Employer's contribution to leave encashment fund not deductible as expense unless actually paid in the previous year.

The employer's contribution to a leave encashment fund is not deductible as an expense unless it is actually paid in the previous year, according to Section 43B of the Income Tax Act. The provision allows deductions only when the liability is incurred and the sum is paid in the same accounting year. The High Court disallowed the deduction for the assessee, as the liability did not meet the criteria under Section 43B(f), which applies prospectively after its enactment. The assessee cannot rely on the precedent set by the Bharat Earth Movers case for this deduction. .....

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