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TMI Blog2016 (7) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act amounting to Rs. 5,428/- could be made in the facts and circumstances of the case. 3. The brief facts of this issue are that the assessee during the previous year relevant to the assessment year under consideration has earned dividend amounting to Rs. 1,04,089/- which was claimed exempt u/s 10(34) in the computation of income filed along with the return. The ld. AO adopted 0.5% of investments in terms of Rule 8D(2)(iii) for the purpose of disallowance u/s 14A of the Act which was upheld by ld. CIT(A). Aggrieved, the assessee is in appeal before us on the following grounds :- "1. That, on facts as well as on law, the Ld. CIT(A)-XII, Kolkata has erred in confirming the disallowance under section 14A of the Income Tax Act amounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s R.R.Sen and Brothers in G.A.No.3019 of 2012 in ITAT No.243 of 2012 dated 04.01.2013 had held that 1% of the exempt income need to be adopted for disallowance u/s 14A of the Act. In response to this, the ld. DR fairly agreed for the said proposition. 3.2. We have heard the rival submissions. We find that the issue involved is squarely covered by the Hon'ble Jurisdictional Calcutta High Court in the case of CIT vs R.R.Sen and Brothers (supra) and accordingly direct the ld. AO to adopt 1% of the exempt income for making disallowance u/s 14A of the Act. Accordingly ground no.1 raised by the assessee is partly allowed. 4. The next issue to be decided in this appeal is as to whether the disallowance of provision of leave encashment amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied that the provision made by the appellant company for meeting the liability incurred by it under the leave encashment scheme proportionate with the entitlement earned by employees of the company, inclusive of the officers and the staff, subject to the ceiling on accumulation as applicable on the relevant date, is entitled to deduction out of the gross receipts for the accounting year during which the provision is made for the liability. The liability is not a contingent liability. The High Court was not right in taking the view to the contrary. 13. The appeal succeeds and is allowed. Section 43B(f) is struck down being arbitrary, unconscionable and de hors the apex Court decision in the case of Bharat Earth Movers (supra). " I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on date, the Hon'ble Calcutta High Court shall have to be followed. Accordingly, reliance placed on the Calcutta High Court decision by the assessee is squarely applicable in the facts and circumstances of this case. However, we deem it fit and appropriate, in the interest of justice and fair play, to set aside this issue to the ld. AO to pass orders based on the outcome of the main appeal on merits by Hon'ble Supreme Court as stated supra. Accordingly the appeal of the revenue is allowed for statistical purposes. " Accordingly ground no.2 raised by the assessee is allowed for statistical purposes. 5. The next issue to be decided in this appeal is as to whether the disallowance u/s 14A of the Act could be made while computing the book p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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