Haffkine Bio Pharmaceutical Corporation vs ACIT, 7(1)(2), Mumbai

Parties Involved

Facts Summary

The assessee, Haffkine Bio Pharmaceutical Corporation, filed its return of income declaring a total income of Rs.1,61,05,768/-. The case was selected for scrutiny, and an assessment order under section 143(3) of the Income-tax Act, 1961 was passed, wherein an addition of Rs.2,00,00,000/- was made by disallowing the provision created towards salary on account of the expected increase in annual personnel cost arising from the implementation of the Sixth Pay Commission. Aggrieved by the said addition, the assessee preferred an appeal before the Learned Commissioner of Income-tax (Appeals), which was rejected. The assessee then filed an appeal before the ITAT, Mumbai Bench, which restored the matter to the file of the Learned Assessment Officer for verification of the said expenditure. During the reassessment proceedings, the assessee reiterated the same submissions and contended that the provision of Rs.2,00,00,000/- was made on the basis of the expected increase in annual personnel cost consequent to the implementation of the Sixth Pay Commission.…

Legal Issues

• 1. Whether the provision created towards salary on account of the expected increase in annual personnel cost arising from the implementation of the Sixth Pay Commission is allowable as a deduction.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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