2008 (2) TMI 383

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....     C.N. Ramachandran Nair &                       T.R. Ramachandran Nair, JJ.          JUDGMENT C.N. Ramachandran Nair, J. This is an appeal filed by the Revenue under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal allowing deduction of around Rs.1.86 crores towards wage increase payable by the assessee to the employees during the previous year under an agreement signed in the subsequent year. The respondent assessee is a Kerala Government undertaking engaged in kury business and financing. The wage settlement with the employees ....

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....n this case is contingent in nature and therefore not an admissible deduction. The assessee on the other hand, relied on the decision of the Supreme Court in Bharath Earth Movers v. Commissioner of Income Tax (245 ITR 428), the decision of the Rajasthan High Court in C.I.T. v. Premier Vegetable Products ( 227 ITR 931) and the decision of the Bombay High Court in United Motors India Ltd. v. Commissioner of Income Tax (181 ITR 347) and contended that liability for increased wages, though ascertained and discharged in the subsequent year being liability of the previous year is an allowable deduction. It is the admitted fact that wage settlement that was prevailing between the management and the employees expired on 31.7.1992, i.e. during the p....