IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN THURSDAY, THE 24TH SEPTEMBER 2009 / 2ND ASWINA 1931 ITA.No. 1136 of 2009() ---------------------- ITA.682/COCH/2006 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT ----------------------------- THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): --------------- KERALA AGRO MACHINERY CORPORATION LTD. THANI, ALUVA. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 24/09/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & V.K. MOHANAN, JJ. -------------------------------------------- I.T.A. No. 1136 OF 2009 -------------------------------------------- Dated this the 24th day of September, 2009 JUDGMENT Ramachandran Nair, J. Respondent is a Government of Kerala undertaking. The assessment involved is for the year 2001-02. Wage revision was due from 1.7.2000 onwards. Even though there was settlement in the previous year itself about increase in wage, the actual settlement and payment were made in the subsequent years. However, since wage revision was payable from 1.7.2000 onwards, and the same will involve liability for 9 out of 12 months in the previous year relevant for the assessment year 2001-02, the assessee reasonably worked out the additional wages payable to the workers and claimed deduction on the same on accrual basis. The assessing officer however rejected the claim stating that actual liability arises only when settlement is signed. However, in first appeal, the first appellate authority held that liability was reasonably ascertained which was in fact paid in the subsequent years. Therefore he allowed the claim. It is against this order 2 confirmed by the Tribunal, that the department has filed this appeal. We do not find any merit in the department appeal as the liability was fixed by the company on a rational basis and the employees were in fact eligible for wage revision for 9 months out of the previous year relevant for the assessment year. Consequently appeal is dismissed. (C.N.RAMACHANDRAN NAIR) Judge. (V.K. MOHANAN) Judge. kk 3