TaxTMI 
TaxTMI 
2019 (2) TMI 1359
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.... AR could not produce any evidence to prove that these provisions for gratuity represents the ascertained liability during the FY 2012-13. In view of the same, it was held that the provisions created by the assessee cannot be allowed as deduction during the AY 2013-14. Hence, the CIT(A) upheld the disallowance made by the Assessing Officer of provisions towards gratuity. 5. Against this, the assessee is int appeal before us. The Ld. AR submitted that during the year, the assessee bank had claimed the following provision for expenses in its accounts: Provision for gratuity to retired staff Rs.29,28,621/- Provision for leave salary to retired staff Rs.17,46,510/- Provision of bonus to retired staff Rs. 37,000/- Provision for Medical aid to retired staff Rs. 2,385/- It was submitted that these provisions were made for the staff who retired between 2010 and 2012 whose gratuity was reworked consequent to the increase in the gratuity limit from Rs. 3.5 lakhs to 10 lakhs. It was submitted that these provisions were also made as per the directions of the Registrar of Cooperative Societies in order to comply with the RBI guidelines. According to the Ld. AR, the....
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....allowing provision for leave encashment invoking the provisions of section 43B of the Act. 93. We find that the co-ordinate Bench of this Tribunal in ITA No.l815/Mds/2011 dated 2.4.2013 allowed the claim of the assessee by sustaining the order of the Commissioner of Income Tax (Appeals) observing as under:-* "6. The fifth ground of appeal relate to allowablility of provision for leave encashment. The issue has already been adjudicated by the Tribunal in. ITA No.818/Mds/2010 relevant to the assessment year 2007-08 in the case of the assessee, wherein the Tribunal has held as under:- "We have heard the submissions made by both the parties and have perused the orders of the authorities below and the judgments referred & by both the sides. The relevant extract of the provisions of section 43B(f) are reproduced herein below:- "43B. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act respect of- a) xxxxxxxxxx b)xxxxxxxxxx c)xxxxxxxxxx d)xxxxxxxxx e) xxxxxxxxx (f) any sum payable by the assessee as an employer in lieu of any leave at t....
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....e Hon'ble Calcutta High Court in the case of Exide Industries Ltd. (supra) wherein the Hon'ble Court has struck down the provisions of sub-clause (f) of section 438. The Hon'ble Supreme Court of India in the case of Bharat Earth Movers Ltd. Vs. CIT reported as 245 ITR 428 answering to the question : "whether, on the facts and in the circumstances of the case, the provision for meeting the liability for encashment of earned leave by the employee is admissible deduction?" held as under- "A few principles were laid down by this court, the relevant of which for our purpose are extracted and reproduced as under: (i) For an assesses maintaining his accounts on the mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business, regard being had to the accepted principles of commercial practice and accountancy. It is not as if such deduction is permissible only in the case of amounts actually expended or paid; (ii) Just as receipts, though not actual receipts but accrued due are brought in for income-tax assessment, so also liabilities accrue....
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.... appeal of the assessee is allowed." In view of the aforesaid findings, we allow this ground of appeal of the assessee." 94. Respectfully following the said decision, we uphold the order of Commissioner of Income Tax (Appeals) and reject the grounds of appeal of the Revenue on this issue." 29.2 In view of the above order of the Tribunal, this ground raised by the Revenue is rejected." 7.2 However before us, the Ld. AR has placed reliance on the order of the ITAT, Pune Bench in the case of U.B. Engineering Ltd. vs. DCIT in ITA No. 1019 & 09/PN/09 dated 30/11/2010 wherein it was held as under: "This issue is relevant to appeal Vide ITA No. 1019/PN/09 for the A.Y 2001- 02. In connection with this issue, Ld. Counsel for the assessee filed a chart showing that the identical issue was covered in favour of the assessee by the decision of the Tribunal in the assessee own case for the A.Y 2003-04 vide ITA 381/PN/07 a copy of which is placed at page 1 of the paper book. In this regard, Ld. Counsel mentioned that para 4 to 7 are relevant. Ld. DR for Revenue relied on the relevant orders of the Revenue. 3. We have heard both the parties and perus....
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....ry, interest rate, mortality rate etc. Assessee relies on the judgement of ITAT Jaipur Bench in case of Mewar Sugar Mills Ltd., Vs. DCIT 61 TTJ 63 and of Madras High Court in the case of Tuttapullam Estates Vs. CIT (1991) 191ITR 131 (Mad.), in which it was held that where the provisions of gratuity was not based on any actuarial valuation but on the basis of 15 days wages for each year of completed service and a group insurance policy had been taken with the Life Insurance Corporation, the assessee was held entitled to claim only the Incremental liability relating to the accounting year as a deduction." 5. However the A.O was not convinced and held that since the payment of gratuity fund was a liability of the employer therefore the provision was to be added back to the total income. Against the addition an appeal was preferred. It was explained that since the assessee was facing severe liquidity crunch and also facing non-cooperation from its bankers, therefore could not make the payment of premium of gratuity during the year under consideration. Further the reliance was placed on George Williamson (Assam) Ltd. v. CIT 228 ITR 343. Ld. CIT(A) was not convinced and....