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Home › All Judgements › CIT vs. Exide Industries (Supreme Court)

CIT vs. Exide Industries (Supreme Court)

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DATE: September 25, 2009 (Date of publication)
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Click here to download the judgement (exide_industries_s_43Bf_supreme_court.pdf)

Judgement holding s. 43B (f) (leave encashment) as unconstitutional stayed

S. 43B (f) was inserted by the Finance Act, 2001 w.e.f. 1.4.2002 to provide that any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee shall be allowed as a deduction only in the year of actual payment.

The said amendment was enacted to supersede the judgement of the Supreme Court in Bharat Earth Movers vs. CIT 245 ITR 428 where it was held that even a provision for leave encashment was deductible on accrual basis.

In Exide Industries Ltd vs. UOI 292 ITR 470, the Calcutta High Courts struck down 43B (f) as being arbitrary, unconscionable and de hors the apex Court decision in the case of BEML on the ground that the objects and reasons were silent as to why the amendment was effected and that the amendment was not consistent with s. 43B which was originally inserted to plug evasion of statutory liability.

The said judgement of the Calcutta High Court has now been stayed by the Supreme Court and it has been clarified that the assessee must pay tax as if s. 43B (f) is on the statute though it is entitled to make a claim in its return.

Related Posts:

  • UOI vs. Exide Industries Limited (Supreme Court) The leave encashment scheme envisages the payment of a certain amount to the employees in lieu of their unused paid leaves in a year. The nature of this payment is beneficial and proemployee. However, it is not in the form of a bounty and forms a part of the conditions…
  • CIT vs. Reliance Industries Ltd (Supreme Court) No doubt, there is a long delay in removing the objections, we are of the opinion that in a case like this the High Court should have condoned the delay in removing the office objections and heard the2matter on merits
  • Connectwell Industries Pvt. Ltd vs. UOI (Supreme Court) The property in dispute was mortgaged by BPIL to the Union Bank of India in 2000 and the DRT passed an order of recovery against the BPIL in 2002. The recovery certificate was issued immediately, pursuant to which an attachment order was passed prior to the date on which notice…
  • M/s Vijay Industries vs. CIT (Supreme Court) Reading of Section 80HH along with Section 80A would clearly signify that such a deduction has to be of gross profits and gains, i.e., before computing the income as specified in Sections 30 to 43D of the Act. It is correctly pointed out by Division Bench in the reference order…
  • CIT vs. Classic Binding Industries (Supreme Court) As pointed out above, once the assessees had started claiming deduction under Section 80-IC and the initial Assessment Year has commenced within the aforesaid period of 10 years, there cannot be another initial Assessment Year thereby allowing 100% deduction for the next 5 years also when sub-section (3), in no…
  • CIT vs. Reliance Industries Limited (Supreme Court) The High Court has noted the finding of the Tribunal that the interest free funds available to the assessee were sufficient to meet its investment. Hence, it could be presumed that the investments were made from the interest free funds available with the assessee

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