Commissioner, Income Tax v. H.p.tourism Development Corporation Ltd

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA -ITA Nos.28 & 29 of 2012B. Decided on: May 16,2013. ITA No.28 of 2012 & ITA No.29 of 2012: Commissioner, Income Tax ...Appellant.. VERSUS H.P.Tourism Development Corporation Ltd.. CoramThe Hon’ble Mr. Justice A.M. Khanwilkar, Chief Justice. The Hon’ble Mr. Justice R.B.Misra, Judge. …Respondent. Whether approved for reporting? Yes For the Appellant: Mr.Vinay Kuthiala, Sr.Advocate with Mrs.Vandana Kuthiala, Advocate. For the Respondent: Mr.Vishal Mohan with Mr.Rattan Thakur, Advocates. ______________________________________________________________ Justice A.M. Khanwilkar, C.J. (Oral) Heard counsel for the parties. 2. These appeals have been filed by the Department on the assertion that it raises substantial question of law as follows:- “Whether the provision made by the assessee for leave encashment is not an ascertained liability and is thus liable to be added to the “book profit” under explanation 1 to Section 115 JB of the Income Tax Act, 1961?” In both these appeals, the Assessing Officer, relying on the decision of the Calcutta High Court, in the case of CIT versus Bharat General & Textile Mills Ltd.[1] held that the provision made by the respondent in the books of account towards leave encashment of employees for the relevant period was unascertained liability and, therefore, was required to be disallowed. The Appellate Tribunal, however, over turned that finding recorded by the Assessing Officer. The Appellate Tribunal accepted the plea of the respondent that the provision made by the respondent in the concerned accounting year was in respect of “ascertained and definite liability” of the respondent towards leave allowance to be paid to the employees. Consistent with that finding, the Appellate Tribunal, relying on the decision of the Apex Court in the case of Bharat Earth Movers versus Commissioner of Income Tax[2]allowed the appeal and was pleased to set aside the assessment order to the extent disallowing the amount towards leave allowance to be paid to the employees. The Appellate Tribunal allowed the claim of the respondent assessee. It is not open for this Court to over turn the finding of fact so recorded by the Appellate Tribunal and, moreso, when the issue is already covered by the decision of the Apex Court in the case of Bharat Earth Movers. It will be apposite to advert to the exposition of the Apex Court in the said decision, which reads thus:- 1 1986 157 ITR 158 (Cal) 2 (2000) 245 ITR 428 “The law is settled: if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liabilitymay have to be quantified and discharged at a future date. What should be certain is the incurringof the liability. It should also be capable of being estimated with reasonable certainty though theactual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in praesenti though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain.” (Emphasis supplied) 3. The argument of the appellant that the finding recorded by the Tribunal is in-appropriate, cannot be the basis to admit these appeals and, moreso, when the substantial question, formulated by the Department, already stands answered by the decision of the Apex Court in Bharat Earth Movers (supra). Hence, dismissed. (A.M. Khanwilkar) Chief Justice 16[th] May, 2013. (sl/s) ( R.B.Misra ) Judge