Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2010 (9) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2010 (9) TMI 918 - HC - Income TaxPayment under Voluntary Retirement Scheme – Whether the expenditure on voluntary retirement scheme is a revenue expenditure and not a capital expenditure – Held that:- It is the settled position that expenditure incurred for achieving the benefit of an enduring nature is also capital in nature. Purpose of introduction of the VRS is to reduce the staff strength, to achieve viability and profitability of the industry , it will give long-term benefit to the assessee. Benefit will be of an enduring nature which will last for years to come – Section 35DDA is virtual declaration that expenditure incurred under VRS is not a revenue expenditure and it is in the nature of a capital expenditure to be amortized in the course of a few years. However in cases pertaining to the period prior to the introduction of section 35DDA Bombay High Court held that it is an revenue expenditure – Same view has been expressed in CIT v. Simpson and Co. Ltd[1996 (6) TMI 12 - MADRAS HIGH COURT], CIT v. Machinery Manufacturing Corporation Ltd.[1991 (6) TMI 15 - CALCUTTA HIGH COURT] and CIT v. P. I. Industries Ltd.[2008 (11) TMI 340 - RAJASTHAN HIGH COURT] – Following the decisions of various High Courts, order of the Tribunal for the assessment year 1999-2000 was confirmed and departmental appeal was dismissed – Allowed as revenue expenditure – Against the revenue.
|