The Tax Publishers2020 TaxPub(DT) 4831 (Mad-HC)

INCOME TAX ACT, 1961

Section 43B

Deduction for leave encashment is allowed only on actual payment; therefore, the Tribunal was justified in concluding that the assessee-company was not entitled for deduction in respect of provision for leave encashment on the ground that no expenditure would be allowed under section 43B(f) on account of any leave salary unless the expenditure was actually paid.

Business disallowance under section 43B - Deduction only on actual payment - Leave encashment not actually paid -

Tribunal concluded that assessee-company was not entitled for deduction in respect of provision for leave encashment on the ground that no expenditure would be allowed under section 43B(f) on account of any leave salary, unless the expenditure was actually paid. Assessee contended that the amount had been determined scientifically and accurately based on actuarial valuation and incurring of expenditure was certain. Held: It is settled that deduction for leave encashment is allowed only on actual payment. Therefore, the Tribunal was justified in concluding that the assessee-company was not entitled for deduction in respect of provision for leave encashment on the ground that no expenditure would be allowed under section 43B(f) on account of any leave salary unless the expenditure was actually paid.

REFERRED : UOI & Ors. v. Exide Industries Limited & Anr. [(2020) 107 CCH 0427(SC) : 2020 TaxPub(DT) 1707 (SC)].

FAVOUR : Against the assessee

A.Y. : 2007-08



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