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TMI Blog2020 (10) TMI 1195X X X X Extracts X X X X X X X X Extracts X X X X ..... Government of Odisha. Assessee has calculated exact figure which has to be paid in different instalments later on as per instructions from the State Government Odisha which actually has been paid to the assessee s employees. Case laws relied on by the ld. DR are also not applicable in the present facts of the case. In view of this, we are of the opinion that the ld. CIT(A) is not justified in confirming the addition made by the AO in this regard. Accordingly, we set aside the impugned order passed by the CIT(A) and allow the grounds of appeal of the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... and 13671 dated 12.08.2009, respectively. The AO after following the revisionary order and judgment of the Hon'ble Supreme Court in the case of Molasses Company Private Limited Vs. CIT (1959) 37 ITR 66 (SC) held that it was an unascertained liability. Accordingly, he disallowed the provisions made by the assessee of ₹ 20.05 crores for the impugned assessment year. 3. Feeling aggrieved from the order of AO, the assessee appealed before the CIT(A0 and the CIT(A) after considering the submissions made by the assessee, dismissed the appeal of the assessee after having the following observations :- 5. I have given careful consideration to the matter. The moot question to be answered is whether the provision of ₹ 20.05 crores provided in the books as additional provision was an unascertained contingent liability or an ascertained liability. It has been explained by the assessee that the additional provision of ₹ 20.05 crores was made on account of pay revision after issue of Govt, of Odisha order dt.22.7.2009 and the OPTC's order dt.20.4.2009. It is clear from the dates of these orders that the same were passed after the end of the previous year 2008-09 relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other hand, ld. DR relied on the order of the lower authorities and submitted that the notification issued by the OPTCL and Government of Odisha dated 24.12.2008, are after closure of the financial year. On the date of financial year ending there was no such liability known to the assessee company, therefore, it cannot be said that it was an ascertained liability. The liability must be existed at the end of the year. To support his contentions, ld. DR relied on the following case laws :- i) Indian Smelting & Refining Co. Ltd. [2001] Taxman 606 (SC); ii) Gordon Woodroffe Leather Mfg. Co [1962] 44 ITR 551 (SC) iii) Housing & Urban Development Corporation Ltd. [2019] 101 taxmann.com 403(Delhi-Trib); Further ld. DR drew our attention to para 3.1 & 3.2 of the decision in the case of Housing & Urban Development Corporation Ltd.(supra) :- 3.1 In the facts of the case before us, we have already noticed that that the Pay Revision Committee had not completed its deliberations before the end of the FY 2006-07 and was yet to submit its report at the time when the FY 2006-07 came to an end; and furthermore, that the pay revision was finally implemented in pursuance of aforesaid O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of I.T. Act, there is statutory provision to the contrary. Moreover, it was held in CIT v. Kasturi & Sons Ltd. [1999] 103 Taxman 342/237 ITR 24 (SC); Federation of Andhra Pradesh Chambers of Commerce & Industry v. State of AP [2001] 115 Taxman 143/247 ITR 36 (SC); CIT v. R.J. Trivedi & Sons [1990] 53 Taxman 485/183 ITR 420 (MP); Greatway (P.) Ltd. v. Asstt. CIT [1992] 64 Taxman 421/[1993] 199 ITR 391 (Punj. & Har.); BM Parmar v. CIT [1999] 102 Taxman 552/235 ITR 679 (Punj. & Har.); Modipon v. CIT [2000] 113 Taxman 44/[2001] 247 ITR 40 (Delhi); CIT v. M.S.S. Rajan [2002] 120 Taxman 680/[2001] 252 ITR 126 (Mad.); CWT v. Tulsi Dass [2002] 123 Taxman 790/256 ITR 73 (Raj.); Vivek Jain v. Asstt. CIT [2011] 14 taxmann.com 146/202 Taxman 499/337 ITR 74 (AP) that the courts or the Tribunal cannot extend relief when the legislative intent is otherwise. It was held in Smt. Tarulata Shyam v. CIT [1977] 108 ITR 345 (SC) that once it is shown that the case of the assessee comes within the letter of the law, he must be taxed, however, great the hardship may appear to the judicial mind. Moreover, it was held in State Bank of Travancore v. CIT [1986] 24 Taxman 337/158 ITR 102 (SC) that consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory to be followed by the companies, therefore, the assessee has rightly claimed it as a known liability in his books of accounts which is allowable as per Section 37(1) of the Act. He also submitted that the AO has relied on the judgment in the case of Molasses Company Private Limited (supra). He further submitted that the judgment of the Hon'ble Supreme Court relied on by the AO has been overruled by the Hon'ble Calcutta High Court. 8. In reply to the above contention of the ld.AR, the ld.DR further submitted that the Hon'ble High Court cannot overrule any judgment of the Hon'ble Apex Court and every High Court are bound to follow the judgments of the Hon'ble Supreme Court, therefore, ld. DR submitted that how the ld. AR of the assessee is submitting like this. 9. After hearing both the sides and perusing the entire material available on record and order of the authorities below, we find that the Government of India announced 6th Pay Revision on 24.03.2008. Subsequently, the OPTCL issued order on 20.04.2009 for implementation of the 6th Pay Commission to his employees w.e.f.01.01.2006 in case of executive employees and from 01.04.2005 for non- executive employees . Subsequentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are placed in the record. The liability calculated by the assessee company was a fixed liability which was to be paid to its employees towards arrear salary which cannot be also taken back from the employees. Therefore, it was a certain liability for the impugned assessment year. The assessee company can make provision for the certain liability which is certainly to be paid, therefore, the assessee company has rightly made provision for the arrears of salary in his books of accounts. As per our considered opinion, this is a necessary expenditure, which is required to be deducted from the profit of the assessee company for the impugned assessment year while calculating the taxable profit because the liability has been imposed by the State Government of Odisha. The ld. DR has relied on the decision in the case of HUDCO as cited supra is not applicable in the present case because in that case the assessee has made adhoc provision and the adhoc provision is not ascertained liability but in the impugned case the assessee has calculated exact figure which has to be paid in different instalments later on as per instructions from the State Government Odisha which actually has been paid t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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