In a recent ruling, the Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) allowed the assessee Goldman Sachs to claim deduction for leave encashment paid before the due date of ITR filing under Section 43B(f) of the Income Tax Act, 1961.
In this case, the assessee, Goldman Sachs (India) Securities Pvt. Ltd., had raised several grounds in its appeal before the ITAT, and one of the grounds was concerning the disallowance of a deduction for leave encashment of INR 63,94,246 under Section 43B of the Income Tax Act for AY 2017-18.
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The assessee argued that the payment was made before the due date for filing the return of income under Section 139(1) of the Income Tax Act, 1961, and claimed the deduction under Section 43B(f) of the Income Tax Act. The lower authorities denied the claim, stating the amount was not paid during the relevant previous year (2016-17).
The ITAT observed that since the payment of Rs. 63,94,246 towards leave encashment was made on or before the due date of filing the return of income, the same is allowable under Section 43B(f) of the Act.
The Mumbai ITAT, comprising Amarjit Singh ( Accountant Member ) and Sandeep Singh Karhail ( Judicial Member ) held that since the payment of Rs. 63,94,246 towards leave encashment was
made on or before the due date of filing the return of income and that the same is allowable under Section 43B(f) of the Income Tax Act.
The bench allowed the ground raised by the assessee.
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