D.B. Corp.Ltd.,, Ahmedabad vs Department Of Income Tax

सुनवाई क तार ख/ Date of Hea ring : 15/04/2015 घोषणा क तार ख /Date o f Prono unceme nt: 17/04/2015

आदेश /O R D E R

PER: S. S. GODARA, JUDICIAL MEMBER

This Revenue's appeal for A.Y.2007-08 arises from order of the CIT(A)-VI Ahmedabad order dated 4.2.2011 in case no.CIT(A)- VI/Addl.CIT/R.1/346/10-11, deleting addition of Rs.29,71,752/- made on account of provision for Leave Encashment in book profits computed u/s. 115JB, in proceedings u/s.143(3) of the Income Tax Act (in short "the Act").

2. The assessee-company is in the business of newspaper publication and windfarm. It has filed its return on 31.10.2007 ITA No.834/Ahd/2011 D.B. Corp Ltd.

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declaring loss of Rs.84,99,417/- as per normal computation and book profits of Rs.67,29,80,215/- u/s.115JB of the Act. This was followed by a revised return reducing book profits to Rs.65,13,42,627/-. The same was summarily processed.

3. The Assessing Officer took up 'scrutiny'. He inter alia noticed the assessee not to have added its leave encashment provision in computation of book profits. The assessee's books had stated it to have been accrued on the basis of actuarial valuation. The Assessing Officer in assessment order dated 29.12.2009 held that the same had to be added under section 115JB Explanation 1 clause (c) for computing book profits.

3. The assessee carried the matter in appeal. The CIT(A) hold that as per the decision of hon'ble Punjab & Haryana High Court in case of CIT Vs. National Hydroelectric Power Corporation Ltd. ITA No.385 of 2009 decided on 06.07.2010, a leave encashment provision on actuarial basis cannot be treated as an unascertained liability under the aforesaid statutory provision. He has allowed the assessee's appeal. This leaves the Revenue aggrieved.

4. We have heard both sides and gone through the relevant findings. The Revenue seeks to restore the impugned addition on account of provisions for leave encashment of Rs.29,71,752/- in computing book profits u/s.115JB Explanation (1) Clause (c) of the Act reading as under:

ITA No.834/Ahd/2011 D.B. Corp Ltd.

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"the amounts or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities."

The picture that emerges from a perusal of the aforesaid statutory provision is that only provisions for unascertained liabilities are to be added in book profits. It is a settled law by now in view of hon'ble Supreme Court decision in Bharat Earth Movers Vs. CIT as reported in (2000) 112 Taxman 61 (SC) that a leave encashment provision is an ascertained liability. The hon'ble Punjab and Haryana high court (supra) holds that such a provision based on actuarial valuation is an ascertained liability. That being the factual position, we observe that a leave encashment provision on actuarial basis is an ascertained liability not to be added u/s.115JB Explanation 1 Clause (c) of the Act. The CIT(A)'s order under challenge is upheld.

4. The Revenue's appeal is dismissed.

Order pronounced in the open court on this the 17th day of April, 2015.

Sd/- Sd/-

(G. D. AGARWAL) (S.S. GODARA) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 17/04/2015 Prabhat Kr. Kesarwani, Sr. P.S.s आदेश क त ल प अ े षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. संबं धत आयकर आयु त / Concerned CIT

4. आयकर आयु त(अपील) / The CIT(A)-III, Ahmedabad ITA No.834/Ahd/2011 D.B. Corp Ltd.

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5. वभागीय त न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

आदेशानुस ार / BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad