9911796707
TMI Blog2012 (12) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... LHI] Followed. - IT Appeal No. 890 (Bang.) of 2011 - - - Dated:- 21-9-2012 - N. Barathvaja Sankar AND George George K, JJ. K. Subramanian for the Appellant. S.K. Ambastha for the Respondent. ORDER George George K, Judicial Member - This appeal instituted by the assessee is directed against the order of the CIT, LTU, Bangalore passed under section 263 of the Act dated 12.8.2011. The relevant assessment year is 2007-08. 2. The grounds of appeal raised read as follows:- 1. Initiating proceedings under section 263 of the Income-tax Act, 1961. (a) The learned Commissioner of Income-tax ('CIT') erred in holding that the assessment order under section 143(3) is erroneous and prejudicial to the interest of revenue. (b) The learned CIT erred in invoking the provisions of section 263 of the Act to direct the Assessing Officer to disallow the payments made by the appellant ('Bank') to its employees under the Exit Option Scheme. (c) The learned CIT erred in holding that the assessment order is erroneous and prejudicial to the interests of the revenue as most of the other issues (discussed in the revisional order) were also held in favour of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35DDA for VRS". Hence, there is an excess claim of deduction to the extent of Rs. 5,67,65,058.54 having a tax effect of Rs. 1.91 crore which requires to be brought to tax as per provisions of section 35DDA. (b) The deduction under section 88E claimed by the assessee amounting to Rs. 46,28,515/- needs to be verified since the records indicate that the conditions contained therein are not satisfied. This has resulted in short levy of tax to the tune of Rs. 51,93,194/-. (c) On verification of the details, the Assessing Officer appears to have not gathered any information as to the depreciation claimed on investment in AFS category of Rs. 1,26,61,106/-. The applicability of the RBI guidelines read with. CBDT Circular 665 has not been looked into by the Assessing Officer. This has resulted in a short levy of tax of Rs. 42,61,728/-. (d) The company has claimed depreciation in respect of computers @ 60%, but in the notes under column 4, it has been mentioned that computers includes printers, modem other accessories. But as per provisions of the Income-tax Act in order to claim depreciation @ 60% in respect of computers the meaning of computer is "computers including computer s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tirement Scheme as provided in Rule 2BA, A copy of the circular is enclosed. Accordingly, it is submitted that as the scheme was not framed in accordance with the guidelines prescribed in Rule 2BA, the provisions of sections 35DDA and 10(10C) of the Act are not applicable to the payments made by the Bank". 5. The CIT(A) however rejected the assessee's objection and directed the Assessing Officer to withdraw the deduction of Rs.7,09,56,323/- being debited to P L account. The relevant finding of the CIT(A) reads as follows:- "On perusal of the records of the assessee show that it has debited a sum of Rs. 7,09,56,323.43/- to the profit and loss account during the previous year. According to the assessee the voluntary retirement scheme is not in accordance with Rule 2BA. The voluntary retirement scheme is called the Exit Option Scheme. The perusal of the scheme shows that it seeks to permit eligible officers in JMGS-I and above to whom the State Bank of Mysore officers services regulation 1979 are applicable who feel frustrated and de-motivated due to lack of career prospects. It also applies to officers who had crossed 58 years between 30.2.06 to 10.7.2006. The perusal of the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned DR on the other hand supported the revision order of the CIT. 9. We have heard the rival submissions, perused the materials available on record and the case laws cited. To be eligible for deduction under section 35DDA, there is no requirement for the VRS scheme to be in compliance of Rule 2BA. A comparison of provisions of section 35DDA and section 10(10C) reads as follows:- Section 35DDA Section 10(10C) "Where an assessee incurs any expenditure in any previous year by way of payment of any sum to an employee (in connection with) his voluntary retirement, in accordance with any scheme or schemes of voluntary retirement, one-fifth of the amount so paid shall be deducted in computing the profits and gains of the business for that previous year, and the balance shall be deducted in equal instalments for each of the four immediately succeeding previous years". "Any amount received (or receivable by an employee of - ( a ) a public company; or ( b ) any other company; or ( c ) an authority established under ; ( d ) . ( e ) ( f ) .. ( g ) Provided that schemes of the said companies or authorities (or societies o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5DDA, provision was made regarding the application of rule 2BA. That portion was deleted when the bill was passed and, thus, the conditionalities of that rule have not been incorporated intentionally in the section. It was, therefore, found that the deletion of conditionalities originally incorporated in the Bill showed that legislative intendment was not to incorporate all the conditions of section 10(10C) in section 35DDA. Finally, the Legislature left the scheme of voluntary retirement open-ended and did not place any restriction on the scheme. Thus, plain language of the provision supports the case of the assessee. Further, it was not a case of taking guidance from a definition section. For sustaining the arguments of the revenue, the provision contained in section 35DDA would have to be modified by incorporating a part of section 10(10C) in it. It was held that, such an incorporation did not find support from any rule of construction. Thus, there was no compelling reason to read section 35DDA as suggested by the revenue. Therefore, the scheme of the assessee was held to be a VRS, to which the aforesaid provision was applicable". 9.4 In view of the aforesaid discussion and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
