Tamil Nadu Small Industries Corporation Ltd. Vs ACIT (Madras High Court)
Madras High Court held that provision for leave salary is not allowable as deduction under section 43B(f) of the Income Tax Act since deduction of actual payment is allowable and not of provision. Accordingly, question of law answered in favour of revenue.
Facts- The substantial question of law that arises for consideration vide the present appeal is that whether on the facts and in the circumstances of the case, the Hon’ble Tribunal was right in rejecting the claim of the appellant claiming deduction for the provision made for leave salary under section 43B(f) of the Income Tax Act, 1961 is correct in law.
Conclusion- Kerala High Court in Dhanalakshmi Bank Ltd. V. Commissioner of Income-tax, Cochin has held that Sub-clause (f) of section 43B is with respect to any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee. The deduction, hence, is allowable only on actual payment.
Held that it is an admitted position, as seen from the order of the Tribunal dated 09.06.2017, that the appellant had made a provision, which, in light of the clear language of Section 43B(f) calls for disallowance. The question of law is hence answered in favour of the revenue and against the assessee.
