TMI Blog2014 (7) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... ortionate with entitlement earned by employees of the company inclusive of officers and the staff subject to ceiling of accumulation as applicable on the relevant date is entitled to deduction out of the gross receipt for the accounting year during which the provision is made for the liability - the liability is not a contingent liability - the provision made for leave encashment cannot be conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be considered to be a contingent liability in view of the judgment of the Apex court in the case of Bharat Earth Movers Ltd vs Commissioner of Income-tax 245 ITR 428 (SC). Therefore, according to the ld.representative, the provision made for leave encashment has to be allowed as claimed. Referring to the judgment of the Apex Court in the case of Apollo Tyres Ltd vs Commissioner of Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyees exercise their options to encash the leave. So long as the employees have not exercised their option there is no question of any payment towards leave encashment. Therefore, according to the ld.DR, it is only a contingent liability. Accordingly, as provided in section 115JB it has to be added to the income computed u/s 115JB of the Act. 5. We have considered the rival submissions on eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the judgment of the Apex court, the provision made for leave encashment cannot be considered to be a contingent liability. Therefore, there is no question of any addition. By respectfully following the judgment of the Apex Court in the case of Bharat Earth Movers Ltd (supra), the orders of the lower authorities are set aside and the addition made by the assessing officer to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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