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TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 1611
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....e notice u/s 142(1) of the Act dated 08.01.2016 filed a letter dated 15.01.2016 explaining the assessee's claim for deduction a sum of Rs. 25,57,00,000/- debited in the profit and loss account which was a provision and contingencies on account of arrear payment due to the employees consequent to wage revision. The assessee gave the following explanation :- "The amount of Rs. 255700000.00 debited to Profit & Loss Account for the year 2009-10 was attributed to impending wage revision and was paid out during the immediately succeeding financial year 2010-11 from the "Provision Held" Account. It may be noted that Profit & Loss Account was loaded only once i.e. in the FY 2009-10. No deduction was claimed during the FY 2010-11 on payment basis.....
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.... arrear payment was not accrued in F.Y.2009-10. Therefore, provision of Rs. 25,57,00,000/- on account of arrear payment due to wage revision was an unascertained liability for F.Y.2009-10 and was required to be added to the total income of the assessee. But A.O. failed to do so. (ii) As per Point No.6.2 of the Notes on Account (Schedule-17) the assessee provided Rs. 1,30,00,000/- for meeting of liability of leave encashment on superannuation during the F.Y.2009-10. As per provision of Section 43B of the I. T. Act, deduction for leave encashment is allowable only on payment basis. Therefore, provision of Rs. 1,30,00,000/- for leave encashment liability were required to be disallowed and added to the income. But A.O. failed to do so. (iii....
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....Ltd. Vs.CIT reported in 314 ITR 62 (SC) b) The assessee provided Rs. 1,30,00,000/- for meeting its liability of leave encashment of superannuation during the F. Y. 2009-10 and that out of the said amount Rs. 49,86,186/- was paid out within 15th October, 2010 and the balance amount of Rs. 72,64,923/- was paid within March, 2011, therefore, even if the amount of Rs. 72,64,923/- is disallowed in this year it may be directed to be allowed in the A. Y.2011-12. c) As per Schedule-12 of the balance sheet that there was contingent liability of Rs. 2,55,66,000/- which was included as provision& contingencies liability was never debited in P& L A/c and therefore there was no question of any disallowance as the said amount as it was never charged ....
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....e encashment is allowable only on payment basis. In course of assessment proceedings, A.O. did not verify the quantum and period of actual payment made in this regard and take action accordingly. (iii) As per Balance Sheet, a contingent liability of Rs. 2,55,66,000/- was included in 'Provision & Contingencies' which was debited in the Profit & Loss account. The contingent liability is not an allowable expenditure for income tax purpose. In course of proceedings u/s. 263 assessee argued that contingent liability of Rs. 2.55 cores as appear in in Schedue-12 in off balance sheet item, representing Bank Guarantee issued on behalf of the constituent for which P/L A/e. was never debited. In course of assessment proceedings, A.O. did not....
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....ment dated 27th April, 2010 was entered into by a management of 46 banks represented by the All India Bank Employees Association, National Confederation of Bank Employees, Bank Employees 'Federation of India, Indian National Bank Employees'; Federation and National Organisation of Bank Workers. The ld. Counsel pointed out that though it was a Regional rural bank it was controlled by Union Bank of India which was a party to the aforesaid settlement. He also pointed out that consequent to the decision of the Hon'ble Supreme Court in the case of Civil Appeal No.2218 of 1999 in the case of South Malabar Gramin Bank vs Co-ord. committee of S.M.G.B.Empl. Union & Ors it has been held that there should be a parity between the employees of the Comme....
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....s agreeable for an addition of the aforesaid sum. Ground of appeal in this regard was not pressed. The ld. DR relied on the order of CIT u/s 263 of the Act. 10. We have given a very careful consideration to the rival submissions. So far as invoking the jurisdiction on the issue of provision for arrear of wages consequent to wage revision of a sum of Rs. 25.57 crores is concerned we find that the AO while completing the assessment has made due enquiries on this aspect and the assessee has also given a reply. As pointed out by the ld. Counsel for the assessee a bipartite settlement between the commercial banks would equally apply to the Regional Rural Banks also. In the circumstances it cannot be said that action of the AO in allowing the cl....