Aditya Birla Sun Life AMC Limited Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that the provision for leave encashment made on actuarial basis constitutes an ascertained liability and is allowable as deduction. Accordingly, the said ground is allowed.
Facts- The assessee is a resident company engaged in the business of asset management, portfolio management and advisory services. In the course of assessment proceedings, the Assessing Officer examined the allowability of deduction claimed under section 80G in respect of CSR related payments, employees’ contribution to provident fund u/s. 36(1)(va), disallowance u/s. 40(a)(ia), disallowance u/s. 43B, computation of capital gains, grant of credit for tax deducted at source, and levy of interest u/s. 234B and 234C. Additions and disallowances were made year-wise, and penalty proceedings u/s. 270A were initiated wherever applicable.
CIT(A) substantially upheld the additions and granted partial relief. Being aggrieved, the present appeal is filed.
Conclusion- Held that it is an admitted position that the assessee has created provision for leave encashment on the basis of actuarial valuation. The Assessing Officer disallowed the same by treating it as unascertained liability, and the Ld. CIT(A) sustained the disallowance by invoking section 43B(f). In view of the binding ratio of the Hon’ble Supreme Court in Bharat Earth Movers and the consistent view taken by the co-ordinate Benches in the assessee’s group cases on identical facts, we hold that the provision for leave encashment made on actuarial basis constitutes an ascertained liability and is allowable as deduction.
