2025 (3) TMI 2064

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....he order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') dated 13.01.2023 by the Assessing Officer, Assessment Unit, Income Tax Department (hereinafter referred to as 'ld. AO'). 2. The only issue to be decided in this appeal is as to whether the provision made for leave encashment on the basis of actuarial valuation could be considered as an application of income in the facts and circumstances of the instant case. 3. We have heard the rival submissions and perused the material available on record. The assessee is a State University created by an Act of Govt. of NCT of Delhi and functions under the aegis of the Department of Training and Technical Education, Govt. of NCT of Delhi. The ....

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....e encashment on the ground that the same was not actually expended by the assessee and hence cannot be treated as application of income. It is not in dispute that the assessee trust is following accrual system of accounting and had actually funded the leave encashment liability separately. Under accrual system of accounting, the assessee would be eligible to claim an expenditure as an application of income irrespective of its actual payment. In any event, the provision made for leave encashment on the basis of actuarial valuation is a genuine and ascertained liability as on 31.03.2021 and hence, in our considered opinion, it becomes a item eligible to be treated as an application of income for charitable purposes. In this regard, the decisi....