2013 (4) TMI 222

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....m/2011 for A.Y. 1997-98 are that the assessee company is engaged in the business of manufacturing of tool, alloy special steel and processing charges of stampings unit. During the course of assessment proceeding the assessee was inter alia asked to submit the details in respect of leave encashment benefit of Rs.17,98,331/-. In reply it was submitted as under:- "No provision has been made for labour demands in the relevant previous year, regarding provision for leave encashment benefit the company has made a provision of Rs. 17,98,331/- on the, basis of actuarial valuation. This was made to comply with the requirements of accounting standard No.15 by the Institute of Chartered Accountants of India. We have relied on the decision of Supreme ....

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....filled in the assessee's case, set aside the order passed bythe ld. CIT(A) and restored the matter to the file of the ld. CIT(A) to decide thesame in accordance with the tests laid down by the Hon'ble Apex Court in the case of Bharat Earth Movers (supra) after providing reasonable opportunity of being heard to the assessee. Pursuant to the order passed by the Tribunal, the ld. CIT(A) while observing that it was stated that the provision of Rs. 17,98,331/- for leave encashment was made on the basis of actuarial valuation which is not in dispute, allowed the claim of the assessee on the ground that various courts and Tribunal have held that such provision made on the basis of actuarial valuation was allowable as revenue expenditure. 3. Being....

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....fully justified in allowing the claim of the assessee. The reliance was also placed on the decision of the Hon'ble Supreme Court in the case of Bharat Earth Movers (supra). 6. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that the facts are not in dispute inasmuch as it is also not in dispute that the assessee has made provision for leave encashment on the basis of the report of the actuarial valuation. 7. In Bharat Earth Movers (supra) the Hon'ble Apex Court extracted and reproduced the following principles laid down by the Hon'ble Apex Court in the case of Metal Box Company of India Ltd. vs. Their Workmen (1969) 73 ITR 53 (SC) as under (Page 431-432) :- (i) For a....