Law: Income Tax Act, 1961

Section: 37(1),143,147

JUDGMENT 1. The assessee-appellant for the relevant assessment year did not claim any deduction on account of leave encashment which they might have to pay to their employees under the scheme. The assessment was complete under section 143 of the Income-tax Act, 1961 on 8-3-2000. The assessee accepted the same by not preferring any appeal from the order of assessment. On 9-8-2000, the Apex Court in an identical case delivered a judgment in Bharat Earth Movers v. CIT [2000] 245 ITR 428, where the Apex Court held that such a liability on account of leave encashment was a liability in praesenti although it might be discharged at a later date and as such the assessee was entitled to claim appropriate deduction by debiting its profit and loss account and making a corresponding credit entry in the liability account. Soon after the judgment was delivered by the Apex Court the assessee applied for revision before the Commissioner within the statutory period of limitation. The Commissioner dismissed the revisional application by holding that the judgment in the case of Bharat Earth Movers (supra), was squarely applicable in the case of the assessee. However, he was not inclined to extend such benefit to the assessee in view of the fact that such judgment could not be applied retrospectively. Before the Commissioner the assessee also relied upon another decision of the Apex Court in the case of Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363. In the said decision the assessee was maintaining its account on the mercantile basis. It had a sales tax liability for the particular assessment year. It did not claim any deduction as the assessment under the Sales Tax Act was not complete by the time the return was submitted. Soon after the submission of the return the sales tax authority assessed the assessee and imposed a liability of Rs. 1,49,776. The assessee immediately filed a revised return claiming deduction of such amount. It was contended on behalf of the revenue that since no such deduction was claimed earlier at the time of filing of the return such liability accrued after the submission of the return could not be brought in by way of filing of the revised…

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