Relief to Thomson Press India: ITAT directs to consider Claim in the Year when Actual Payment is made towards Leave Encashment [Read Order]

In a major relief to Thomson Press (India) Ltd, the New Delhi Bench of the Income Tax Appellate Tribunal (ITAT), directed the Assessing Officer (AO) to consider the claim in the year when actual payment is made towards leave encashment.

For AY 2013-14 the assessee e-filed its return declaring loss of Rs. 11 crores. The Assessing Officer (AO) completed the assessment on total loss of Rs. 3 crores under section 143(3) of the Income Tax Act, 1961 making an aggregate disallowance under various heads. On appeal by the assessee, the CIT(A) allowed part relief. The assessee is in appeal in respect of disallowances retained by theCIT(A).

On query, it was stated by the assessee that leave encashment was claimed on accrual basis following the decision of Calcutta High Court in CIT vs. Exide Industries Ltd.

The Counsel for the assessee submitted that it was brought to the notice of the CIT(A) that the AO has disallowed the provision for sick leave which has already been disallowed by the assessee in its computation of taxable income. Therefore, sustenance thereof will amount to double disallowance. For the balance sum the counsel fairly admitted that the matter be restored to the file of the AO.

The Tribunal of GS Pannu, President and Astha Chandra, Judicial Member observed that “The submission of the assessee regarding suo-moto disallowance of provision of sick leave needs verification. We, therefore, set aside the order of the CIT(A) and restore the matter back to the file of the AO. If on verification, it is found that the sum has doubly been disallowed, the AO shall modify the assessment allowing the relief due to the assessee.”

The Bench further directed the AO to consider the claim of the assessee in the year when actual payment is made towards the leave encashment.

To Read the full text of the Order CLICK HERE

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