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TMI Blog2016 (1) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs. 14 lacs (made by DCIT, Circle-1, Alwar) to Rs. 140 lacs by disallowing the entire amount of outstanding liability for Pay Revision. The disallowance made by ld. AO and enhanced by ld. CIT (A), Alwar needs to be deleted as :- * The Provision for liability towards wages revision & payment has been rightly made on the basis of Bipartite settlements signed on 02.06.2005 (retrospectively applicable from 01.11.2002) whereby wages/pay revision was to be 13.25% of establishment expenses & provision made @ 12% is less than settled by bipartite settlements. The same ought to be allowed as allowed in immediate proceeding A.Y. 2009-10 by Ld. CIT (A), Jodhpur. * The amount of wages revision provided on 31.03.2010 has been duly paid on 24.09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to disclose true and correct net profit of the assessee bank. In case, if ascertained liability of Rs. 140.00 lacs was debited in the year of payment, than such amount will be treated as expenses pertaining to previous year and would be disallowable. Beside this, the banks net profit will not reflect to true and correct in both years i.e. in the year of provision and in the year of payment. The Punjab National Bank (sponsored Bank) has also made the provision of during the year under consideration on account of salary. RBI has been regularly very strict making the provision of salary revision as per bipartite settlement. RBI has recently has given the direction to make the provision pay revision to the all banks for the year ended 31st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made on the basis of the pay revision due with effect from 01.11.2007 as 9th Bipartite settlement. In this connection, he further submitted tht the pay revision of bank employee is made in five years and the last pay revision was made on 01.11.2002 as per 8th Bipartite settlement. The pay revision as per 8th Bipartite settlement was decided 13.25% of establishment expenses and same was applicable from 01.11.2007. However, the union of the banks were not agree and therefore, the further negotiation to hike was decided in 9th Bipartite settlement i.e. 17.5%. Further it is also submitted that provision was also made by all RRB's as per the direction of the sponsored bank PNB. The RBI is also very strict for making the provision of pay rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. A/R are distinguishable on facts. The ld. CIT (A) placing reliance on the judgments of Hon'ble Supreme Court in the cases of M/s. Shree Sajjan Mills Ltd. vs. CIT, 156 ITR 585, M/s. Gemini Cashew Sales Corporation, 65 ITR 643, M/s. Indian Molasses Co. P. Ltd., 37 ITR 66 and Hon'ble Bombay High Court in the case of M/s. Phalton Sugar Works Ltd. vs. CIT, 162 ITR 622, held that no deduction is allowable to the appellant on account of any adhoc provision made in the books of accounts on account of pay revision of employees. The amount would accrue and become allowable as a deduction only in the year of agreement for pay revision having been signed by the bank with the representative of employees. Therefore, the ld. CIT (A) rejected the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the pay revision of the employees is an on going process in respect of bank employees. The pay revision of Rs. 140 lacs was made on the basis of pay revision due as on 1.11.2007 as 9th Bipartite Settlement. The settlement was effected between the concerned parties i.e. Management and Union of Employees in the financial year under consideration. On the basis of agreement, the payments were also made to the employees from the effective date. Therefore, the conclusion of ld. CIT (A) that there was no crystallized liability and no agreement was arrived at between the parties, is without any merit. The appellant is a Gramin Bank sponsored by Punjab National Bank and having the trapping of scheduled bank. The appellant is also governed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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