Case Law Details
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
- During the relevant year the assessee-company debited sum of Rs.75,38,35,000/- in respect of 6 th Pay Commission arrears. The assessee in the Note on Account stated that awaiting the final decision on the recommendations of the 6 th Pay Commission, the company has provided Rs.7538 lakhs towards employees cost for arrears payable upto 31 st March, 2008.
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