TaxTMI 
TaxTMI 
2014 (9) TMI 1179
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....ning of assessment already completed under section 143(3) of the Act is valid. Counsel for the assessee submits that the Commissioner of Income Tax (Appeals) erred in holding that reopening of assessment already completed under section 143(3) of the Act is valid even when no tangible material was available with the Assessing Officer to reopen the assessment. Counsel submits that the details in respect of the issues on which reopening was done were already available with the Assessing Officer at the time of original assessment under section 143(3) of the Act, therefore reopening was based only on change of opinion and the assessment needs to be struck down as invalid on this ground. 4. Departmental Representative vehemently supports the order of lower authorities in reopening the assessment. 5. Heard both sides. Perused orders of lower authorities. The issue of reopening has been considered elaborately by the Commissioner of Income Tax (Appeals) and held that reopening in this case was made within a period of four years from the end of the assessment year and the reopening was made subsequent information available with the Assessing Officer and therefore reopening is valid. While ....
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....poration of India Ud v. Addl. CIT (30 taxman. cam 211) (2013), it was held that there is no failure on the part of assessee to disclose material facts but there is complete failure on the part of the AO to apply his mind during original assessment to points on which assessment is reopened, reopening was treated as valid. 4.2.1 In view of the above judgments, I am of the considered opinion that there is no infirmity in reopening the assessment. The ground raised by the appellant, therefore, gets defeated. Now, let us move on to the merits of the case." 6. On going through the impugned order, we do not find any valid reason to interfere with the decision of the Commissioner of Income Tax (Appeals) in holding that reopening is valid. The grounds raised by the assessee on this issue are rejected. 7. Coming to the merits, the assessee has raised the following grounds of appeal:- "2. Without prejudice to the above contentions as to jurisdiction, it is submitted that even on merits, the CIT(A) erred in holding that the deduction u/s 36(1)(viia) should be restricted to the provision made in books as against the entire eligible amount. 2.1 Further in computing the deduction u/s 36(1....
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....,44,027/-. Assessee had also made a provision of Rs. 2.23 Crores on its standard assets. If the provision for bad and doubtful debts alone was considered, then the total allowance under Section 36(1)(viia) was in excess of such provision. However, if the provision for standard assets was also considered as provision for bad and doubtful debts, then the total provision could go up to Rs. 6,24,44,027/-. Then of course, assessee's claim as finally allowed was well within the limits specified under Section 36(1)(viia) of the Act. At this juncture, a look at Section 36(1)(viia) is necessary and this is reproduced hereunder, for brevity:- "36(1)(viia) a scheduled bank [not being a bank incorporated by or under the laws of a country outside India] or a non-scheduled bank [or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank], an amount [not exceeding seven and one-half per cent] of the total income (computed before making any deduction under this clause and Chapter VIA) and an amount not exceeding [ten] per cent of the aggregate average advances made by the rural branches of such bank computed in the pr....
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.... the assessee during the course of assessment proceedings also with regard to the claim made by it under Section 36(1)(viia), insofar as it concerns the quantum of such claim. This obviously show that there was no application of mind by the Assessing Officer at the time of assessment. Assessing Officer had not come to any conclusion at all having not considered the claim in the light of the conditions set out in Section 36(1)(viia) of the Act. We cannot say that he had taken a view which was in accordance with law. It is not a case where the Assessing Officer had adopted one of the courses possible in law. Of course, a cryptic order of the Assessing Officer by itself may not show that there was no thought given by him on a claim of the assessee. However, here there was no enquiry made during the course of assessment proceedings. Therefore, the order which was silent on the claim made by the assessee, and allowing such claim, without any discussion, will definitely render it erroneous and prejudicial to the interests of Revenue. As held by Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd. v. CIT (243 ITR 83), "prejudicial to the interests of the Revenue" is a term of....
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....ommissioner of Income Tax (Appeals) and no fresh details which were not filed before the Assessing Officer were placed before the Commissioner of Income Tax (Appeals). Counsel for the assessee placing reliance on the order of the Commissioner of Income Tax (Appeals) submits that Commissioner has rightly deleted the addition on verifying the details furnished by the assessee since the addition amounted to double taxation. Counsel places reliance on the order of the Commissioner of Income Tax (Appeals). 15. Heard both sides. Perused orders of lower authorities. Commissioner of Income Tax (Appeals) deleted this addition on verifying the details furnished by the assessee i.e. copy of computation of income, break-up of provisions of contingencies debited to profit and loss account etc. accepting the contention of the assessee that it has correctly added back the provision while computing its income. The Commissioner of Income Tax (Appeals) while accepting the submissions of the assessee and deleting the disallowance observed as under:- "6.1 The Id.AR has strongly contested the disallowance made by the AO. The appellant had filed a copy of the computation of income along with the full....
