Brief of the case
In case of Gujarat Energy Transmission Corpn. Ltd vs. ACIT, assessee-company the company has provided certain sum towards employees cost for arrears payable upto 31st March, 2008 . It debited said sum in respect of 6 th Pay Commission arrears, since final decision on recommendations of 6 th Pay Commission was awaited. Assessee pleaded that it should be allowed in year of payment to him. Revenue made addition holding it as contingent liability. Tribunal in assesee’s own case in earlier assessment year relied upon CIT vs. Kerala State Financial Enterprises Ltd. wherein it was held that in the normal course, an agreement called settlement as increase in wages takes effect from the date of expiry of the previous settlement and this case is no exception to it. What is important is not the date of signing the agreement nor the later approval granted by the Government, but the effective date of commencement of the wage revision under the agreement. In the present case, the CIT(A) has recorded the fact that the Gujarat Government accepted the 6th Pay Commission in December- 2008.Thus, following ratio in aforesaid case , Tribunal allowed assessee’s claim.
Facts of the case
Contention of Assesse
The plea of the assessee was that it should be allowed in the year of payment to the assessee.
HELD by ITAT
The Tribunal relied on decision of Kerala High Court in the case of CIT vs. Kerala State Financial Enterprises Ltd, wherein it was held that wherein it was held that assessee is entitled to claim deduction of such wage increase attributable upto the end of previous year, no matter exact amount was ascertained.
The department could not point out any distinguishable features order of the Tribunal of the earlier years . Facts being identical, respectfully following the precedent, the court delete the addition of Rs.75,38,35,000/- and allow this ground of appeal of the assessee.
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