TMI Blog1996 (9) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... led to claim any deduction for Rs. 3,84,652 on account of leave with wages under the Beedi and Cigar Workers (Conditions of Employment) Act, 1966?" The year of assessment is 1975-76 and the accounting year ended on March 31, 1975. The assessee is a registered firm engaged in the business of manufacturing beedis. The assessee filed a return showing income at Rs. 4,57,675. It was subsequently revised on March 10, 1977, showing income at Rs. 73,023. In the revised return, it claimed expenses of Rs. 3,84,652 on account of leave with wages as per notification dated December 10, 1976, of the State Government. The relevant conditions of the said notification are as under : (1) That in lieu of the period of leave earned under the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y was an ascertained one and it was not contingent. Therefore, the Commissioner of Income-tax (Appeals) allowed the claim of the assessee. Aggrieved against the order of the Commissioner of Income-tax (Appeals), the Department approached the Tribunal in appeal and the Tribunal reversed the finding of the Commissioner of Income-tax (Appeals) holding that by virtue of sub-section (6) of section 26 of the Beedi and Cigar Workers (Conditions of Employment) Act, 1966, the assessee was not entitled to claim any deduction for leave with wages. It was also held that only in 1977 the amount was ascertained as to what was the quantum of legal liability which the assessee claimed. Though the method of calculation of such liability in 1977 would enta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and in order to give effect to the provisions of the Act, the said notification was issued legitimising the claim of the workers from 1974. It was further laid down that in lieu of leave earned in 1974, 1975 and 1976, this additional financial advantage shall be paid to the worker in four instalments in 1977 and when demanded on festival occasions. It was also laid down that the additional financial advantage shall be equal to the wages of 5 per cent. of total number of bidis made by the workers. It is an admitted position that the assessee maintains the mercantile system of accountancy. That being so, the financial liability had accrued as per the Act read with the notification against the assessee right from 1974 to make payment to thes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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