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TMI Blog2018 (5) TMI 1573X X X X Extracts X X X X X X X X Extracts X X X X ..... mpensation and did not allow claim under section 35DDA of the I.T. Act, 1961. 3. The assessee filed written submissions before Ld. CIT(A) which is reproduced in the appellate order in which the assessee briefly explained that assessee-company is a manufacturing company and is engaged in the business of manufacturing of auto components, such as, filters, rear view mirrors and plastic components of different varieties for different O.E.M. vehicle manufacturers. There was also demerger of other units as per the directions of Hon'ble Delhi High Court. The assessee-company, during the assessment year, had seven manufacturing units at Faridabad, Gurgaon, Manesar, Pune and Aurangabad with Corporate/Head Office at Okhla Industrial Area, New Delhi. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T. Act is applicable in respect of the expenditure made in connection with the voluntary retirement. This provision is applicable when VRS is introduced by the assessee-company and payments are made by the assessee-company to its employees on their voluntary retirement. However, in the case of the assesseecompany, its Aurangabad unit was closed with retrenchment of all the workers and staff as on 31st March, 2010. The service compensation was paid to the employees of the Company which is based on 16 days wages/salary for the years of service served by them. Payments were made to the workers and staff on their retrenchment. Thus, no payment is made for VRS. It is, therefore, an allowable deduction under section 37(1) of the I.T. Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Notice of closure of factory by an Employer Same of the Employer: Lumax Automotive Systems Ltd. Address: C10, Waluj, Aurangabad. Dated 29th day of January, 2010. In accordance with provision of the Industrial Dispute Act, 1947 we hereby give notice to all concerned that it is our decision to affect the closure specified in the annexure. with effect from 31s' March, 2010. Signature U.K. Jain Chairman and Managing Director This factory has been suffering heavy and perpetual losses for the 2-3 years due to various reasons, The major ones is financial problem. We have lost orders from our valued and 'ominous customer. Further, due to losses and paucity of funds the unit is not able to upgrade machines and testi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 37(1) are allowed. In the result, the appeal is allowed. 5. After considering the submissions of the Ld. D.R. in the light of findings of the Ld. CIT(A), we do not find any merit in the Departmental Appeal. The assessee-company explained that it has closed down its Aurangabad unit due to heavy losses suffered by the assessee-company. The assessee-company in this year has declared loss of Rs. 4.34 crores in the return of income and after making addition as well, the net taxable loss have been determined at Rs. 3.77 crores. Therefore, the contention of the assessee-company is correct that in order to save future losses, Aurangabad unit was closed down by the assessee-company. The closure is approved by the Board of Directors and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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