Income Tax Appellate Tribunal Mumbai Haffkine Bio Pharmaceutical ... vs Acit 7(1)(2), Mumbai on 13 January, 2026 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH "E", MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER I.T.A No.5352/Mum/2025 (Assessment Year: 200708) Haffkine Bio Pharmaceutical vs ACIT, 7(1)(2), Mumbai Corporation Aykar Bhavan, BKC, Maharastra Acharya Dhondle Marg, Parel, Mumbai400012 PAN : AAACH0965N APPELLANT RESPONDENT Assessee by : Shri Mayur Makadia Respondent by : Shri Hemanshu Joshi (SR DR) Date of hearing : 07/01/2026 Date of pronouncement : 13/01/2026 ORDER Per: Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the NFAC Delhi [for brevity, 'Ld.CIT(A)'] order passed under section 250 of the Incometax Act, 1961 (for brevity, 'the Act) for the Assessment Year 200708, date of order 27/06/2025. The impugned order emanated from the order of the Learned Assessment Commissioner of Incometax 7(1)(1), Mumbai (for brevity, 'the Ld.AO') order passed u/s 143(3) r.w.s. 254 of the Act, date of order 10/10/2016. 2 ITA No.5352/Mum/2025 Haffkine Bio Pharmaceutical Corporation 2. The brief facts of the case are that the assessee 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 Act 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 Ld. CIT(A). However, the Ld. CIT(A) rejected the assessee's appeal. 3. Thereafter, the assessee filed an appeal before the ITAT, Mumbai Bench, and the Tribunal, vide its order dated 06.04.2015, restored the matter to the file of the Ld. AO 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. It was submitted that the assessee had computed the said provision by relying on the pattern and calculations of earlier years. The provision was created to account for an ascertained liability towards the anticipated increase in salaries pursuant to the recommendations of the Sixth Pay Commission. However, the Ld. CIT(A) once again rejected the assessee's appeal. Being aggrieved, the assessee has filed the present appeal before us. 4. The Ld. AR argued the matter and filed a paper book comprising pages 1 to 67, which has been placed on record. The Ld. AR submitted that the assessee has consistently followed the same method of creating provision for salary since 3 ITA No.5352/Mum/2025 Haffkine Bio Pharmaceutical Corporation financial year 197677. It was further submitted that the assessee is a Government of Maharashtra undertaking, and the recommendations and orders of the Pay Commission are binding upon it. The details relating to the implementation of the Pay Commission's directions have been furnished in a tabulated form, which is reproduced below: 5. The Ld. AR further contended that the said liability has been consistently and systematically computed by the assessee since the year 1976. Based on such historical calculations, an ad hoc provision of Rs.2,00,00,000/ was made in the impugned assessment year. It was submitted that the provision for salary arising out of the implementation of the Sixth Pay Commission was duly calculated and the relevant workings were placed before the Bench. The same are reproduced below: 4 ITA No.5352/Mum/2025