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2013 (11) TMI 934 - AT - Income TaxDisallowance of extra ordinary expenses - Payment under VRS scheme - Held that:- payments made under the Voluntary Retirement Scheme was the expenditure incurred by the assessee to save expenses and it was not referable to any income yielding asset. It was held that the said expenditure thus should be allowed in its entirety in the year in which it was incurred and the same could not be spread over a number of years. It was also held that the expenditure incurred by the assessee relating to Voluntary Retirement Scheme as well as on account of gratuity was revenue expenditure and the same was allowable as deduction in the year in which it was actually incurred - Following decision of Commissioner of Income-tax v. Bhor Industries Ltd. [2003 (2) TMI 20 - BOMBAY High Court] - Decided against Revenue. Disallowance of interest - Loan taken for new factory - Held that:- loans had been obtained for the purpose of assessee’s business and the fact that the particular portion of the business for which the loans were obtained had been transferred or closed down did not alter the fact that the loans, when obtained had been for the purpose of the assessee’s business - CIT(A) was fully justified in allowing the claim of the assessee on interest paid on capital borrowed for the purpose of new glass factory set up by the assessee at Jambusar in Gujarat which was nothing but expansion of the assessee’s existing business - Following decision of Veecumsees v. Commissioner of Income-tax [1996 (4) TMI 6 - SUPREME Court] - Decided against Revenue. Disallowance of expenditure - Closure of factory - Held that:- Thane unit was closed by the assessee as a business necessity arising out of statutory compulsion. As further found by him, the business carried on in the said unit was not discontinued but shifted to other places. Having taken note of these facts, the ld. CIT(A) held that the ratio of the decision of Hon’ble Supreme Court in the case of K. Ravindranathan Nair (2000 (11) TMI 3 - SUPREME Court) was clearly applicable to the facts of the assessee’s case and accordingly he directed the A.O. to allow the deduction claimed by the assessee on account of expenses pertaining to the closed Thane factory u/s 37(1) of the Act. At the time of hearing, the ld. D.R. has not been able to bring anything on record to controvert or rebut the finding of fact recorded by the ld. CIT(A) on this issue - Decided against Revenue. Computation of profit u/s. 115JA – Held that:- P&L Account prepared by the assessee for the purpose of 115JA of the Act has been duly certified by the Chartered Accountant. There is no complaint that the same is not in accordance with provisions of part II & Part II of Schedule VI of the Companies Act 1956. As rightly pointed out by the assessee the only restriction in 115JA(2) is regarding the depreciation which has to be in conformity with the method adopted under Companies Act. There is however, departure in section 115JB(2) of the Act which provides that the accounting policies and accounting standards adopted while preparing P&L Account for section 115JB of the Act should correspond to the one adopted for the purpose of Companies Act 1956 - Decided against Revenue. Assessee provided funds for establishing drinking water facilities to the residents in the vicinity of the refinery and also provided aid to the school run for the benefit of the children of those local residents - Monies spent for bringing drinking water as also for establishing or improving the school meant for the residents of the locality in which the business is situated cannot be regarded as being wholly outside the ambit of the business concerns of the assessee, especially where the undertaking owned by the assessee is one which is to some extent a polluting industry – such expenditure are allowable.
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