The Tax Publishers2021 TaxPub(DT) 0330 (Bang-Trib)



Krishna Grameen Bank v. Asstt. CIT

ITA No. 495/Bang/2018

31 December, 2020

Appellant by: Sowmya, Advocate

Respondents by: Pradeep Kumar, CIT (DR)(ITAT)


N.V. Vasudevan, V.P.

This appeal by the assessee is against the Order, dated 19-12-2017 of Commissioner (Appeals), Gulbarga relating to assessment year 2013-14.

2. Grounds 1, 6 & 7 are general or consequential grounds and do not need any specific adjudication.

3. Ground No. 2 raised by the assessee reads as follows :--

'2. On the facts and in the circumstances of the case, the learned Commissioner (Appeals) erred in disallowing provision made for privileged leave encashment to the tune of Rs. 2,84,07,024 which was made on actual valuation, treating the same as contingent liability without appreciating the submission of Appellant.'

4. The assessee is a regional rural bank established under Rural Banks Act and is a scheduled bank classified under second Schedule of RBI, having several Rural Branches. The assessee had claimed a deduction of a sum of Rs. 2,84,07,024 on account of provision for leave encashment. The assessing officer was of the view that the aforesaid expenditure was a contingent expenditure and cannot be allowed as a deduction. According to the assessing officer, the claim for deduction cannot be allowed in view of clause (f) to section 43B of the Income-tax Act, 1961 [the Act] which was inserted by Finance Act, 2003 and insertion of the aforesaid section is the effect of nullifying the decision of the Hon'ble Supreme Court rendered in the case of BEML v. ACIT, (2000) 245 ITR 478 (SC) : 2000 TaxPub(DT) 1505 (SC). The assessee argued before the assessing officer that the Hon'ble Calcutta High Court in the case of Exide Industries Ltd. & Anr. v. UOI, (2007) 292 ITR 470 (Cal) : 2007 TaxPub(DT) 1321 (Cal-HC) has already declared the aforesaid amendment as arbitrary and unconstitutional. The assessing officer, however, observed that the Department has gone in appeal before the Hon'ble Supreme Court and the order of Hon'ble Calcutta High Court has been stayed. The assessing officer accordingly refused to allow the claim for deduction on account of provision for leave encashment.