his employee, as specified u/s 43B(f). Accordingly, out of the total disallowance of ₹ 35,19,00,000/- disallowance of ₹ 99,76,056/- is deleted and the remaining disallowance of ₹ 34,19,23,944/- (₹ 35,19,00,000 ₹ 99,76,056) is hereby confirmed. 4.3 We have heard the rival contentions and perused the materials available on record. During the course of hearing, the ld.AR of the assessee drew our attention to the decision of ITAT Jaipur Bench in the case Jhalawar Kendriya Sahakari Bank Ltd vs ACIT (ITA No.1032/JP/2011 and ITA No. 1051/JP/2011 in the case of ACIT vs Jhalawar Kendr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 2014-15 vide order dated 17.05.2018 in ITA No. 272/JP/2018 in para 4.1 to 4.3 as under :- 4.1 The Ground No. 2 (II) of the assessee is regarding the disallowance of insurance premium paid to LIC and others towards leave encashment liability of ₹ 34,19,23,944/- (₹ 35,19,00,000 less ₹ 99,76,056). Brief facts of the case are that the AO during the course of assessment proceeding requested the assessee bank to furnish the information relating to the amount of leave encashment and confirm as to whether the amount of leave encashment shown in P L a/c is actually paid to the employees. If the same is paid to the employees then the assessee bank shall furnish the documentary proof for the same. The assessee bank submitted reply of the above query vide letter No. 18028 dated 29-12-2016 which has been considered by the AO. However, the AO did not find the assessee bank s reply acceptable on the following grounds:- (i) It is seen that the assessee bank has been claiming this deduction on the basis of investment made for this purpose with the LIC, Bajaj Allianz, future generali, Aviva, HDFC, India first and Birla. Any payment for leave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the decision of ITAT Jaipur is also not applicable to the case of the appellant because the appellant has absolute control over the funds parked with these companies and the employees do not have any control over these funds. The other decision relied upon by the appellant are not relevant for deciding the allowability of deduction u/s 43B(f). I have gone through the various decisions relied upon by the appellant carefully. In the decision given by the ITAT Delhi H Bench in the case of the Nainital Bank, the amount paid to LIC on account of leave encashment was allowed as deducting relying on the decision of the Supreme Court in the case of CIT vs Textool Company Ltd (262 iktr 257) and the decision in the case of Associated Electrical Industries (India) Pvt. Ltd. I have gone through the decision of the Supreme Court in the case of Textool Company Ltd. carefully. The issue decided by the Hon'ble Supreme Court in that case was admissibility of deduction of the payment made to LIC towards gratuity fund u/s 36(1)(v) of the I.T. Act, 1961. The issue of allowability of deduction u/s 43(B)(f) of leave encashment was not there before the Hon'ble Supreme Court. The Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause the appellant has absolute control over the funds parked with these companies and employees do not have any control over these funds. The other decision relied upon by the appellant are not relevant for deciding the allowability of deduction u/s 43B(f) 4.13 It is pertinent to mention that in the A.Y. 2009-10 and 2010- 11,the appellant itself had shown the funds parked with LIC and other companies for leave encashment as investment in Schedule II of the Balance Sheet (₹ 4,35,91,748 and ₹ 5,77,16,828 as on 31- 03-2009 and 31-03-2010 respectively) In the A.Y. 2010-11, the interest accrued on such funds was credited to the Profit Loss Account under the head Other income . Therefore, I find no justification for claiming investment of same nature as expenditure in the A.Y. 2014-15. 4.14 As per information furnished by the appellant, the actual amount paid towards leave encashment to employees through LIC was ₹ 99,76,056/-, therefore, in view of the discussion made above, the deduction of ₹ 99,76,056/- is held to be allowable u/s 43B(f) because this was the sum payable and actually paid by the assessee as employer in lieu of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atistical purposes. Thus the Tribunal after considering the factual matrix of the issue remitted the same to the record of the AO for afresh adjudication after considering the relevant details to be filed by the assessee. However, the Tribunal has accepted the position of allowability of the claim if the same is regarding the premium paid for a policy taken from the LIC for Employees Group Leave Encashment Scheme. Accordingly, as far as the allowability of the claim for payment of premium of policy taken by the assessee for Employees Group Leave Encashment Scheme, the same is allowable expenditure. However, since the ld. CIT (A) has pointed out that the assessee itself has shown the payment as investment in the LIC and other companies and the interest accrued on such fund was credited to the Profit Loss account, therefore, the AO has to just verify the fact whether any income accruing on the policy taken by the assessee was actually received by the assessee or it is just an accounting treatment by the assessee without actual income. Further, if the benefit accrued on the policy is only accumulated to the fund itself which is to be used for discharge of liability o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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