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2024 (1) TMI 53 - ITAT MUMBAIDisallowance of the provisions made for leave encashment - such provision was made on the basis of actuarial valuation carried out by the assessee and that leave encasement was not a statutory liability for the assessee - HELD THAT:- The assessee is entitled to deduction of any such on this account subject to payment. Section 43B of the Act as noted is an overriding provision which allows deduction for the purpose of computing income u/s 28 of the Act only if actual payment has been made. The Parliament has inserted clause (f) after the judgment of the Hon’ble Supreme Court in Bharat Earth Movers. [2000 (8) TMI 4 - SUPREME COURT] to eschew the mischief of claim of deduction (leave salary) without making actual payment. Mischief Rule/Heydon’s Rule is really a sub-rule of ‘Purposive Construction Rule’. It is well accepted cannon of statutory construction that it is the duty of the court to further Parliament’s aim of providing a remedy for the mischief against which the enactment is directed and the court should prefer a construction which advances this object rather than one which attempts to find some way of circumventing it. (Refer RBI Vs. Peerless General Finance [1996 (1) TMI 332 - SUPREME COURT]). Even if we apply the purposive construction and look at the purpose of introducing clause (f) in section 43B of the Act with effect from 01.04.2002 (by Finance Act, 2001) after the Hon’ble Supreme Court decision in Bharat Earth Movers Ltd [ supra] the Legislative intent is clear that in computing the income of an assessee in a previous year u/s 28 of the Act, the assessee be allowed deduction of any sum which is actually paid; and clause (f) read with Explanation 3B makes it clear that Post 01.04.2001, deduction of any sum on account of payment towards employees leave encashment would be allowed only in the previous year when assessee makes actual payment. A literal interpretation of relevant section 43B of the Act also supports the view of CIT(A), therefore, the action of Ld. CIT(A) is legally sustainable and so it is upheld. Appeal of assessee stands dismissed.
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