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2023 (7) TMI 19 - ITAT CHENNAIDeduction of provision for leave encashment / unearned leave - AO has disallowed actual payment towards leave encashment on the ground that it has credited to provision for leave encashment - It was the claim of the appellant that the reduction in the provision for leave encashment has been withdrawn from liability from the provision for leave encashment shown in the balance sheet, but instead of crediting it to the liability account, the amount has been reduced (credited) to the actual amount of leave encashment paid to the employees during the year - HELD THAT:- The assessee has filed a detailed note explaining the actual payment of leave encashment and amount withdrawn from provision for leave encashment. We find that the arguments of the assessee appears to be correct, going by method of accounting followed by the assessee for claim of deduction towards payment for leave encashment and provision for leave encashment in the books of accounts. But fact remains that, facts needs to be verified from the AO. Therefore, we set aside the issue to the file of the AO and direct the AO to re-examine the claim of the assessee in light of arguments that the assessee is making provision for leave encashment in the books of accounts and adding back the same in the memo of computation of taxable income and further claiming deduction towards payment for leave encashment u/s. 43B(f) - AO is directed to verify the claim of the assessee and decide the issue in accordance with law. Appeal filed by the assessee is allowed for statistical purposes.
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