Tribunal rules on revenue's appeal, assessee's objection, and leave encashment deduction.

The Tribunal partially allowed the revenue's appeal, dismissed the assessee's cross objection, and restored the issue of deduction of leave encashment u/s.43B(f) to the AO for both the current and previous assessment years. The Tribunal directed verification of fresh evidences for claim u/s.35AD, certification in Form 3CD for deduction u/s.35AD, and the leave encashment deduction issue based on legal principles.

---

---

Issues:
1. Admission of fresh evidences for claim u/s.35AD without following Rule 46A of IT Rules.
2. Denial of deduction u/s.35AD by AO based on lack of certification in Form 3CD.
3. Dismissal of cross objection filed by the assessee.
4. Disallowance of claim of deduction of leave encashment u/s.43B(f) by AO.

Issue 1: Admission of fresh evidences for claim u/s.35AD without following Rule 46A of IT Rules:
The Revenue challenged the action of the ld CIT(A) in admitting fresh evidences for the claim of 35AD without following Rule 46A of IT Rules. The Revenue contended that the evidences were accepted without providing the AO an opportunity to verify or refute them, leading to a violation of principles of Natural Justice. The Revenue cited various court decisions to support their argument. The CIT DR highlighted that the fresh evidences, including commissioning and completion reports, were not before the AO, and thus, the order of the ld CIT(A) should be reversed. The AR, on the other hand, argued that the AO disallowed the deduction based on the absence of certification in Form 3CD, which was not required during the relevant assessment year. The AR stated that the information regarding the deduction was available to the AO through the audit report. The Tribunal noted that primary evidence, such as the completion and commissioning reports, was not before the AO and decided to restore the issue to the AO for verification.

Issue 2: Denial of deduction u/s.35AD by AO based on lack of certification in Form 3CD:
The AO had disallowed the deduction u/s.35AD due to the absence of certification in Form 3CD regarding the claim. The AR argued that the certification requirement came into effect after the relevant assessment year and that the auditors had excluded assets eligible for deduction u/s.35AD in the audit report. The Tribunal observed that the auditors had reduced the value of assets claimed under 35AD in the audit report. However, since the primary evidence was not before the AO, the issue was sent back to the AO for verification of the certificates. If found correct, the assessee would be entitled to the deduction u/s.35AD.

Issue 3: Dismissal of cross objection filed by the assessee:
During the hearing, the AR representing the assessee decided not to press the cross objection filed by the assessee. Consequently, the cross objection was dismissed as withdrawn. The AR endorsed this decision in the appeal.

Issue 4: Disallowance of claim of deduction of leave encashment u/s.43B(f) by AO:
The assessee's appeal contested the denial of the claim of deduction of leave encashment u/s.43B(f) by the ld CIT(A). The issue was found to be identical to the one in the appeal for the previous assessment year. Following the principles established by the Hon'ble Supreme Court in a specific case, the Tribunal decided to restore the issue to the AO for further consideration.

In conclusion, the Tribunal partially allowed the revenue's appeal for statistical purposes and dismissed the assessee's cross objection. The issue related to the deduction of leave encashment u/s.43B(f) was also restored to the AO for both the current and previous assessment years based on the established legal principles.

---