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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 ..... n on closure of the Aurangabad unit of the assessee-company. The amount is thus paid for business purposes only and as such, it was an allowable deduction under section 37 of the I.T. Act. Provisions of Section 35DDA applied by the A.O. are not applicable in this case because assessee-company has not paid any service compensation under any scheme of voluntary retirement. In the absence of any contrary material brought on record, we are of the view that no interference is called for in the matter. - Decided against revenue. - ITA. No. 114/Del./2015 - - - Dated:- 2-5-2018 - Shri Bhavnesh Saini, Judicial Member And Shri L. P. Sahu, Accountant Member For Revenue : Shri Amit Jain, Sr. D.R. For Assessee : None ORDER Per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same, the Directors of the Company in their Board Meeting, had decided to close down its factory unit at Aurangabad. Accordingly, Management had given a General Notice to the factory workers for closure of the unit w.e.f. 31st March, 2010. The Company Management and the Worker s Union had entered into an Agreement with regard to Terms of the Retrenchment Compensation and other dues to the workers. The details were filed on record. Out of 59 employees, 56 employees had taken their dues and submitted their resignation. Out of 03 left-over employees, 02 employees had taken their dues in F.Y. 2012- 2013 and only one employee remained unpaid at the time of assessment proceedings. It was submitted that generally there are two ways for payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. 4. The Ld. CIT(A) considering the material on record, deleted the entire addition. His findings are reproduced as under : FINDINGS : 1 have perused that assessment order, grounds of appeal, written submission and discussed the matter with the AR very carefully. The appellant company had closed its business at Aurangabad unit for which the board resolution and nature of closure of factory notice by the employer is reproduced below:- CERTIFIED TRUE COPY OF THE BOARD RESOLUTION PASSED AT THE BOARD METTING OF LUMAX AUTOMOTIVE SYSTEMS LIMITED HELD ON 29 JANUARY 2010 AT 63-64, GHOKALE MARKET, NEW DELHI-110054 The company authorizes its board to take the decision of closer of loss making factories of the company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will face the consequences. With a view to overcome from this problem, the management has decided to close the factory and request the workers to take their full and final settlement from the company. Management is also open to any viable suggestions from the concerned workmen. The closure of factory retrenchment of employees is not equivalent to voluntary retirement scheme of group of employees under the VRS scheme. Hence the provision for 35DDA is not applicable in this case. The appellants claim is made u/s 37(1) of the IT Act which is permissible in law. The appellant incurred expenditure on payments made to retired employees of closed unit as full and final settlement of their dues. Hence this is made for business purpose. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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