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Principal Commissioner of Income Tax, Panchkula Versus M/s Haryana Agro Industries Corporation Limited

2016 (5) TMI 397 - PUNJAB AND HARYANA HIGH COURT

Additions made on account of provision for arrears of salary being as prior period expenses and contingent liabilities - Held that:- Tribunal after examining the matter that as per notification dated 7.1.2009 issued by the State Government, the arrears of pay revision were to be paid by the assessee in two instalments i.e. 40% during the financial year 2008-09 and 60% in the next financial year. The liability was thus not in the nature of any contingent liability. Since the method adopted by the .....

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S. RAJ RAHUL GARG, JJ. For The Appellant : Mr. Yogesh Putney, Advocate Ajay Kumar Mittal,J. 1. This appeal has been preferred by the revenue under section 260A of the Income Tax Act, 1961 (in short, the Act ) against the order dated 10.9.2015, Annexure A.3 passed by the Income Tax Appellate Tribunal, Division bench, Chandigarh in ITA No.157/CHD/2014, for the assessment year 2010-11, claiming following substantial question of law:- Whether on the facts and in the circumstances of the case, the le .....

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ltural implements and agriculture related activities. It filed its return of income on 13.10.2010 by declaring income of Rs. 2,11,71,693/- which was revised on 28.2.2011 at Rs. 8,48,13,167/-. Subsequently, the case was selected under compulsory scrutiny. Notice under Section 143(2) of the Act was issued to the assessee. The representative of the assessee attended the assessment proceedings. It was noticed by the Assessing Officer that as per page No.48 of point Nos.(ix) and (x) of Notes to Accou .....

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3, the assessee was asked to explain why these provisions created during the year may not be disallowed as these expenses were eligible in the year of payment. The assessee in its reply dated 30.1.2013 stated that its Board of Directors held a meeting on 18.3.2009 wherein a resolution was passed to pay arrears of pay scales at the rate of 60% of the total arrears during the year under consideration as per which a provision was made for Rs. 2,04,52,413/- on accrual basis as the accounts of the as .....

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IT(A)]. Vide order dated 27.12.2013, Annexure A.2, the CIT(A) partly allowed the appeal deleting the addition made by the Assessing Officer on account of provision of arrears of salary amounting to Rs. 2,04,52,413/-. Not satisfied with the order, the revenue filed appeal before the Tribunal. Vide order dated 10.9.2015,Annexure A.3, the Tribunal dismissed the appeal. Hence the instant appeal by the revenue. 3. We have heard learned counsel for the appellant-revenue. 4. It has been categorically r .....

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he accounts on accrual basis, the disallowance made by the Assessing Officer was not held to be justified. While concurring with the findings recorded by the CIT(A), it was recorded by the Tribunal as under:- 9. We have heard the rival contentions and perused the material available on record. We are in total agreement with the findings given by the learned CIT(Appeals). The provision of the pay revision was made by the assessee as per notification dated 7.1.2009 in view of the minutes of Board m .....

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