BHARAT EARTH MOVERS vs COMMR. OF INCOME TAX

The Supreme Court addressed the admissibility of deductions for provisions made for encashment of earned leave under Section 256(1) of the Income-tax Act, 1961. The Court held that the liability for encashment of leave is not contingent but a certainty, as employees have the right to either avail or encash their leave. The Court overturned the High Court's ruling that deemed such provisions as contingent liabilities, thereby allowing the deduction claimed by the appellant company for the assessment year 1978-1979.