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TMI Blog2020 (11) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Tribunal 'B' Bench, Chennai ('the Tribunal' for brevity) for the assessment year 2007-08. 2.This appeal has been filed by raising the following substantial questions of law:- Provision for Leave Encashment "1.Whether the Tribunal was right in law in holding that the assessee is not entitled for deduction in respect of provision for Leave encashment without appreciating that the amount has been determined scientifically and accurately based on actuarial valuation, and the incurring of expenditure is certain and has arisen in the previous year ended 31st March 2007? 2.Whether the Tribunal was right in law in holding that no expenditure shall be allowed u/s.43B(f) on account of any leave salary unless the expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We also find that provision was subsequently made to restrict deductions on account of unpaid loan to the financial institutions. Leave encashment is neither statutory liability nor a contingent liability. It was a provision to be made for the entitlement of an employee achieved in a particular financial year. An employee earns certain amount by not taking leave which he or she is otherwise entitled to in that particular year. Hence, the employer is obliged to make appropriate provision for the said amount. Once the employee retires he or she has to be paid such sum on cumulative basis which the employee earns throughout his or her service career [sic] unless he or she avails the leave earned [sic] by him or her. That, in our view, could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are judge made law and are applicable to all under the Constitution..." It is noteworthy that the High Court did not question the existence of power of the legislature to enact the subject clause, as can be discerned from the following observations: "...We, not for a single moment, observe that legislature was not entitled to bring such amendment. They were within their power to bring such amendment. However, they must disclose reason which would be consistent with the provisions of the Constitution and the laws of the land and not for the sole object of nullifying the Apex Court decision." 5.We also had an occasion to consider the similar issue in T.C.A.No.189 of 2018 dated 13.10.2020. Applying the above decision, the present tax cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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