TMI Blog2016 (1) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, we do not find any merit in the conclusion draw by ld. CIT (A).Thus the orders of ld. CIT (A) as well as AO are hereby set aside. We also find that the case of the assessee is covered by the decision of the ITAT Jaipur Bench in the matter of Jhalawar Kendriya Sahakari Bank Ltd. vs. ACIT [2014 (8) TMI 1127 - ITAT JAIPUR] whereby the claim of the assessee was allowed. - Decided against revenue - ITA No. 169/JP/2015 - - - Dated:- 8-1-2016 - T. R. Meena (Accountant Member) And Laliet Kumar (Judicial Member) For the Assessee : Ajay Somani (C.A.) For the Revenue : Kalika Singh (CIT) ORDER Laliet Kumar (Judicial Member) The appeal filed by the assessee is arising from the order dated 05.12.2014 passed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of such provision of pay revision. The assessee vide its reply dated 21.03.2013 has explained as under : The basis of the provision has been the same as was in previous year. The amount of provision in previous year and current year was calculated 12% of the establishment expenses which has been the basis of eight bipartite settlement signed on 02.06.2005 and was applicable from 01.11.2002. Under the settlement wage/pay revision way 13.25% of the establishment expenses. The assessee bank has also made the provision @ 12% which is less than of 13.25%. The actual payment has been made on 24.09.2010 ₹ 764.10 lacs the total provision of ₹ 565.00 lacs (425 lacs for the F.Y. 2008-09 + 140.00 lacs for the F.Y. 2009-10) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this regard has been furnished. Thus, the AO disallowed 10% of provision made i.e. a sum of ₹ 14.00 lacs has been disallowed and added to the total income of the assessee. 3. Being aggrieved by the order of AO, the assessee has carried the matter before ld. CIT (A). The ld. CIT (A) after considering the assessment order and submissions made by the assessee, observed that no proper basis and justification for making the provision was furnished in the course of assessment proceedings. The ld. CIT (A) opined that whole amount of adhoc provision made by the appellant in the account books needs to be disallowed rather than making a 10% disallowance of the amount. He, accordingly asked the assessee to show cause u/s 251(2) of the IT A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 278, 807, 1578 313/2010 by Hon ble High Court of Delhi. 3.2. The ld. CIT (A) while considering the submissions of the assessee, was of the view that the provision made by the bank for pay revision of employees in the books of accounts over a period of 2-3 years, will remain only a provision till the liability to pay the revised pay arises. The liability to pay would arise only when an agreement/settlement is reached by the bank with the employees. The agreement with the employees would entail determining the quantum of pay revision which is to be given to each employee and also the date from which the pay revision would become effective. Therefore, the liability would accrue only in the year in which such an agreement is signed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly be deleted. 4.2. On the other hand, the ld. D/R supported the order of the ld. CIT (A) and requested to confirm the disallowance. 4.3. We have heard rival contentions and perused the material available on record. The ld. A/R of the assessee contended that in the immediately preceding assessment year 2009-10 the claim of the assessee in respect of provision of pay revision of employees was accepted by the ld. CIT (A) after taking into consideration the judgments of Hon ble High Courts and the ITAT. The ld. D/R could not controvert the claim of the assessee. The AO has only disallowed ₹ 14.00 lacs i.e. 10% of the adhoc provision made by the appellant in the books of account. Against the said disallowance, the assessee was in ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me due when the pay revision is accepted by the employees. In our view, the employees are entitled to revised pay from the date it was due and payable by the employer. However, the quantum may vary, as in the present case, initially the revision was estimated @ 13.25%, however, later on it was crystallized @ 17.5%. The provision in the present case was made on the basis of 13.25%, however, later on it was required to be revised and in fact revised @ 17.5%. Therefore, we do not find any merit in the conclusion draw by ld. CIT (A).Thus the orders of ld. CIT (A) as well as AO are hereby set aside. We also find that the case of the assessee is covered by the decision of the ITAT Jaipur Bench in the matter of Jhalawar Kendriya Sahakari Bank Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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