Appeal Dismissed: Provision for Arrears of Salary Upheld

The revenue's appeal under section 260A of the Income Tax Act against the addition made on account of provision for arrears of salary was dismissed. The Tribunal upheld the CIT(A)'s decision, emphasizing that the liability for arrears of salary was ascertained and not contingent, justifying the provision made on accrual basis. The Tribunal found no error in the lower court's ruling, concluding that the appeal lacked merit as no substantial legal question arose.

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Issues:
Appeal by revenue under section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal regarding the addition made on account of provision for arrears of salary.

Analysis:
The respondent-assessee, a government undertaking, filed its income tax return declaring income, which was revised later. During scrutiny, it was noted that provisions were made for arrears of salary based on a State Government notification. The Assessing Officer disallowed the provision, stating it should be allowed only in the year of payment. The CIT(A) partly allowed the appeal, deleting the addition. The Tribunal affirmed the CIT(A)'s decision, stating the liability was not contingent but an ascertained liability. The provision was made on accrual basis as per the mercantile system of accounting. The Tribunal found no infirmity in the CIT(A)'s order, dismissing the appeal.

The Tribunal's findings were based on facts and not shown to be illegal or perverse. The liability for arrears of salary was not contingent but ascertained, arising during the assessment year and discharged in the future. The provision was made on accrual basis as per the mercantile system of accounting. Therefore, no substantial question of law arose, leading to the dismissal of the appeal by the revenue.

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