Fresh verification of deduction claims, binding leave encashment precedent, and rejection of unreconciled accounting difference claim.

Additional evidence on the non-performing assets deduction under section 36(1)(viia) required verification of the branch population and classification facts, so the disallowance was set aside and the matter restored for fresh adjudication. The leave encashment disallowance was treated as covered by binding Supreme Court precedent in Exide Industries and was also remitted for decision in accordance with that ruling. The claim for provision relating to the difference between the General Ledger and Detailed Ledger was held to be an unreconciled accounting difference, not an ascertained liability, and the disallowance was upheld.

---

---

Issues: (i) whether the disallowance of provision for non-performing assets under section 36(1)(viia) required fresh adjudication after admission of additional evidence; (ii) whether the disallowance of provision for leave encashment required restoration to the Assessing Officer following binding precedent; and (iii) whether the provision for difference between General Ledger and Detailed Ledger was an allowable deduction.

Issue (i): whether the disallowance of provision for non-performing assets under section 36(1)(viia) required fresh adjudication after admission of additional evidence.

Analysis: The assessee produced additional documentary material relating to the population and branch-status issue, which was relevant to determine whether the concerned branch could be treated as a rural branch for the purpose of deduction. The material was admitted, and the existing finding on population and branch classification was treated as requiring verification afresh by the Assessing Officer.

Conclusion: The disallowance was set aside and the matter was restored to the Assessing Officer for fresh adjudication after verifying the additional evidence.

Issue (ii): whether the disallowance of provision for leave encashment required restoration to the Assessing Officer following binding precedent.

Analysis: The issue was accepted as covered by earlier Tribunal decisions following the decision of the Supreme Court in Exide Industries, and the same course of action was adopted for uniformity in adjudication.

Conclusion: The matter was restored to the Assessing Officer for adjudication in accordance with the applicable Supreme Court decision.

Issue (iii): whether the provision for difference between General Ledger and Detailed Ledger was an allowable deduction.

Analysis: The provision represented an unreconciled accounting difference and was not treated as a provision for an ascertained liability or obligation. No provision under the Income-tax Act was found to permit allowance of such claim as a deduction.

Conclusion: The disallowance was upheld and the claim was rejected.

Final Conclusion: The consolidated result left the assessee successful on the remanded issues but unsuccessful on the accounting-difference claim, and the appeals were disposed of partly in the assessee's favour.

---