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.... circumstances, we uphold the order of the Commissioner of Income Tax (Appeals) and reject the grounds raised by the Revenue on this issue. 17. The next issue in the grounds of appeal of the Revenue is that Commissioner of Income Tax (Appeals) erred in holding that unreconciled entries in inter branch transactions credited to profit and loss account to the tune of Rs. 11,52,75,635/- is not taxable. 18. Departmental Representative referring to the assessment order submits that Assessing Officer made addition of Rs. 11.52 crores representing credit balances in the account arising due to non-reconciliation between the various branches of the assessee bank which is an error in accounting of inter-branch transactions. Departmental Representative submits that assessee could not reconcile these credit balances and they were rightly brought to tax by the Assessing Officer. The Departmental Representative placing reliance on the judgement of Hon'ble Supreme Court in the case of CIT Vs. T.V. Sundaram Iyengar & Sons Ltd. (222 ITR 344) submits that these unclaimed balances were rightly taxed by the Assessing Officer. Departmental Representative also places reliance on the decision of the Hon....
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....of the assessee are exactly similar to the facts before the Hon'ble Calcutta High Court in the case of Betts Hartley Huett and Co. Ltd. (supra). In that case, it was held that the transaction between the head office of the assessee and its branch in India was a transaction between the principal and principal. In law, there cannot be a valid transaction of sale between the branch and its head office. As it is ultimately based on a proposition that no person can enter into contract with one self. Debiting or crediting one's account cannot alter the legal position. Applying the same principle as enunciated by the Hon'ble Calcutta High Court, it cannot be said that the transactions between the branches gave rise to an income assessable under the Income-tax Act. The substance of the entire transaction, in our view, appears to be pure accounting lapses on the part of the bank or its branches to properly reconcile the transactions. In fact, it is always understood that all these accounts must have cancelled each other. It did not take place that way due to human errors or lack of advice forthcoming as regards the closure of the accounts. In any case, any imbalance in the inter....
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....income in the hands of the bank. We must appreciate that these transactions in the inter branch accounts are mere accounting entries. When the transactions were made to these accounts initially, these were not in the nature of income either of the branches involved or of the bank as a whole. It is a part of transactions on the real accounts and not on what is known as revenue accounts. Therefore, it is difficult to say that the amounts in question bear the same character as unclaimed deposit received from the customers by the assessee T.V.Sundaram Iyengar & Sons Ltd. 34. In the light of the discussions of these facts, it is difficult to say that either the decision of the Apex Court in the case of T.V.Sundaram Iyengar & Sons Ltd. (supra) or other decisions including the decision of Hon'ble Delhi High Court in the case of CIT Vs. Rajasthan Golden Transport Co.(P} Ltd. - 249 ITR 723 are applicable to the facts of the case. In fact, the Hon'ble Delhi High Court in the case of Rajasthan Golden Transport Co.(P) Ltd. (supra) was concerned with the amounts received in the course of trade transactions. In the decision of the Hon'ble Delhi High Court, the amounts in question w....
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....nder section 115JB contending that provisions have no application to its bank. Having gone through the decision of the co-ordinate Bench in assessee's own case in ITA No.1757/Mds/2011 dated 2.4.2013, we find that the issue has been decided in favour of the assesse. Respectfully following the said decision, we uphold the order of the Commissioner of Income Tax (Appeals) and reject the grounds raised by the Revenue on this issue. 26. The last issue in the grounds of appeal of the Revenue is that Commissioner of Income Tax (Appeals) erred in holding that interest under section 244A is to be granted on the interest component of the refund also. 27. Departmental Representative placing reliance on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Gujarat Fluoro Chemicals (358 ITR 291) submits that assessee is not entitled for interest on interest. 28. Counsel for the assessee submits that co-ordinate Bench in assessee's own case in ITA No.1757/Mds/2011 dated 2.4.2013 for the assessment year 2006-07 remitted this issue back to the file of Assessing Officer to consider the issue in the light of the decision of Hon'ble Supreme Court in the case of Sandvik Asia Ltd. Vs. CIT....
