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TMI Blog2021 (3) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... t : Mr.Karthick Ranganathan, Senior Standing Counsel For the Respondent : Mr.R.Vijayaraghavan JUDGMENT M.DURAISWAMY, J. Challenging the order passed in I.TA.No.1170/Mds/2013 in respect of the assessment year 2006-07 on the file of the Income Tax Appellate Tribunal, Chennai, B Bench, the Revenue has filed the above appeal. 2.The appeal was admitted on the following substantial question of law: Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in holding that the provision for wage arrears of ₹ 5.80 crores is an ascertained liability, notwithstanding the fact that the said provision has been accounted on cash basis? 3.When the appeal was taken up fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. The liability is not a contingent liability. The High Court was not right in taking a view to the contrary. 7. The appeal is allowed. The judgment under appeal is set aside. The question referred by the Tribunal to the High Court is answered in the affirmative, i.e., in favour of the assessee and against the revenue. Before parting we would like to observe that when this appeal came up for hearing on 24-3-1999, we felt some difficulty in proceeding to answer the question arising for decision because the orders of the authorities below and of the Tribunal did not indicate how the leave account was operated by the appellants and leave salary provision was made. To appreciate the facts correctly and in that light to settle the law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isputed before the Tribunal and was not disputed before this Court too. (ii)[1959] 37 ITR 1 (SC) [Calcutta Co. Ltd., Vs. Commissioner of Income Tax] ... Turning now to the facts of the present case, we find that the sum of ₹ 24,809 represented the estimated expenditure which had to be incurred by the appellant in discharging a liability which it had already undertaken under the terms of the deeds of sale of the lands in question and was an accrued liability which according to the mercantile system of accounting the appellant was entitled to debit in its books of account for the accounting year as against the receipts of ₹ 43,692-11-9 which represented the sale proceeds of the said lands. Even under section 10(2) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrong and it should have answered the referred question in the affirmative. Before we conclude, we are bound to observe that having accepted the receipts of ₹ 43,692-11-9 in their totality even though a sum of ₹ 29,392-11-9 only was actually received by the appellant in cash, thus making the appellant liable for income-tax on a sum of ₹ 14,300 which had not been received by it during the accounting year, it was hardly open to the Revenue to urge that the sum of ₹ 24,809 should not have been allowed as a permissible deduction before arriving at the profits or gains of the appellant which were liable to tax. Consistently enough with this attitude, the Revenue ought to have expressed its willingness to treat only a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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