Under Clause (f) of Section 43B any sum payable by the employer/assessee to its employees as leave encashment shall be available for deduction only in computing the income referred to in Section 28 of that previous year in which such sum is actually paid by the employer to its employees.

Calcutta High Court had struck the aforesaid clause (f) as being arbitrary and unconscionable in Exide Industries Ltd vs UOI 292 ITR 470 .

Income Tax department filed Special Leave Petition in Supreme Court which stayed the order of the Calcutta High court and decided that assessee must pay tax as if s. 43B (f) is on the statute though it is entitled to make a claim in its return.