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....ent already completed under section 143(3) of the Act is valid even when no tangible material was available with the Assessing Officer to reopen the assessment. Counsel submits that the details in respect of the issues on which reopening was done were already available with the Assessing Officer at the time of original assessment under section 143(3) of the Act, therefore reopening was based only on change of opinion and the assessment needs to be struck down as invalid on this ground. 33. Departmental Representative vehemently supports the order of lower authorities in reopening the assessment. 34. Heard both sides. Perused orders of lower authorities. The issue of reopening has been considered elaborately by the Commissioner of Income Tax (Appeals) and held that reopening in this case was made within a period of four years from the end of the assessment year and the reopening was made subsequent information available with the Assessing Officer and therefore reopening is valid. While holding so, the Commissioner of Income Tax (Appeals) observed as under:- "4.1. I have carefully considered the facts of the case and the submission of the Id. AR. The reopening in this case was ma....
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....e AO to apply his mind during original assessment to points on which assessment is reopened, reopening was treated as valid. 4.2.1 In view of the above judgments, I am of the considered opinion that there is no infirmity in reopening the assessment. The ground raised by the appellant, therefore, gets defeated. Now, let us move on to the merits of the case." 35. On going through the impugned order, we do not find any valid reason to interfere with the decision of the Commissioner of Income Tax (Appeals) in holding that reopening is valid. The grounds raised by the assessee on this issue are rejected. 36. Coming to the merits, ground no.2 is raised challenging the order of the Commissioner of Income Tax (Appeals) in upholding the computation of deduction under section 36(1)(viia) of the Act made by the Assessing Officer by considering the word "place" as appearing under Rule 6EA to mean " Panchayat" whereas the same should only be taken to mean "ward" in a rural area. Counsel for the assessee submits that this issue has been decided against the assessee by the co-ordinate Bench while disposing off the appeal in the assessment year 2009-10 in ITA No.1949/Mds/2012 dated 18.6.2014. ....
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....had also come up before the Tribunal in ITA No.818/Mds/2010 relevant to the assessment year 2007-08. The findings of the Tribunal are reproduced herein below:- "7. We have perused the orders and heard the rival submissions. The original claim, which was allowed by the Assessing Officer under Section 36(1)(viia) of the Act, was as follows:- 7.5% of Gross Total Income: Rs. 5,74,07,362 10% of Rural Advances (Rs. 27,26,50,990/-): Rs. 2,72,65,099 Rs. 8,46,72,461 Thereafter, assessee had moved in appeal against some of the additions made by the Assessing Officer on other issues and pursuant to the relief granted in such appeal, the gross total income which earlier stood at Rs. 76,54,31,493/- came down to Rs. 35,38,65,546/-. As a result of the reduction in gross total income, deduction under Section 36(1)(viia) was also scaled down from Rs. 5,74,07,362/- to Rs. 2,65,39,916/-. This sum when aggregated with 10% of rural advances coming to Rs. 2,72,65,099/-, resulted in the sum of Rs. 5,38,05,015/- being eventually allowed as deduction under Section 36(1)(viia) of the Act. In the books of the assessee, actual provision for bad and doubtful debts was only Rs. 4,01,44,027/-. A....
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....n abundant caution, to deal with a situation where banks are not to suffer shock of sudden delinquency that could happen in future. There is always a possibility that an asset, which is fully recoverable, may not be so at future date. Nevertheless, possibility of happening of such a contingency cannot be a sufficient reason to consider a provision made on standard assets also as a provision for bad and doubtful debts. Therefore, claim of the assessee that provision for standard assets also has to be considered for applying the condition set out under Section 36(1)(viia) is not in accordance with law. If the provision for standard assets is not considered as provision for bad and doubtful debts, the actual provision for bad and doubtful debts made by the assessee in its books Rs. 4,01,44,027/- fall much below the sum of Rs. 5,38,05,015/- allowed by the Assessing Officer. In any case, a look into the original assessment order clearly show that but for the deduction allowed to the assessee as claimed by it in its return, there was no discussion as to how Section 36(1)(viia) was applied and whether the limits were corrected worked out. Admittedly, no question was asked to the assessee ....
