Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (3) TMI 99 - AT - Income TaxDeletion of disallowance VRS expenses –Held that:- The CIT(A) following his appellate order for the assessment year 1998-99 in assessee's own case held that the expenditure was to be treated as revenue expenditure - The provision of section 35DDA providing for amortization of expenditure incurred under VRS have come into Statute by the Finance Act, 2001, effective from 2001 - the tribunal held that the expenditure in the case has to be treated as revenue expenditure – it is not applicable to the current assessment year - the order of the CIT(A) upheld – Decided against Revenue. Deletion of LTA and medical expenses – Held that:- Some divisions of the assessee were maintaining books of accounts for medical expenses and LTA expenses on cash basis while some of the divisions were following mercantile system of accounting - The assessee in order to bring uniformity and to comply with the provisions of Companies Act and Accounting Standard accounted for the liability towards these expenses on mercantile basis - The assessee has claimed that the expenses were computed precisely - it was certain liability and not the contingent one –Relying upon Hon'ble High Court in the case of CIT vs. Dolaguri Tea Company (P) Ltd. [1994 (4) TMI 381 - CALCUTTA HIGH COURT] the findings of the CIT(A) upheld that switching over from cash system of accounting to the mercantile system in respect of LTA and medical expenses was on a bonafide change and justified - the computation of liabilities in this regard has not been the subject matter of verification by the AO – thus, the matter remitted back to the AO for computation of liability - Decided partly in favour of Revenue. Deletion of disallowance of warranty and option services contract expenses – Held that:- The assessee has made the provision in the regard on the basis of actuarial valuation – as decided in assessee’s own case the order of the CIT(A) upheld – the AO has not been pointed out any discrepancy and the defect in the actuarial calculation – thus, the AO was not justified in making disallowance – Decided against Revenue. Disallowance on account of depreciation – Held that:- As decided in assessee’s own case that the assessee cannot be forced to claim depreciation - the amendment in section 32(1), Explanation 5 for making the allowability of depreciation compulsory was prospective in nature and was effective from 1.4.2002 – thus, the above amendment is also not applicable for assessment year under consideration - the AO’s action for forcing depreciation on the assessee in preceding assessment years and following the same in this year is not sustainable – thus, there is no infirmity in the order of the CIT(A) – Decided against Revenue.
|