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Disallowance of payments to workers under the voluntary retirement scheme. Analysis: The judgment revolves around the disallowance of payments made to workers under a voluntary retirement scheme by the assessee company. The company, engaged in fabrication work, faced financial difficulties due to accumulated losses. It sought closure of its factory, which was rejected by the government, leading to the introduction of a voluntary retirement scheme. The Assessing Officer disallowed the expenditure claimed under the scheme as business expenditure, citing lack of continuity in business activities. The company argued that it continued its business through sub-contractors and fabrication work at customers' sites. Both the Assessing Officer and CIT (A) rejected the company's contentions, leading to an appeal. The Appellate Tribunal analyzed the facts and legal precedents to determine the continuity of the business. It found that the fabrication work at customers' sites and manufacturing activities at the shops were part of the same business, indicating no cessation of business. The Tribunal rejected the suspicion that bills provided by the company were fabricated, highlighting the ongoing business relationships. The Tribunal also noted the company's business activities in subsequent years, affirming the continuity of business. Legal precedents, including judgments from the Madras and Patna High Courts, supported the company's position that the expenditure under the voluntary retirement scheme was incurred in the course of business and out of commercial expediency. The Tribunal distinguished the judgments relied upon by the revenue, emphasizing the unity of control, management, and finances in the company's operations. It highlighted that the closure of one part of the business did not affect the deductibility of the expenditure under the scheme. The Tribunal concluded in favor of the assessee, allowing the deduction for the payments made under the voluntary retirement scheme. The decision was based on the business continuity, commercial expediency, and legal principles established in relevant judgments. This detailed analysis of the judgment showcases the intricate legal considerations and factual assessments undertaken by the Appellate Tribunal in resolving the issue of disallowance of payments under the voluntary retirement scheme.
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