TaxTMI 
TaxTMI 
2016 (5) TMI 1634
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....g to Rs. 1,38,92,020/- made under the head of 'post retirement benefits' ignoring the fact that the Revenue is in Hon'ble ITAT in the previous year on the same issue.." 3. Brief facts, relating to the issue in question, are that during the year under consideration the assessee had debited an amount of 1,38,92,020/- in its P&L a/c under the head Post Retirement Medical Benefits. The AO required the assessee to explain as to how this liability was paid. In response, the AR of the assessee, on 15.1.2013, submitted written reply, inter alia, as under: "Post Retirement Benefits :- The company is a public sector undertaking under the Ministry of Commerce & Industry. The company has a Post Retirement Medi~al Benefits Scheme (P....
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....the Chartered Accountants Act, 1949 (38 of 1949) as may be prescribed by the Central Government in consultation with National Accounting Committee on Accounting Standards established under sub-section 1 of section 210A. The companies are also required to keep their accounting books by following accrual system of accounting as prescribed under section 209(3) of the Companies Act. 1956. The Institute of Chartered Accountants of India (ICAI) had issued Accounting Standard 15 (AS-IS) titled as "Employee Benefits". Amongst other retirement benefits, the standard provide for making provisions in respect of Gratuity. Leave Encashment and Post Retirement Health and Welfare Schemes. It is also stated in the Para 2 of the A....
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.... (iii) The liability is incurred and accounted in respect of the business of the assessee company. The liability created by the is in respect of employees who are either in service or have retired from the service. Since the services are rendered by the employees during the period of their active employment with the employer, the future cost, post retirement, is expected to be evenly charged on scientific method to the current period so that the profits are determined for taxation purposes. If such a liability is not accounted and provided for a future year would be saddled with huge expenditure in respect of the service of the employees which were rendered during active employment i.e. pre-retirement. The expenditu....
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....ed by the AO are clearly distinguishable. It was also pointed out by the appellant's AR in his letter dated 15.09.2011 that the AO had allowed in this assessment year itself similar liabilities based on actuarial valuation on gratuity and leave encashment provision s: Further it was pointed out that on the principle of consistency this provision needs to be allowed as similar provision for post retirement medical benefits was allowed in scrutiny assessments for A.Y. 2006-07 and 2007- 08. Therefore, this provision of Rs.1,15,45,360/- towards post retirement medical benefits is also an allowable deduction u/s 37(1) of the I.T. Act, 1961 and hence is allowed and thus the ground No.2 is fully allowed." 6.4. I am of the view that th....