Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

The A.C.I.T., Circle, Panchkula Versus M/s Haryana Agro Industries Corporation Ltd.,

2015 (9) TMI 1426 - ITAT CHANDIGARH

Addition on account of provisions made for payment of arrears of salary on the basis of revision of pay scales w.e.f. 01.01.2006 - Held that:- 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 meeting held on 18.3.2009. A copy of the extract of the minutes of the Board held on 18.3.2009 was also filed before us. It was very clear from the perusal of this that the arrears of pay revision were to be paid by the assessee in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

contingent liability. From these facts, it can be very easily inferred that there was an ascertained liability in the form of payment of arrears of revised pay scales, which partly was booked in an earlier year and the remaining in the present year. Since the assessee is following the mercantile system of accounting and the provision on account of arrears for salary payment was made in the accounts on the accrual basis, the disallowance made by the Assessing Officer was not justified. - Decided .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a Undertaking for carrying the activities of manufacturing and sale of feed, pesticides, storage of agricultural produce and trading of agricultural implements and agricultural related activities etc. For the relevant assessment year, return declaring income of ₹ 8,48,13,167/- was filed. During the course of assessment proceedings, the Assessing Officer noted that as per notes to accounts at page 48 item No.(viii) and (ix) read as under : "(viii) The State Government vide its notifica .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ce charge @ 1% on the procurement of the gunny bags amounting to ₹ 23.30 lacs for the year 2008-09 and ₹ 20.11 lacs for the year 2009-10 as payable to Director Food & Supply." 3. The Assessing Officer asked the assessee to justify the eligibility of year of payment of these provisions. The assessee explained to the Assessing Officer that the expenses had been claimed on accrual basis by following the mercantile system of accounting. However, the Assessing Officer rejected th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ployees w.e.f. 1.1.2006 and the State Government also followed the same and allowed the revised pay scales to its employees and the employees of State Government Undertakings. Accordingly, the Board of Directors of the assessee in their meeting held on 18.3.2009, passed a resolution to pay arrears of pay scales @ 60% of the total arrears during the year under consideration. The amount comes to ₹ 204.52 lacs and a provision for this was made and a note was given in the audited accounts on a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

icer on this account. The findings of the learned CIT (Appeals) are as under : "6.1 On the basis of facts before me, it is noted that the expenditure on account of arrear salary due to revised pay package was provided in the assessee's books of account as per State Government notification dated 07.01.2009 and in view of minutes of board meeting held on 18.03.2009. The appellant made provision for 40% arrear of the revise pay scales of Rs.l06.37 lacs in year 2008-09 to be released during .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y him or when the demand is made against him or when the liabilities ascertained and the assessee is at liberty to reflect the same when he chooses to admit the liability. In the present case, the liabilities of payment of remaining part of arrear salary have arisen during the accounting period under consideration and that the liability was also discharged at a future date. The incurring of the liability was ascertained by the year under appeal and it was not in the nature of any contingent liab .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Act gives power to the Central Government to notify the accounting standards to be followed by the assessee following the mercantile system of accounting. In this regard, the notification number 9949 dated 25.01.1996 issued by CBDT provides for accounting standards relating to disclosure of accounting policies. Item No. (A)(4)(i) of the notification stipulates that provisions should be made for all known liabilities and losses even though the amount cannot be determined with certainty and re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. It is also certain that such liability has been discharged in the following year. Since, the appellant is following mercantile system of accounting and provision on account of arrear for salary payment amounting to ₹ 2,04,52,413/- was made in the accounts on the accrual basis, therefore. the AO was not justified to disallow the amount of ₹ 2,04,52,413/- on account of such provision as noted in the assessees audited accounts. Hence, this ground of appeal is allowed." 6. Aggriev .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y to pay the arrears of salary accrued to the assessee during the financial year 2009-10, ignoring the facts that the liability was crystallized when a resolution was passed by the Board of Directors on 18.03.2009. 3. It is prayed that the order of the Ld. CIT (Appeal) be set-aside and that of the A.O, be restored. 4. The appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed off." 7. The learned D.R. during the course of hearing before us submi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version