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04-06-2019, Gainwell Commosales, Section 43B, Tribunal Kolkata

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3 months 2 weeks ago #9664 by amit
Section - 43B
Order Date - 04-06-2019
Favouring - Assessee allowed for statistical purposes
Court - Tribunal Kolkata
Appellant - Gainwell Commosales Pvt. Ltd.
Respondent - DCIT
Justice - A.T.VARKEY, JM & DR. A.L.SAINI, AM
Citation - 619Taxpundit80
Appeal No. - ITA Nos.1344 & 1345/Kol/2015
Asstt. Year - 2011-12 & 2012-13

Order

PER : Dr. A. L. Saini

The captioned four crossappeals filed by the Assessee as well as Revenue,pertaining to assessment years2011-12 and 2012-13, are directed against separate orders passed by the learned Commissioner of Income Tax (Appeals)-4, Kolkata (in short the ld. ‘CIT(A)’], which in turn arise out of separate assessment orders passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (in short the ‘Act’).

2. First we shall take assessee’s appeals in I.T.A. No. 1344 & 1345/Kol/2015, for assessment year 2011-12 and 2012-13. In these two appeals, common issue is that whether on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the disallowance made by the Assessing Officer on account of provision for leave encashment, for A.Y. 2011-12 at Rs. 70,06,297/- and for A.Y 2012-13 at Rs. 1,73,21,918/-. Since the issue involved in these two appeals are common and identical, therefore, these appeals have been heard together and a consolidated order is being passed for the sake of convenience and brevity The assessee’s appeal in I.T.A. No. 1344/Kol/2015, for assessment year 2011-12, is taken as a lead case.

3. At the outset itself, Ld Counsel for the assessee submitted before us that the issue involved in these two appeals relate to disallowance on account of provision of leave encashment of Rs. 70,06,297/- for assessment year 2011-12 and Rs. 1,73,21,918/- for assessment year 2012-13. The issue under consideration, i.e. provision for leave encashment, which is pending before the Hon’ble Supreme Court for adjudication and there is no finality on this issue. The ld Counsel submitted that the main grievance of the assessee is that the Ld. CIT(A) was erred in not appreciating that Clause (f) of section 43B of the Act, providing for allowance of leave encashment on payment basis is arbitrary and de horse the Supreme Court decision in the case of Bharat Earth Movers, as held by the Hon’ble jurisdictional High Court in the case of Exide Industries Ltd. 292 ITR 470 (Cal).

4.On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer.

5. We have heard both the parties and perused the material available on record. We note that the similar issue had come up before this Tribunal in the case of M/s. S. R. Batliboi & Co. vs. DCIT, ITA No. 1598/Kol/2011 for AY 2007-08 wherein the Tribunal vide para 4 has held as under:

“4. After hearing rival submissions and going through the facts and circumstances of the case and the order of the Tribunal cited supra, we find that the issue is dealt by the Coordinate bench of this Tribunal as under:

“3. At the outset, ld. senior counsel for the assessee submitted that in all these three appeals, the issue relates to allowability of provision for leave encashment in terms of sub-section (f) of section 43B of the Income Tax Act. The assessee had advanced its claim relying on the decision of the Hon’ble Kolkata High Court in the case of M/s. Exide Industries Ltd. reported in 292 ITR 470. However, the Assessing Officer did not accept the assessee’s claim observing that Department has preferred a Special Leave Petition before the Hon’ble Supreme Court and stay of the order of the Hon’ble Kolkata High Court was granted by the Hon’ble Apex Court. Ld senior counsel submitted that under identical circumstances, Tribunal has restored the matter to the file of Assessing Officer to decide the issue in accordance with the decision of the Hon’ble Apex Court in the case of DCIT, Circle-8, Kolkata –vs.- M/s. Ernst & Young Pvt. Ltd. in ITA No. 1787/Kol./2008. He, therefore, submitted that the matter may be restored ba k to the file of Assessing Officer.

4. Learned Departmental Representative did not raise any objection.

5. We have con idered the submissions of both the parties and have perused the records of the case. We find that Tribunal on identical issue in ITA No. 1787/Kol./2008 in the case of M/s. Ernst & Young Pvt. Ltd. has observed at para 12 in page 6 as under :-

“12. Ground No. 5 of the revenue’s appeal is against the relief allowed by the CIT(A.) in respect of provision for leave encashment which was deleted by the CIT(A.) following the decision of the Hon’ble jurisdictional High Court in the case of M/s. Exide Industries Ltd. (supra). It was pointed out by the ld. DR that the Hon’ble Apex Court in”SLP (Civil) 22889 of 2008 has stayed the operation of the decision of the Hon’ble jurisdictional High Court. In view of the above, we set aside the orders of the authorities below on this point and restore the matter back to the file of the AO with the direction that he will readjudicate this issue as per decision of the Hon’ble Apex Court in the case of M/s. Exide Industries Ltd. (supra)”.

Respectfully following the same we set aside the orders of authorities below on this point and restore the matter back to the file of Assessing Officer for adjudication as per the decision of the Hon’ble Apex Court in the case of M/s. Exide Industries Ltd.(supra).”

In view of the above and respectfully following the same, we set aside the orders of the authorities below and restore the matter back to the file of Assessing Officer for adjudication as per the decision of Hon’ble Apex Court in the case of M/s. Exide Industries Ltd. (Supra). This Common ground of appeal of assessee (for both assessment years 2011-12 and 2012-13), is allowed for statistical purposes.

6. Now we shall take revenue’s appeal in I.T.A. No. 1371 &1372/Kol/2015, for assessment year 2011-12 and 2012-13. Since the issue involved in these two appeals of Revenue, are common and identical, therefore, these appeals have been heard together and a consolidated order is being passed for the sake of convenience and brevity. The Revenue`s appeal in I.T.A. No. 1371/Kol/2015, for assessment year 2011-12 is taken as lead case.

7. The grounds of appeal raised by the Revenue as per lead case in I.T.A. No. 1371/Kol/2015, for assessment year 2011-12, are as follows:

1. That on the facts and the circumstances of the case ld. CIT(A) has erred in deleting the disallowance of Rs. 83,67,730/- on account of Software Expenses being capital in nature.

2. That on the facts and circumstances of the case, ld. CIT(A) has erred in deleting the disallowance of commission expenses of Rs.1,10,58,743/-.

3. That on the facts and in the circumstances of the case, the ld. CIT(A) has erred in deleting the disallowance of warranty expenses of Rs. 82,02,019/-.

4. That the assessee craves for leave to add, delete or modify any of the grounds of appeal before or all the time of hearing. We shall take the above grounds raised by Revenue, one by one, as follows:

8. Ground No.1relates to disallowance of Rs. 83,67,730/- on account of software expenses being capital in nature.

9. The brief facts are that during the year under consideration, the assessee has entered into a Software Maintenance and Support Agreement with Accenture to

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