TMI Blog2023 (1) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... [ 1990 (8) TMI 5 - CALCUTTA HIGH COURT] , Trustees of H.E.H the Nizam s Charitable Trust [ 1981 (1) TMI 52 - ANDHRA PRADESH HIGH COURT] and the decision of the Tribunal in assessee s own case [ 2019 (3) TMI 2009 - ITAT DELHI] deleted the impugned disallowance. There is no substance in the contention of the Ld. DR that there is no scientific basis for the impugned provisions for gratuity and leave encashment which were made on the basis of actuarial valuation. No infirmity in the order of the Ld. CIT(A) who has applied the ratio decidendi of the decisions (supra) to the facts of the assessee s case. We, therefore, confirm his findings in the absence of anything brought on record by the Revenue to enable us to take a different view. Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said amounts represented unascertained liability. 4. Aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who deleted the impugned disallowance by observing in para 4.2 of the appellate order as under:- 4.2 Ground of appeal no. 2 challenges the disallowance of provision of Rs. 2,31,76,773/- comprising of provision of gratuity and provision of leave encashment as application of income. 4.2.1 The Assessing Officer, while disallowing the amount on account of provisions, noted that the said amount represented unascertained liability. The appellant has submitted that liability on account of earned leave and gratuity has been made on the basis of actuarial valuation. Reliance has also been placed on decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritable organizations has to be computed on commercial principles which mean that according to the accounts of the trust. Accounting standards mandate that provision be made for retirement benefits. Hence, applying the ratio in the case of DIT (E) vs. NASSCOM (supra), it can be said that any provision which is reasonably made is to be allowed while computing the income available to die trust for application to charitable purposes in India in accordance with section 11(1)(a). In the case of the appellant there is nothing on record to show that the provisions were not made bonafide. Further, the provisions are evidenced by actual liabilities and, in the case of leave encashment and gratuity, by actuarial valuation. 4.2.4 In CIT vs. Trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has to make provision for payment of such ascertained amounts but at an unascertained time. 8. Further, learned C1T(A) drew, strength from the judgment of the Hon'ble jurisdictional High Court in the case of D1T(E) vs NASSCOM, 345 ITR 362 wherein it was held that the income available for charitable purpose to be computed in accordance with commercial principles, provision for bad and doubtful debts could be created, and observed that the ratio of this judgment applies to this case also as the provisions has been made to meet the ascertained liability likely to be incurred during the course of carrying out its object. This reasoning given by the learned C1T(A) does not appear to be suffering from any illegality 01 irregularity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record should disclose why the explanation is not accepted and is not acceptable. 8. Before the Ld. CIT(A), the assessee submitted that income under section 11 is to be determined on commercial principles and that to determine the income on commercial basis provision of expenses for meeting the objectives have to be considered. If the provision is bonafide and for furtherance of the objects of the Trust, the said provision cannot be disregarded. The only condition is that the provision should be for meeting the objects of the Trust. 8.1 It was further submitted that the assessee as per the consistent practice makes the provision relating to gratuity and leave encashment on the basis of actuarial valuation. It was stated that disclosur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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