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....assessee claimed deduction under section 36(1)(viia) on the total income of the bank including income of the merged entity Bharat Overseas Bank Ltd. also. The Assessing Officer while completing the assessment restricted the deduction only on the income of the assessee bank on the ground that income of Bharat Overseas Bank Ltd. already enjoyed all the benefits of deduction under section 36(1)(viia) of the Act. On appeal, the Commissioner of Income Tax (Appeals) allowed the claim of the assessee. 44. Departmental Representative vehemently supports the order of the assessment in not allowing deduction under section 36(1)(viia) on the income of Bharat Overseas Bank Ltd. 45. Counsel for the assessee relied on the order of the Commissioner of Income Tax (Appeals) 46. Heard both sides. Perused orders of lower authorities. We find that this issue has been considered by the Commissioner of Income Tax (Appeals) and allowed claim of the assessee observing as under:- "5.6 On the issue of exclusion of income of the erstwhile Bharat Overseas Bank Ltd, the AO has excluded the said income on the contention that the proportionate income of erstwhile Bharat Overseas Bank Ltd included in the han....
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....unal while rejecting the appeal of the Revenue held as under:- "56. Now we come to the additional ground which raises issue of computation of average of advances for allowing deduction u/s 36(1)(viia). The relevant pleadings read as follows: "The CIT(A) erred in directing the AO to consider the aggregate average advances outstanding at the end of each month and not the incremental advances granted during each month, in computing the deduction u/s 36(1) (viia). The CIT(A) ought to have appreciated that as per clause (a) of Rule 6ABA, the sum to be reckoned for deduction u/s 36(1 )(viia) has to be computed on advances made by the rural branch during the previous month & the same should be outstanding as at the end of the month. The assessee in its claim for the current year, had considered the closing balances of advances made as on 31.3.2008. This amounts to double deduction of the same amount since closing balance as on 31.3.2008 was already considered for deduction u/s 36(1 )(viia) for the earlier previous year. The CIT(A) ought to have appreciated this fact and upheld the disallowance of excess deduction u/s 36(1 )(viia). The CIT(A) erred in following the decision in the ....
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....onal ground." 52. Respectfully following the above order of this Tribunal, we reject the grounds raised by the Revenue for the assessment year 2007-08 also. 53. The last issue in the appeal of the Revenue is that the Commissioner of Income Tax (Appeals) erred in holding that the interest under section 244A is to be granted on the interest component of the refund also. 54. This issue has been decided in favour of the Revenue in para no.29 of this order in ITA No.1951/Mds/2013. For the reasons and conclusions arrived therein, the grounds raised by this Revenue on this issue for the assessment year 2007- 08 are allowed. ITA No.2126/Mds/2013:- 55. This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals), LTU, Chennai dated 20.9.2013 for the assessment year 2010-11 arising out of the assessment order passed under section 143(3) of the Act. 56. The first issue in the appeal of the assessee is that Commissioner of Income Tax (Appeals) erred in upholding the computation of deduction under section 36(1)(viia) made by the Assessing Officer by considering the word "Place" as appearing in Rule 6EA to mean the "Panchayat" whereas the same should ....
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.... the above order of the co-ordinate Bench of this Tribunal in ITA No.1815/Mds/2011 dated 2.4.2013 and find that the Tribunal has decided both these issues against the assessee by dismissing the grounds observing as under:- "4. The third ground of appeal of the assessee is regarding restriction of claim in respect of deduction under section 36(1)(viia) to the extent of provision made in the books. The A.R. for the assessee has conceded that this issue has already been decided against the assessee bank in the case of Bharat overseas Bank Ltd. in ITA No.1191/Mds/2012. This issue had also come up before the Tribunal in ITA No.818/Mds/2010 relevant to the assessment year 2007-08. The findings of the Tribunal are reproduced herein below:- "7. We have perused the orders and heard the rival submissions. The original claim, which was allowed by the Assessing Officer under Section 36(1)(viia) of the Act, was as follows:- 7.5% of Gross Total Income: Rs. 5,74,07,362 10% of Rural Advances (Rs. 27,26,50,990/-): Rs. 2,72,65,099 Rs. 8,46,72,461 Thereafter, assessee had moved in appeal against some of the additions made by the Assessing Officer on other issues and pursuant to the....
