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TMI Blog2014 (6) TMI 1089X X X X Extracts X X X X X X X X Extracts X X X X ..... ee filed Return of Income [ROI] on 9.4.2009 declaring total income of Rs. 3,02,40,890/-. It was noticed that the assessee has claimed the following amounts in the profit and loss account under the head 'provisions' as under: Bad and doubtful debts Rs. 5601000 Building fund Rs. 2000000 Gratuity Rs. 700000 Manager Salary Security Rs. 6067000 Without any description Rs. 9678000 The A.O. was of the opinion that these provisions are not allowable. Accordingly, he sought explanation from the assessee. After verification, the claim of bad and doubtful debts was allowed by the A.O. It was noticed that the claim of building funds of Rs. 20 lakhs had already been disallowed by the assessee in the computation of income filed in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT (A) in appeal no. 330/2009-10. Such non-consideration of the explanation shows that the addition for Rs. 60,67,000/- sustained without any application of mind. 4. That on the facts and in the circumstances of the case, Ld. CIT (A) erred in confirming the addition of Rs. 20,00,000/- made by the Ld. AO for the provision for the arrear of the salary. 5. That on the facts and in the circumstances of the case, Ld. CIT (A) erred in not allowing the claim of arrear of salary from 01/01/2004 to 31/03/2008 amounted to Rs. 71,39,285/- as an expense for the year under consideration. 6. Without prejudice to above and in the alternative:- a) That on the facts and in the circumstances of the case, Ld. CIT (A) ought to made s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under consideration. The provision for arrear of salary was made in the year under consideration as the amount was reasonably estimated in the year under consideration." 4. We have heard the rival submissions and have carefully perused the entire material on record. It was argued by Shri U.C. Jain, the ld. Sr, Advocate that Ground Nos. 1, 2 and 3 stand covered by the Tribunal order rendered in assessee's own case for A.Y. 2007-08 in ITA NO. 240/JU/2011 vide order dated 24.4.2011 in which similar disallowance was made which was allowed by the Appellate Tribunal. Copy of this Tribunal order has been place on record for your perusal and is enclosed at pages 104 to 114 of the paper book. This fact could not be denied or repelled by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rar during this year. Accordingly, by respectfully following this Tribunal order, we allow Ground Nos. 1, 2 and 3 which are in respect of one issue and delete the impugned addition. 6. It was submitted by the ld. A.R. that Ground Nos. 4, 5 and 6 and additional ground are in respect of one common ground. 7. Facts of this issue are that during the year the assessee bank made provision of Rs. 60 lakhs in the profit and loss account for arrears of salary to be calculated from 1.1.2004 because the exact amount of arrear to be paid upto 31.3.2008 was not ascertained, provision for the lumpsum estimated amount was made. Arrears of salary was made in the month of January 2009 and the year-wise break-up of arrear of salary is state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimated. For this purpose, the ld. A.R. has invited our attention towards the decision of the Hon'ble Supreme Court rendered in the case of Rotork Controls India P. Ltd Vs. CIT reported in 314 ITR 62 [SC], copy of which is enclosed in the paper book at pages 65 to 82 and on which the A.O. has also placed reliance that the provision made by a company is allowable u/s 37(1) and the Hon'ble Apex Court has laid down a test for allowability in the above order. With reference to this judgment, it was argued that the provision for salary made because arrear has to be made and when exact amount of arrear is not known, it has to be quantified in a lumpsum manner that this provision has been made during the year after decision was taken dur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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