Appeal allowed for leave encashment & compensation dispute, case referred back for fresh adjudication.

The Tribunal allowed the assessee's appeal for statistical purposes in the case involving disallowance of leave encashment provision and compensation paid to investors. The Tribunal directed the matter to be restored to the AO for fresh adjudication based on relevant legal precedents, including a decision of the Hon'ble Supreme Court. The revenue's appeal was dismissed, upholding the CIT(A)'s decision in favor of the assessee on both issues.

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Issues:
1. Disallowance of leave encashment provision
2. Disallowance of compensation paid to investors

Issue 1: Disallowance of leave encashment provision
The appeal was against the disallowance of Rs. 21,67,547 by the CIT(A) regarding provisions for leave encashment not paid before the due date of filing the return of income. The AO disallowed the amount under section 43B(f) of the Act. The assessee requested restoration of the matter to the AO based on a Tribunal decision in a similar case. The Tribunal referred to the decision of the Hon'ble Supreme Court in the case of "Exide Industries Ltd" and directed the AO to keep recovery of tax and interest in abeyance pending the Supreme Court's decision. The Tribunal upheld the decision of the Co-ordinate Bench and restored the matter to the AO for fresh adjudication based on the Supreme Court's decision. The appeal was allowed for statistical purposes.

Issue 2: Disallowance of compensation paid to investors
The revenue appealed against the deletion of Rs. 36,21,660 disallowance by the CIT(A) regarding compensation paid to investors by the assessee. The AO disallowed the compensation, stating it was not agreed that the fund manager would pay compensation to customers for service deficiencies. The CIT(A) allowed the appeal based on a previous Tribunal decision in the assessee's case, holding that the compensation was deductible to protect the assessee's business interests. The Tribunal upheld the CIT(A)'s decision, following the previous Tribunal ruling, and dismissed the revenue's appeal. The appeal of the assessee was allowed for statistical purposes.

In conclusion, the Tribunal addressed the issues of disallowance of leave encashment provision and compensation paid to investors, providing detailed analysis and referring to relevant legal precedents and decisions to arrive at its conclusions.

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