2015 (10) TMI 1706

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... expenses. 2. On the facts and circumstances of the case of the Ld. CIT(A) erred in law and merits of the case in deleting the addition of Rs. 26,97,000/- made by the AO on account of provision of gratuity and leave encashment. 3. The appellant craves, leave or reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 2. Facts narrated by the Revenue Authorities are not disputed by both the parties, therefore, need not been repeated here for the sake of brevity. 3. At the time of hearing, Ld. Counsel of the assessee stated that the issue no. 1 relating to disallowance of foreign travel expenses has already been decided by the ITAT, Delhi Bench 'G', New....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....gs of Ld. CIT(A) these expenses were part of remuneration package of the Directors and as per Form 16, the same were added in the income of the directors of the company. The relevant finding of Ld. CIT(A) are reproduced below: "After considering the facts of the case as well as various details submitted by A.R. before the A.O. as well as the arguments made by him, I am inclined to agree with the arguments of the A.R. that there was no justification for making this disallowance. Accordingly the AO is directed to delete this addition since they have been already reflected in From No. 16 of the Directors and are part of their remuneration package approved by the Board of Directors of the Company. As a result, this ground is treated as allow....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....shment was fully explained during the course of appellate proceedings and the same was computed on the basis of a certificate given by actuarial expert which clearly establish that the provisions for gratuity and leave encashment are based on a scientific methodology which is also certified by a specialist. The ld. Counsel vehemently contended that in view of the above facts of the present case the issue is squarely covered in favour of the assessee by the decision of Hon'ble Supreme Court in the case of Rotork Controls Ltd. vs. CIT, 314 ITR 62 (SC). The ld. Counsel pointed out that the CIT(A) in the original order dated 12/07/2013 dimissed the ground no. 2 of the assessee ignoring the relevant facts of the case which was subsequently recti....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... mistake apparent from record, the contentins of the appellant are fully justified and, therefore, this ground of the appellant is being allowed in view of the issue being covered by the Apex Court judgment." 7. In view of above, we are inclined to hold that since the provision for gratuity and leave encashment were fully explained by the assessee before the authorities below and the ld. CIT(A) also recorded that the provision was computed on the basis of scientific methodology and also certified by the actuarial specialist. Under above noted facts, we respectfully follow the decision of Hon'ble Supreme Court in the case of Rotork Controls India Pvt. Ltd. (supra), wherein it was held that a provision is a liability which can be measured o....