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TMI Blog2023 (7) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... - The assessee has filed a detailed note explaining the actual payment of leave encashment and amount withdrawn from provision for leave encashment. We find that the arguments of the assessee appears to be correct, going by method of accounting followed by the assessee for claim of deduction towards payment for leave encashment and provision for leave encashment in the books of accounts. But fact remains that, facts needs to be verified from the AO. Therefore, we set aside the issue to the file of the AO and direct the AO to re-examine the claim of the assessee in light of arguments that the assessee is making provision for leave encashment in the books of accounts and adding back the same in the memo of computation of taxable income and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not in the nature of expenditure for earned leave but actually the excess provision (which was not allowed in the earlier years) reversed and reduced from the expenditure incurred and hence has to be excluded as it did not constitute the income. 4. The Commissioner of Income Tax (Appeals) /National Faceless Appeal Centre (NFAC) ought to have appreciated that the excess provision for leave encashment of Rs. 1,26, 73,897/- was reversed and reduced from the actual expenditure incurred by the Appellant in connection with payment made towards leave encashment / encashment of unearned leave reducing the gross expenditure which is allowable in the hands of the Appellant. 5 The Commissioner of Income Tax (Appeals) /National Faceless App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le additional grounds at the time of hearing. 3. The brief facts of the case are that, the assessee M/s. Tamilnadu Industrial Investment Corporation Ltd., has filed its return of income for the assessment year 2018-19 on 29.10.2018, declaring total income of Rs. 24,34,77,100/-. The case was selected for scrutiny and during the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed deduction for provision for leave encashment at Rs. 1,26,73,897/- and thus, by considering submissions of the assessee disallowed provision for leave encashment at Rs. 1,26,73,897/- and determined total income of Rs. 25,61,50,998/-. The assessee carried the matter in appeal before the first appellate authority, but could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by debiting to profit and loss account and crediting to provision for leave encashment account. In the memo of computation of taxable income the provision is added back and actual payment of leave encashment is claimed as deduction u/s. 43B(f) of the Income-tax Act, 1961 (hereinafter referred to as the Act ). From the current year, there was a reduction in LIC computation of provision to be made towards leave encashment to the extent of Rs. 1,26,73,897/-. It was the claim of the appellant that the reduction in the provision for leave encashment to the extent of Rs. 1,26,73,897/- has been withdrawn from liability from the provision for leave encashment shown in the balance sheet, but instead of crediting it to the liability account, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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