S.K. Chander, Accountant Member - (1.) THESE appeals by the assessee are directed against the orders of the CIT(A)-I, New Delhi relating to assessment years 1982-83 and 1983-84 both dated 22-8-85 dealing with a common issue. We have heard the parties, carefully considered their rival submissions and perused the orders of the authorities below along with evidence on record.
(2.) The assessee-company derives income from sales of wires and cables, electrical accessories and leasing of gas cylinders. It also deals in purchase and sale of gas cylinders. For its employees there is an agreement at the time of employment which entitles the employees to what is described as a privilege leave with pay of 30 days per year. The employees are entitled to carry forward the unavailed leave to the next year and the leave can be accumulated up to a maximum period of 180 days. The employees can also surrender the leave but up to maximum period of 15 days during one financial year or 30 working days once during two financial years. The employees avail of this leave or encash it at the time of discontinuance of service, which may be caused by any of the following : (a) Resignation (b) Retrenchment (c) Retirement (d) Termination. On the basis of above scheme, the assessee has been making payments to the workers for leave and in its books of account have been debiting the actual, payment for purpose of making a claim of deduction in the computation of total income of a particular assessment year. The assessee is maintaining books of account on mercantile system of accounting and its previous year ends on 30th June. For the assessment years 1982-83 and 1983-84, the previous year respectively ended on 30th June, 1981 and 30th June, 1982.
(3.) AFTER the account books had been completed and closed and final accounts drawn for the assessment year 1982-83, it appears, the assessee thought of changing the method of accounting relating to provision for leave for its employees. It had already in the process of completing the books of account claimed deduction in respect of leave encashment amount actually disbursed during the accounting period relevant to the assessment year 1982-83. It further on the basis of the cha.nged method of accounting made a claim for deduction of Rs. 1,50,087 before the IAC. The IAC observed that, inter alia, the assessee had not made any provision in respect of the amount now claimed in the accounts for the year, which had already been closed. He, therefore, rejected this claim.;