Bharat Earth Movers vs Commissioner Of Income Tax, Karnataka

The Supreme Court addressed the admissibility of deductions for provisions made for encashment of earned leave under Section 37 of the Income Tax Act, 1961. The Court held that such provisions are not contingent liabilities but rather certain liabilities, as employees have a right to encash accumulated leave. The High Court's ruling that these provisions are contingent was overturned, allowing the deduction claimed by the appellant company for the assessment year 1978-1979.