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TMI Blog2013 (12) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... payment was under the scheme framed by the employer - The scheme is voluntary and not compulsory based on the fact - "The Govt. of India has decided to close the business and the scheme is not voluntary in nature, it is compulsory and is to be opted by all the employees and if it is not availed by certain employees then in that circumstance those employees will be compulsorily retrenched." - It may be a different thing that the government persuaded or pressurized all the employees to accept the scheme giving threat of retrenchment - It is voluntary because only when a scheme is voluntary, there is question of anybody opting to avail or not to avail - The Revenue itself has allowed the deduction in the earlier year – Decided against Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order has not been considered by ld. CIT(A). 3. The appellant craves the consent to add, modify, amend or delete any of the ground of appeal at the time of hearing." 3. At the time of hearing before us, it is stated by the learned counsel that the assessee is a Government of India undertaking. It is engaged in the business of manufacture of fertilizer. Due to heavy losses, the company had stopped the manufacturing activity since earlier years. During the accounting year relevant to assessment year under consideration, the Assessing Officer disallowed depreciation on several assets, viz., building, roads and culverts, water system, office appliances etc. That in AY 2004-05, the assessee had claimed the depreciation on all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epreciation on various assets claimed in the year under consideration. He further stated that since the assessee has not carried out any manufacturing activity which was its main business, it is evident that no assets were used for the purpose of business and therefore, the disallowance of entire depreciation is fully justified. 5. We have carefully considered the arguments of both the sides and perused the material placed before us. Admittedly, the facts of the year under consideration and assessment year 2004-05 are identical. In AY 2004-05, the Assessing Officer allowed depreciation on certain assets while in the year under consideration, he disallowed the depreciation on all the assets. In our opinion, when the facts are identical, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25,84,000/- made by the AO on account of payment made to employee under Voluntary Separation Scheme u/s 35DDA(1)." 7. At the time of hearing before us, it is stated by the learned DR that during the financial year 2006-07, relevant to assessment year 2007-08, the assessee made a payment of Rs. 9,94,63,000/- under the Voluntary Separation Scheme (VSS). On the above scheme, the provisions of Section 35DDA were applicable and therefore, the Assessing Officer, following the provisions of Section 35DDA, allowed 1/5th of the payment made under VSS in the year under consideration. The learned CIT(A) directed the Assessing Officer to allow the entire payment on the ground that Section 35DDA presupposes that there should be continuance and existe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of VSS is allowed in the year under consideration instead of allowing 1/5th of the payment in the five years. 9. We have carefully considered the arguments of both the sides and perused the material placed before us. Section 35DDA reads as under:- "35DDA. (1) 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." 10. From the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact recorded by the learned CIT(A). From the above finding, it cannot be said that the scheme was not voluntary. If the scheme is compulsory, there is no question of any option to the employees. It may be a different thing that the government persuaded or pressurized all the employees to accept the scheme giving threat of retrenchment. However, so far as the nature of scheme is concerned, it is voluntary because only when a scheme is voluntary, there is question of anybody opting to avail or not to avail. Therefore, we hold that the scheme was voluntary and condition No.(iii) for applicability of Section 35DDA was duly fulfilled. From the perusal of Section 35DDA, we do not find any condition that there should be continuous existence of bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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