M/s. C & E Limited v. C.I.T.-4, Kolkata
[Citation -2016-LL-0916-45]

Citation 2016-LL-0916-45
Appellant Name M/s. C & E Limited
Respondent Name C.I.T.-4, Kolkata
Court ITAT-Kolkata
Relevant Act Income-tax
Date of Order 16/09/2016
Assessment Year 2010-11
Judgment View Judgment
Keyword Tags leave encashment • leave salary • ascertained liability
Bot Summary: Sr DR for the revenue Date of concluding the hearing : 14-09- 2016 Date of pronouncing the order : 16-09-2016 ORDER Shri S.S. Viswanethra Ravi, JM :- This appeal by the Assessee is against the order dated 20-03-2015 passed by the Commissioner of Income Tax, Kolkata-4, Kolkata for the assessment year 2010-11. The assessee filed its return of income declaring total income of Rs.1,82,33,290/- on 03-10-2010. Thereafter, the assessee filed revised return of income on 18-06-2011, wherein the claim of credit under MAT was increased. In response to which, the A/R of the assessee appeared and produced the relevant details before the AO. After considering the submissions of the assessee the AO passed an assessment order u/s. Under show cause notice, the assessee filed written submission in respect of leave salary to the extent of Rs.3,35,269/- stating that it was not a provision. Considering the submissions of the assessee the CIT has set aside the impugned assessment order dated 21-03- 2013 passed u/s. 143(3) of the Act by treating the same as erroneous and prejudicial to the interest of the revenue and directed the AO to add the unpaid leave salary to the total income of the assessee and to pass an order accordingly.


IN INCOME TAX APPELLATE TRIBUNAL, BENCH KOLKATA Before Shri P.M. Jagtap, Accountant Member and Shri S.S.Viswanethra Ravi, Judicial Member I.T.A. No.1299/KOL/2015 A.Y: 2010-11 M/s. C & E Limited Vs. C.I.T.-4, Kolkata PAN: AACCC 5418K (Appellant) (Respondent) Appearances by: Shri Srikumar Banerjee, FCA, ld.AR for assessee Shri Rajat Subhra Biswas, CIT, ld.Sr DR for revenue Date of concluding hearing : 14-09- 2016 Date of pronouncing order : 16-09-2016 ORDER Shri S.S. Viswanethra Ravi, JM :- This appeal by Assessee is against order dated 20-03-2015 passed by Commissioner of Income Tax, Kolkata-4, Kolkata for assessment year 2010-11. 2. assessee has raised following grounds of appeal:- 1. That learned Commissioner of Income Tax has erred in law and in fact by disallowing leave salary of Rs.3,35,269 on ground that is provision though it is ascertained liabilities. 2. That learned Commission of Income Tax has erred in law and in fact by disallowing leave salary ITA No. 1299/Kol/15 M/s. C & E Limited 1 of Rs.3,35,269 though it is ascertained liabilities based on actuarial valuation. 3. That learned Commissioner of Income Tax has erred in law and in fact by disallowing leave salary of Rs.3,35,269 on ground that it provision though it is ascertained liabilities accrued on mercantile system of accounts followed by appellant. 3. Brief facts of case are that assessee is company having engaged in business of manufacturing of leather chemicals and trading of dyes and chemicals. assessee filed its return of income declaring total income of Rs.1,82,33,290/- on 03-10-2010. Thereafter, assessee filed revised return of income on 18-06-2011, wherein claim of credit under MAT was increased. Under scrutiny notices u/s. 143(2) and 142(1) were issued. In response to which, A/R of assessee appeared and produced relevant details before AO. After considering submissions of assessee AO passed assessment order u/s. 143(3) of Act dated 21-03-2013 determining total income at Rs.2,07,01,302/- for year under consideration. 4. Thereafter, CIT having exercising his jurisdiction u/s. 263 on perusal of assessment records found from Schedule 21.2(xii) (Details of Provision) appended to P & L Account that provision for leave salary to extent of Rs.3,35,269/- was made found lying unpaid in balance sheet as on 31-03- 2010. Under show cause notice, assessee filed written submission in respect of leave salary to extent of Rs.3,35,269/- stating that it was not provision. It was actuarial liability, which will be ascertained as per actuarial valuation of leave encashment as per Revise Indian Accounting ITA No. 1299/Kol/15 M/s. C & E Limited 2 Standar-15. leave salary is payable to employee every year and such amount will be paid ascertaining amount of leave salary. Considering submissions of assessee CIT has set aside impugned assessment order dated 21-03- 2013 passed u/s. 143(3) of Act by treating same as erroneous and prejudicial to interest of revenue and directed AO to add unpaid leave salary to total income of assessee and to pass order accordingly. 5. Aggrieved by such order passed by CIT u/s. 263 now Assesee is in appeal before us by raising above mentioned grounds of appeal and further contended that such claim was made in pursuant to order of Hon ble Jurisdictional High Court of Calcutta. But, however, AO disallowed same in view of SLP (Special Leave Petition) (Civil) preferred by revenue before Hon ble Supreme Court against order/judgment of Hon ble Jurisdictional Calcutta High Court, which was still pending for disposal of same. Finally ld.AR has sought to remand issue to file of AO in view of order dated 8-5-2009. 6. Ld. DR concedes that order/judgment of Hon ble Supreme is binding on respondent-revenue. He also sought to remand issue to file of AO. 7. Heard rival submissions and perused material evidence available on record. We find that respondent revenue had preferred SLP (Special Leave Petition) (Civil) petition before Hon ble Supreme Court against judgment of Hon ble Jurisdictional Calcutta High Court. Hon ble Apex Court in SLP proceedings in CC 12060/2008 dated 8.9.2008 had held as under:- petition was called on for hearing today. Upon hearing counsel court made following Order. ITA No. 1299/Kol/15 M/s. C & E Limited 3 Issue Notice. In meantime, there shall be stay of impugned judgement, until further orders. Later Hon ble Supreme Court in CC 22889 / 2008 dated 8.5.2009 had held as under:- petition was called on for hearing today. Upon hearing counsel court made following Order Delay condoned. Leave granted. Pending hearing and final disposal of Civil appeal, Department is restrained from recovering penalty and interest which has accrued till date. It is made clear that as far as outstanding interest demand as of date is concerned, it would be open to department to recover that amount in case Civil Appeal of department is allowed. We further make it clear that assessee would, during pendency of this Civil Appeal , pay tax as if Section 43B(f) is on statute book but at same time it would be entitled to make claim in its returns. 8. In view of above, we remit issue to file of AO to decide same taking into consideration outcome of main case in SLP (civil) 22889/2008 of Hon ble Supreme Court. Therefore, grounds raised by assessee are allowed for statistical purpose. 9. In result, appeal of assessee is allowed for statistical purpose. Order Pronounced in Open Court on 16 t h September 2016. Sd/- Sd/- P.M. JAGTAP S.S.VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 16 /09/2016 ITA No. 1299/Kol/15 M/s. C & E Limited 4 Copy of order forwarded to:- 1. Appellant/Assessee: M/s. C & E Ltd 95 Park Street, 2nd Floor, Kolkata-16. 2. Respondent/Department: Commissioner of Income Tax-4, Kolkata, Aaykar Bhavan, P-7 Chowringhee Square, Kolkata-69. 3. CIT 4. CIT(A) 5. Departmental Representative 6. Guard File True Copy By order Assistant Registrar ** PRADIP SPS Income Tax Appellate Tribunal Kolkata benches, Kolkata ITA No. 1299/Kol/15 M/s. C & E Limited 5 M/s. C & E Limited v. C.I.T.-4, Kolkata
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