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2015 (4) TMI 174 - AT - Income TaxDisallowance of leave encashment - Whether on facts and circumstances of the case, the CIT(A) ought to have followed the decision of the jurisdictional High Court in the case of CIT vs. Hindustan Latex Ltd. [2012 (6) TMI 713 - KERALA HIGH COURT ] and deleted the disallowance of provision for leave encashment amounting to ₹ 24.37 crores - Held that:- issue is fully covered by the judgment of the Hon’ble Kerala High Court in the case of the South Indian Bank Ltd. vs. CIT reported in [2014 (2) TMI 1080 - KERALA HIGH COURT] wherein the Apex Court held that it pertains to the provision made for leave encashment and the disallowance was u/s. 43B(f). Therefore, the said disallowance is justified. In view of this, we are inclined to decide the issue against the assessee. Whether on facts and circumstances of the case, the CIT(A) erred in confirming the action of the Assessing officer in assessing interest/commission received upfront on inland/export bills purchased/discounted/LCs opened - Held that:- assessee has transferred an amount of ₹ 27.64 crores towards other liabilities out of the interest received upfront on inland bills and export bills purchased/discounted. Though initially, the full amount received is credited to the P&L account as it was received by the assessee, at the time of preparing final accounts, proportionate interest relating to the remaining period of maturity of the bills was transferred from the P&L account to unexpired interest/discount/commission in the balance sheet. According to the Ld. AR, this amount is not accrued to the assessee and since the assessee can charge interest only on the borrower, such income is apportioned on the basis of period of time. In our opinion, when bills are discounted, the transaction is completed and income is accrued to the assessee and there is no question of postponement of recognition of income. Hence, in our opinion, the lower authorities are justified in treating the amount accrued as income of the assessee - Decided against assessee.
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