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....any debts which had become doubtful. Standard assets are always considered recoverable, in the sense, bank has no doubt of recoverability. When the bank itself has treated such assets as good and recoverable, any provision made on such assets cannot be considered as a provision for bad and doubtful debts. The debt itself being good, a provision made on good debt cannot be considered as a provision for bad and doubtful debts. May be, the RBI has made a regulation for 10% provision for standard assets also a prudential norm. This can however be considered as a measure prescribed in abundant caution, to deal with a situation where banks are not to suffer shock of sudden delinquency that could happen in future. There is always a possibility that an asset, which is fully recoverable, may not be so at future date. Nevertheless, possibility of happening of such a contingency cannot be a sufficient reason to consider a provision made on standard assets also as a provision for bad and doubtful debts. Therefore, claim of the assessee that provision for standard assets also has to be considered for applying the condition set out under Section 36(1)(viia) is not in accordance with law. If the ....
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....oner of Income Tax (Appeals) failed to appreciate that since all the investments held by the appellant constitutes its stock-in-trade the provisions of section 14A are not applicable and hence no disallowance is called for. 63. Counsel for the assessee submits that assessee bank is holding securities as stock-in-trade, when once securities are held as stock-in-trade, no disallowance under section 14A is warranted. The counsel submits that co-ordinate Bench of this Tribunal decided similar issue for the assessment year 2009-10 in ITA No.1949/Mds/2012 dated 18.6.2014. Referring to the said order, counsel submits that in principle, the Tribunal decided the issue in favour of the assessee holding that provisions of section 14A have no application when the securities are held as stock-in-trade. However, the Tribunal remitted the matter to the file of the Assessing Officer to ascertain whether securities are held as stock-intrade. 64. Departmental Representative places reliance on the orders of lower authorities in invoking provisions of section 14A read with Rule 8D for the purpose of disallowing expenditure attributable for earning dividend income. 65. We have perused the order of c....
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....of investments held as 'stock-intrade' wherein the 'exempt' income by way of dividends is only incidental. It is also made clear that since there is no verification of the factual position of investments held as 'stock-in-trade', we accept the assessee's contentions in principle only and remit the issue back to the Assessing Officer to determine the true factual position. The assessee's alternative plea carries only an academic significance. The relevant ground is accepted for statistical purposes." 66. Since the facts and circumstances are identical, following the said decision of this Tribunal, we allow the ground raised by the assessee. 67. The next issue in the appeal of the assessee is that Commissioner of Income Tax (Appeals) erred in not allowing deduction in respect of contribution to staff welfare fund overlooking the mandatory requirement of payment as an employer. 68. At the time of hearing, counsel for the assessee submits that this issue has been decided against the assessee by the co-ordinate Bench for the assessment year 2008-09 in ITA No.1815/Mds/2011 dated 2.4.2013 in para 14 of the order. Respectfully following the said order of this Tribunal, we dismiss the gr....
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....nner during the accounting period, it formed part of the liability incurred by the bank actually in the next accounting year and the bank has not claimed the amount for that year. The expenditure is an business expenditure allowable under section 37 of the Act. Now, the question is when such expenditure should be allowed: Whether it should be allowed in the assessment year relevant to the financial year in which Memorandum of Understanding was signed or in the year of actual payment? The learned AR has stated that the expenditure may be allowed in the year of actual payment. In view of the above discussion and the statement made by the learned AR, we hold that the amount claimed by the assessee towards wage revision be allowed in the year of actual discharge of the said liability. This ground of appeal of the Revenue is thus partly allowed. Since, the issue in hand is identical to the one already adjudicated by the Tribunal, the present ground of appeal is partly allowed for the aforesaid reasons." 74. Respectfully following the said decision, we hold that provision made towards wage arrears is only a provision and liability has not been crystallized. The wage arrears shall be a....
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....he above stated tax jurisdictions. Simultaneously, the Assessing Officer held that on furnishing details on assessee's part, the claim would be allowed in its favour. This resulted in disallowance/addition of Rs. 55,65,44,48/-. 24. In lower appellate order, the CIT(A) has quoted a notification No.S.O 2123(E) dated 28.8.2008 reported as 304 ITR(St.)63, clarifying that in such a case involving a DTAA, an income has to be included in the total receipts and the necessary relief is to be granted by 'elimination' method or as per the terms of agreement seeking to avoid double taxation. He relies upon Finance Act, 2012 inserting explanation 3 to section 90 making the notification retrospectively applicable. In this manner, the CIT(A) has directed the Assessing Officer to allow relief to the assessee as per the aforesaid notification. 25. We have heard both parties and gone through the relevant findings in the orders of Assessing Officer as well as the CIT(A). The parties are unanimous before us that this very issue stands decided in the Revenue's favour by the 'tribunal' (supra) in preceding assessment year. So, we also follow suit and reject the assessee's relevant grounds." ....
