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TMI Blog2014 (7) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity of the Assessee had ceased that the AO disallowed the deduction - there is no justification for denying the deduction to the Assessee Company and granting the same as per the provisions of section 35DDA of the Act - the order of the Tribunal cannot be faulted on any ground – thus, no substantial question of law arises for consideration – Decided against Revenue. - Income Tax Appeal No. 403 of 2012 - - - Dated:- 9-7-2014 - S. C. Dharmadhikari And B. P. Colabawalla,JJ. For the Appellant : Mr. Tejveer Singh For the Respondents : Mr. Girish Dave with Ms. Kadambari Dave i/b Mr. A. K. Jasani JUDGMENT (Per B. P. Colabawalla J.) :- 1. This Appeal under section 260A of the Income Tax Act 1961 filed by the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be amortized under section 35DDA ? 3. The facts stated briefly are that the Assessee filed its return of income on 1st November 2004 declaring a total loss of ₹ 6,62,98,483/-. The return was processed under section 143(1) of the Act and after issuing the necessary notices to the Assessee, the Assessing Officer passed his order on 29th December 2006 under section 143(3) of the Act. With reference to the deduction claimed by the Assessee of the sum of ₹ 39,66,774/- in relation to severance pay, the Assessing Officer first held that this deduction could not be claimed under section 37(1) of the Act as the same was on par and/or akin to a Voluntary Retirement Scheme (VRS) and in view thereof, the provisions of section 35DDA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the authorities below have proceeded on the fallacious assumption that the payment of severance pay is an expenditure connected with closing down of business, whereas not only assessee continues to carry on the business, but he does so more efficiently, by outsourcing the production of alcoholic beverages. The expenditure incurred on this restructuring of business model, in our humble understanding, cannot be treated at par with expenses on closing down the business. The judicial precedents cited by the authorities below deal with the situations where business was being closed down. That is not the case before us. In this view of the matter, the judicial precedents cited by the authorities below are not really decisive of the issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyees, in essence, is a payment in connection with their voluntary retirement. In this view of the matter, even though the amount paid to the employees is a revenue expenditure, it is required to be amortized nevertheless under section 35DDA of the Act. We, therefore, hold that only one fifth of the expenditure on severance pay was allowable in this assessment year. The assessee will, however, get deductions of same amount in each of the four subsequent assessment years as well. 6. On the perusal of the said paragraph, it is clear that the ITAT being the last and the highest fact finding authority under the Act, has rendered a categorical finding that :- i) the Assessee continues its business; ii) it does so more efficiently by o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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