TMI Blog2014 (3) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... ees. Hence, it is trading liability. As such he is otherwise entitled to deduction of such amount by showing it as a provisional expenditure in his account. The Legislature by way of amendment restrict such deduction in the case of leave encashment unless it is actually paid in that particular financial year. The legislature is free to do so after it discloses reasons there for and such reasons are not inconsistent with the main object of the enactment. Without such reason the enactment is inconsistent with the original Provision. The legislature must disclose reasons which would be consistent for the provision of the constitution and the laws of the land and not for the sole object of nullifying the judgment in the case of Bharat Earth Mov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he head Earned Leave Encashment . During the assessment proceedings, it was explained to the Assessing Officer that this was an ascertained liability and the same was not paid. The assessee further brought to the notice of the Assessing Officer that the issue was decided in favour of the assessee for the AYs 2005-06 and 2006-07 by the Hon ble ITAT, Hyderabad. However, the Assessing Officer disallowed the earned leave encashment of ₹ 1,02,98,507/- on the following grounds: a) the Hon ble ITAT allowed the assessee s appeal following Calcutta High Court decision in the case of Exide Industries and Another Vs. Union of India and Others, 292 ITR 470. However, the Apex Court admitted SLP against the said decision; b) the department has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Under clause (f) of 43B, any sum payable by the employer to his employees as leave encashment shall be deductible only in computing the income referred to in s. 28 of that previous year in which sum is actually paid by the employer to its employees. While inserting clause (f) no special reasons were disclosed. Although such disclosure was not mandatory yet the subject amendment widen the scope of the original section. Leave encashment is neither a statutory liability nor a contingent liability. It is provision to be made for the entitlement of an employee achieved in a particular financial year. An employee earns certain amount by not taking leave which he or she is otherwise entitled during the particular year. Hence, the employer is ob ..... X X X X Extracts X X X X X X X X Extracts X X X X
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