Leave Encashment Payment Made After Financial Year not Deductible under Income Tax Act Without Accrued Liability: Himachal Pradesh HC

The Himachal Pradesh High Court held that leave encashment payment made after the financial year is not deductible under the Income Tax Act without accrued liability. The court clarified that for an expense to be deductible, the liability must have accrued in the relevant financial year. Payment made in a subsequent year for leave not availed in the previous year does not qualify for deduction if the liability was not recorded on an accrual basis.