Co-op Society's Leave Salary Provisions Disallowed: Tribunal Orders Fresh Examination

The Tribunal allowed the appeals filed by the Co-operative Society engaged in banking for statistical purposes, remitting the issue of disallowance of provisions for leave salary payable back to the Assessing Officer for fresh examination in line with decisions of higher courts. The orders dated January 22, 2019, were pronounced in favor of the assessee, overturning the CIT(A)'s decisions.

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Issues:
Disallowance of provisions made in the accounts for leave salary payable.

Analysis:
The appeals were against three orders of the CIT(A) for the assessment years 2009-2010, 2010-2011, and 2011-2012, all dated 31.03.2017. The main issue raised was the justification of confirming the disallowance of provisions made in the accounts for leave salary payable. The assessee, a Co-operative Society engaged in banking, had filed returns for the mentioned years, and subsequent assessments were carried out. The Assessing Officer disallowed provisions for leave salary, leading to appeals to the CIT(A), who confirmed the disallowance following a judgment of the jurisdictional High Court. The assessee then appealed to the Tribunal.

The Tribunal considered a similar issue in a previous case and referred to judgments by the Kerala High Court and the Rajasthan High Court regarding the deduction of provision for leave encashment. The Tribunal noted that the Supreme Court had stayed a judgment of the Calcutta High Court on the matter. Citing various legal precedents and interim orders, the Tribunal decided to set aside the CIT(A)'s orders and remit the issue to the Assessing Officer for fresh examination in line with the decisions of the higher courts.

Ultimately, the Tribunal allowed the appeals filed by the assessee for statistical purposes, remitting the issue back to the Assessing Officer for reconsideration. The orders were pronounced on January 22, 2019, in favor of the assessee.

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