2011 (11) TMI 674

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....,58,312/- made by the Assessing Officer on account of provision of wage revision. 3. In this case Assessing Officer noted that assessee in Schedule 18 - Notes on accounts annexed with audited balance sheet and profit and loss account, the assessee company at point no. 9 has claimed provision made for wage revision, the relevant para read as under:-   "The pay revision of the employees of the company is due w.e.f. 1st January, 2007. Pending decision of the committee formed by the GOI, a provision of Rs. 1,13,58,312/- (previous year Rs. 2922055/-) has been made on estimate basis as apportioned by Holding Company i.e. NTPC Ltd." 3.1 Assessing Officer asked the assessee to justify the claim of the provision made in the books of accou....

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....or the employees which were not crystallized. Accordingly, he made the addition of Rs. 1,13,58,312/-. 4. Upon assessee's appeal Ld. Commissioner of Income Tax (Appeals) held as under:- "I have considered the facts of the case and the observations of the Assessing Officer in the assessment order. As far as Grounds nos. 3(i) & (ii) are concerned, it has been submitted that wages of the employees of the appellant company were due for revision with effect from 1.1.2007 and that a Committee for revision of pay scales in central PSUs had been setup. The recommendations of the Committee were received subsequently but in the meantime, based on the demands of the employees, the Board of Directors of the appellant company sanctioned adhoc payme....

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....ct from 1.1.2007 and the year under appeal is FY 2007- 08, relevant to Assessment Year 2008-09, although the recommendations of the Committee set up for the purpose were received later and the actual and final payment was released in October, 2009. Accordingly, the judgement of the Hon'ble Apex Court in the case of Bharat Earth Movers vs. C.I.T. (supra) would be applicable to the case of the appellant and the provision made by the appellant for wage revision during the year under appeal is an allowable deduction. It has also been submitted that in case of NTPC Ltd. a similar issue was decided in favour of the assessee and that the Committee on Disputes declined permission to the CBDT to pursue the appeal before the ITAT because it did not f....