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TMI Blog2015 (6) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the purpose of calculation of minimum book profits u/s 115JB, the assessee had not added back the provisions for Gratuity and Leave encashment which in his opinion were unascertainable and, therefore, was to be added back. The argument of assessee that the provisions were created scientifically on the basis of actuarial valuation and, therefore, were in the nature of ascertained liability was not accepted by him. Aggrieved, the assessee filed appeal before Ld. CIT(A) and Ld. CIT(A) allowed relief to the assessee by holding as under: "11. Ground No.9 is regarding the addition of Rs. 1,78,35,000/- as provision for gratuity and Rs. 53,46,000/- as provision for leave encashment made by the AO under 115JB of the I. T. Act, 1961. As per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the case of Bharat Earth Movers (supra) is not applicable to the assessee's case. In the aforesaid case laws relief was primarily given to the assessee on the ground that the AO failed to give his finding that the provision has been made for an unascertained liability. However, the facts in the present case are different. The provision for gratuity and leave encashment as discussed above are based on estimates and presumed figures end are uncertain as far as their quantum is concerned. In view of this the provision for gratuity of Rs. 1,78,35,611/- and provision for leave encashment of Rs. 53,46,000/- added back as per provisions of section 115JB of the I. T. Act." 11.1. As per the above, it is clear that provision for gratuity and l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has already been heard but has not yet been disposed off. The Ld. A.R. further submitted that assessee has filed appeal before Hon'ble High Court also and its question has been admitted. It was submitted that in Assessment Year 2001-02, the Hon'ble Tribunal had remitted the issue of gratuity back to the office of A.O. for readjudication. However, he submitted that the issue was fully covered in favour of assessee by the order of Hon'ble Supreme Court in the case of Bharat Earth Movers Vs CIT 11 Taxman 61. The Ld. A.R. further placed his reliance on the following case laws: i) CIT Vs Insilco Ltd. 179 Taxman 55 (H.C.) Del. ii) CITVs Kelvinator of India Ltd. 76 Taxman 309 (H.C.) Del. 4.1 Continuing his arguments, Ld. A.R. submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the year under consideration, then the same is not subject to adjustment made while computing book profit u/s 115JA. To that extent there could which was net debited during- the year under consideration to the profit and loss account relating to schedule 10 in the balance sheet of the, assessee, the addition cannot be made for computing book profit u/s 115JA. It is the case of the assessee that provision of gratuity of Rs. 68,23,350/- was though debited to the P&L account but it was again added while computing the income under the normal provisions. Copy of computation of income has been filed by the' assessee at pages 107 to 110 of the paper book. It is observed there from that while computing the income under the normal provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered for addition while computing profit U/S 115JA, (ii) Provision for gratuity being not ascertained liability was to be added while computing book profit U/S 115JA. iii) Liability of Rs. 29.60.828/- on account of provision for leave encashment being a liability based on actuarial valuation is to be considered ascertained liability hence deductible while computing book profit u/s 115JA. This ground is partly allowed." 7. In Assessment Year 2001-02, the tribunal had though followed Assessment Year 2000-01, but it did not reject the claim outrightly but it remanded back the issue to the office of A.O. for readjudication. The findings of Tribunal are contained in para 34: "There is no disparity on facts. The contention of the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that the assessee had filed an appeal before Hon'ble High Court wherein the question raised by assessee has been admitted. Therefore in view of above facts and circumstances, we following the order of Tribunal in Assessment Year 2000-01 and 2001-02, partly allow the appeal of Revenue by holding that the provisions for leave encashment is ascertained liability. As regards provisions for gratuity, the argument of Ld. A.R. that in subsequent years Ld. CIT(A) has allowed the relief and Revenue has not filed appeals, therefore, order of Ld. CIT(A) should be upheld, do not hold much force as we do not know as to whether there were defects in actuarial report in those years or not. Therefore, following Assessment Year 2001-02, we remit bac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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