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....98-99 for making the impugned disallowance. 45. In lower appellate order, the CIT(A) has quoted his predecessor's orders for assessment years 2005-06 and 2008- 09(supra) as well as various decisions stated herein below: UCO Bank vs CIT 240 ITR 355 (SC) CIT vs City Union Bank Ltd 291 ITR 144 (Mad) Bharat Overseas Bank Ltd vs ACIT I.T.A.No. 239/Mds/2001 dated 7.1.2005 Indian Bank vs DCIT I.T.A.No.984/Mds/2003 dated 30.6.2011 Accordingly, the impugned disallowance stands deleted. 46. Coming to this issue as well, the parties express unanimity in referring to order of the 'tribunal' for assessment year 2008- 09(supra) to state that the very issue stands decided in the assessee's favour. Consequently, we agree with the CIT(A)'s findings and reject the relevant Revenue's ground." 85. Respectfully following the said decision, we uphold the order of the Commissioner of Income Tax (Appeals) and reject the grounds of appeal of the Revenue. 86. The next issue in the appeal of the Revenue is that Commissioner of Income Tax (Appeals) erred in deleting disallowance of loss on revaluation of derivative contracts. The counsel for the assessee submits that this issue has also ....
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....g Officer. Counsel for the assessee submits that this issue has been decided in favour of the assessee for the assessment year 2009-10 in ITA No.1949/Mds/2012 dated 18.6.2014 at page 10 & 11 in para 16 to 18 of the order in restricting depreciation to 15% as against 80% claimed by the assessee. 90. On perusal of the above decision, we find that the depreciation on UPS was allowed by this Tribunal at 60% observing as under:- "16. The assessee's fifth ground raises issue of depreciation on UPS claimed @ 80%. The Assessing Officer treated it as general plant and machinery and restricted it to 15% of the total value of Rs. 12,49,63,955/- resulting in consequential addition of Rs. 5,89,08,262/-. In doing so, he drew support from the ITAT Delhi and Jodhpur benches' decisions to hold that a UPS is neither part of a computer nor an energy saving device but only an equipment to ensure uninterrupted power supply. 17. In lower appellate order, the CIT(A) has agreed with the Assessing Officer's findings treating the UPS in question as part of general plant and machinery only. 18. We have heard both parties and gone through the case file. It emanates from the tabulation that the very dep....
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....hing contained in this section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return." 21. The Hon'ble Calcutta High Court in the case of Exide Industries (supra) has held that the original enactment of section 43B of the Income Tax Act was to curb unreasonable deduction on the basis of the mercantile system of accounting without discharging statutory liabilities on the one hand and claim appropriate benefit under the Act on the other introduced the provisions of section 43B(f). Under clause (f) of section 43B any sum payable by the employer to its employees as leave encashment shall be deductible only in computing the income referred to in section 28 of that previous year in which the sum is actually paid by the employer to its employees." The Hon'ble High Court further held that "while inserting the clause (f) no special reasons were disclosed. Without such re....
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....de to his employees but also the present value of any payments in respect of their services in that year to be made in a subsequent year if it can be satisfactorily estimated. So is the view taken in Calcutta Co. Ltd. v. CIT [1959] 37 ITR 1 (SC) wherein this court has held that the liability on the assessee having been imported, the liability would be an accrued liability and would not convert into a conditional one merely because the liability was to be dis- charged at a future date. There may be some difficulty in the estimation thereof but that would not convert the accrued liability into a conditional one ; it was always open to the tax authorities concerned to arrive at a proper estimate of the liability having regard to all the circumstances of the case. Applying the above said settled principles to the facts of the case at hand we are satisfied that the provision made by the appellant-company for meeting the liability incurred by it under the leave encashment scheme proportionate with the entitlement earned by employees of the company, inclusive of the officers and the staff, subject to the ceiling on accumulation as applicable on the relevant date, is entitled to deduct....