TMI Blog2013 (6) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. Accordingly nothing wrong in the order of the CIT(A) and confirm the same. In favour of assessee. Provision for staff incentive - whether an unascertained liability or not? - MAT - Held that:- As decided in assessee's own case wherein no evidence has been filed before AO in respect of particular policy followed by the assessee- company in respect of staff incentive. The copy of scheme has also not been filed. However, at the same time the AO also rejected the issue summarily without asking for the scheme for incentive claimed from the assessee and the CIT(A) allowed the relief without examining the scheme. Therefore remand the matter back to the file of AO with a direction to re-examine the issue after obtaining the scheme of staff i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mon issues have been raised. 4 First common issue is whether that the ld. CIT(A) erred in holding that provision of leave encashment is ascertained liability and therefore, need not to be added back to the book profits u/s 115 JB of the Act. 5 The ld. DR for the revenue was heard. 6 After considering the submissions of the ld. DR for the revenue and the relevant material on record, we find that the provision for leave encashment was treated as unascertained liability by the Assessing Officer and added to the book profits u/s 115 JB of the Act whereas the ld. CIT(A) held the same to be as ascertained liability and held that same could not be added to the book profit. Identical issue came up for consideration in the batch of earlier app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar may properly deduct not only the payments actually made to his employees but also the present value of any payments in respect of their services in that year to be made in a subsequent year if it can be satisfactory estimated." No doubt the above decision was rendered in the context whether such provision was allowable as deduction under normal provisions, however, the principles laid down above are relevant for our purpose to understand whether such provision for leave encashment would constitute ascertained liability or not. Above principles clearly show that the provision for leave encashment would constitute a liability and if the same has been determined on the basis of actuarial valuation then same cannot be considered as unascer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of staff incentive from the assessee." Following the above order, we set aside the order of the ld. CIT(A) and remit this issue back to the file of Assessing Officerwith identical directions as contained in the above para. 10. One additional issue has been raised in Assessment year 2006-07 i.e. whether the provision for gratuity is ascertain liability or not? 11. the Ld. DR for the revenue was heard. 12. After considering the submissions of the ld. DR for the revenue we find that provision for gratuity was treated as ascertain liability and added to the book profit. 13. On appeal, the ld. CIT(A) held that since provision for gratuity has been made on the basis of actuarial valuation therefore, same could not be treated as ascer ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
