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TMI Blog2010 (9) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... ue expenditure and it is in the nature of a capital expenditure to be amortized in the course of a few years. However in cases pertaining to the period prior to the introduction of section 35DDA Bombay High Court held that it is an revenue expenditure – Same view has been expressed in CIT v. Simpson and Co. Ltd[1996 (6) TMI 12 - MADRAS HIGH COURT], CIT v. Machinery Manufacturing Corporation Ltd.[1991 (6) TMI 15 - CALCUTTA HIGH COURT] and CIT v. P. I. Industries Ltd.[2008 (11) TMI 340 - RAJASTHAN HIGH COURT] – Following the decisions of various High Courts, order of the Tribunal for the assessment year 1999-2000 was confirmed and departmental appeal was dismissed – Allowed as revenue expenditure – Against the revenue. - ITA NO 206/10 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he previous year in which such payments were made. All payments to the employees under the voluntary retirement scheme for the period prior to the introduction of section 35DDA have to be necessarily considered under section 37(1) of the Act which is the residuary provision for allowing all other items of business and professional expenditure not specifically covered by other provisions of the statute. We notice that the Tribunal has declared entitlement for the assessee for deduction of the entire amounts paid under the voluntary retirement scheme as a revenue expenditure by virtue of consistent decisions of various High Courts. We are of the view that a consistent view taken by different High Courts on a question of law should not be dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessment relevant for the previous year in which payments were made. The same view has been expressed by the Madras High Court in CIT v. Simpson and Co. Ltd. (No. 1) reported in [1998] 230 ITR 703 (Mad) and the Calcutta High Court in CIT v. Machinery Manufacturing Corporation Ltd. reported in [1992] 198 ITR 559 (Cal). In fact there is a recent judgment of the Rajasthan High Court also taking the same view which is in CIT v. P. I. Industries Ltd. reported in [2009] 221 CTR (Raj) 259 ; [2010] 321 ITR 601 (Raj). The assessments involved in all the above cases pertain to the period prior to the introduction of section 35DDA of the Act. So much so, except the Rajasthan High Court no other High Court had occasion to consider the scope, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ially to make it more viable and profitable. Therefore, the benefit will be of an enduring nature which will last for years to come. So much so, in our view, payment made under the voluntary retirement scheme for retirement of a large number of employees is nothing but a capital expenditure which could be claimed as a deduction in a phased manner in the course of several years. It is for the assessee to estimate on a rational basis as to how many years the benefit is going to be enjoyed by the company and to write off the amount in a phased manner and claim deduction of only so much of the amount written off in the previous year and claim the balance in the course of succeeding years. Section 35DDA is virtual declaration of the fact that ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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