Commissioner of Income Tax vs National Cereals Products

This appeal by the revenue u/s 260A of the Income Tax Act, 1961 is directed against order, dated 16-5-2002, passed by the Income Tax Appellate Tribunal, New Delhi (hereinafter referred to as the Tribunal) in IT Appeal No. 2777 (Delhi) of 1995 pertaining to the assessment year 1991-92.

The issue, sought to be raised by the revenue in this appeal, is as to whether the provision for payment for the employees towards accumulated privileged leave could be allowed as business expenditure or not?

We have heard learned counsel for the parties. We are of the view that the issue raised is no more res integra. In Bharat Earth Movers Vs. Commissioner of Income Tax, Karnataka, , their Lordships of the Supreme Court have been pleased to hold that the provision made by a company for meeting the liability incurred by it under the leave encashment scheme, proportionate with the entitlement earned by the employees of the company, subject to the ceiling on accumulation as applicable on the relevant date, is entitled to deduction of this amount out of the gross receipts of the accounting year, during which the provision is made for the liability. It has been held that the liability is not a contingent liability.

In view of the said authoritative pronouncement, the view taken by this Tribunal cannot be faulted with. No substantial question of law survives for our consideration. Accordingly, we are decline to entertain the appeal.

Dismissed.