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TMI Blog2020 (11) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... 01. The appeal was admitted by a bench of this Court vide order dated 21.02.2013 on the following substantial questions of law: (i) Whether the Appellate Authorities were correct in holding that the assessee is entitled to claim deduction in respect of expenditure incurred toward payment of voluntary retirement compensation of the employees taken over from M/s. Elpro International when the same was not incurred solely and exclusively for the purpose of business? (ii) Whether Appellate Authorities were correct in failing to take into consideration that the business of M/s. Elpro International continue and taking over of the employees eligible for voluntary retirement was a device to avoid tax and recorded a perverse finding? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and held that the assessee is entitled to deduction in respect of payments made to the employees under the scheme. Thereupon the revenue approached the Income Tax Appellate Tribunal (hereinafter referred to as 'the tribunal' for short) by filing an appeal. The tribunal by an order dated 13.07.2012 by placing reliance on its earlier order upheld the order passed by the Commissioner of Income Tax (Appeals). In the aforesaid factual background, this appeal has been filed. 4. Learned counsel for the revenue submitted that the tribunal ought to have appreciated that the transaction between the assessee and M/s. Elpro International was only purchase of shares and therefore, expenditure incurred by the assessee under the scheme was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. 5. On the other hand, learned Senior counsel for the assessee submitted that in case of the assessee itself, the Pune Bench of Income Tax Appellate Tribunal by an order dated 22.06.2007, had answered the issues involved in this appeal in favour of the assessee and against the aforesaid decision, the revenue had preferred an appeal before the High Court of Bombay viz., I.T.A.No.904/2009, which has been dismissed by the High Court of Bombay vide order dated 16.08.2018 for want of prosecution. It is urged that an inference can be drawn that the revenue has accepted the view taken by the Pune Bench of the tribunal in case of the assessee. Learned Senior counsel for the assessee has also invited our attention to the facts mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;, 118 ITR 261 (SC) ' COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE VS. NOVELL SOFTWARE DEVELOPMENT (I) (P.) LTD.', (2013) 35 TAXMANN.COM 414 (KARNATAKA), 'COMMISSIONER OF INCOME-TAX AND ANOTHER VS. INFOSYS TECHNOLOGIES LTD. (2012) 349 ITR 606 (KARN), 'THE COMMISSIONER OF INCOME TAX, BANGALORE-1 VS. M/S G.E. MEDICAL SYSTEMS INDIA PVT. LTD., ITA NO.904/2009 and 'THE G.E.MEDICAL SYSTEMS INDIA (P) LTD. PUNE VS. DCIT, CIR 1(1), PUNE, ITA NO.1073 & 1074/PN/2003. 6. We have considered the submissions made by learned counsel for the parties and have perused the record. Section 37(1) of the Act provides that any expenditure not being expenditure of the nature described in Sections 30 to 36 and not being in the nature of capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and M/s. Elpro International. This agreement is part of share purchase agreement. Under the said agreement, the employees were given a choice of continuity of service and it was also provided that their service shall be considered from the date they have joined M/s. Elpro International. Thereafter, in July 1997, the assessee formulated the scheme. Under the scheme, a sum of Rs. 4,33,67,658/- was paid as retirement benefit to the employees who availed benefit of the scheme. Under the scheme, compensation was paid not only for past services but also for remaining years of service with the company. The employees had also filed a complaint against the assessee under the Labour Laws and therefore, the assessee had to offer a scheme to avoid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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