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2021 (9) TMI 439 - AT - Income TaxAlllowability of claim of arrears of salary - Ascertained or crystallized liability of the current year or not - coperative bank Allowability of remaining provision of payments towards surrender leave, bonus and ex-gratia etctowards arrears of salary - pay commission recommendation against the assessee co-operative bank - what is the relevant point of time the liability of the assessee towards arrears of salary has actually crystallized and not the year to which such arrears of salary pertains? - HELD THAT:- In agreement as been executed between the assessee co-operative bank and its employees and staff members on 16.04.2012 towards implementation of the 14th pay commission recommendations and finally, major payments towards arrears of salary have happened during November 2012 - liability of the assessee cooperative bank to implement 14th pay commission recommendation arose on adoption of resolution at its meeting of the Board of Directors read along with execution of agreement with its employees and staff members. Prior to these two significant events which happened during the financial year 2012-13, it cannot be said that the assessee cooperative bank has decided to implement and enforce 14th pay commission recommendation in respect of its employees and on same analogy, prior to these two significant events, even the employees were not having any legally enforceable claim to implement 14th pay commission recommendation against the assessee co-operative bank. Crystallization of liability to pay arrears of salary and other payments towards surrender leave, bonus and ex-gratia etc. as per 14th pay commission recommendation arose during the financial year 2012-13 relevant to subsequent assessment year 2013-14 and not during the current financial year 2011-12 relevant to impugned assessment year 2012-13. The assessee co-operative bank therefore shall be eligible to claim the same in the subsequent assessment year 2013-14 and not in the impugned assessment year. AO is well within his jurisdiction to examine all such claims and the assessee is required to justify such claims and demonstrate with reasonable verifiable evidence that such liability has crystallized during the year under consideration. Grounds so taken by the assessee co- operative bank for allowability of claim of arrears of salary is hereby dismissed.
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