TaxTMI 
TaxTMI 
1987 (12) TMI 79
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....trical accessories and leasing of gas cylinders. It also deals in purchase and sale of gas cylinders. For its employees there is an agreement at the time of employment which entitles the employees to what is described as a privilege leave with pay of 30 days per year. The employees are entitled to carry forward the unavailed leave to the next year and the leave can be accumulated up to a maximum period of 180 days. The employees can also surrender the leave but up to maximum period of 15 days during one financial year of 30 working days once during two financial years. The employees avail of this leave or encash it at the time of discontinuance of service, which may be caused by any of the following : (a) Resignation (b) Retrenchment ....
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.... in the following terms in its books of account : &....
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....bsp; --------- ------------  ....
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....p; ----------- 2,06,541.30 &nb....
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....ssessment for each year was rightly made by the IAC. He, therefore, dismissed the appeals on this issue. 8. We find from the assessment order for the year 1983-84 that the claim before the IAC (A) was that the assessee has changed the method of accounting, qua, the liability for leave encashment and, therefore, the liability which had been qualified on ascertainable and reasonable basis at Rs. 2,06,541 should be allowed. Now, in so far as the change of method of accounting is concerned, it could not have applied to the asstt. year 1982-83 for which the accounts had already been closed. In fact, in the books of account, which had been closed before this thought cross the mind of those, who run the affairs of the company debit had already ....
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....ve on this issue applied our mind and perused the provisions of the leave rules. In fact, these have been examined by both the authorities below. In our considered opinion, the assessee has such rules which can and do enable the assessee to ascertain its contingent liability in a fair and reasonable manner. The claim of the assessee is, therefore, covered by the judgment of the Tribunal, which we have referred to, which accords with the law laid down by the Supreme court in the case of Metal Box Co. of India Ltd. v. Their Workmen [1969] 73 ITR 53. In this judgment the Hon'ble Court in this context has observed that when the liability under a scheme of gratuity in respect of the accounting year is set in the profit and loss account, in the a....