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2015 (3) TMI 446 - AT - Income TaxDisallowance of gratuity and compensation, payment made to common support staff and expenses in respect of processing unit which was permanently closed down - whether the processing business was a separate business not related with the other business of the assessee? - CIT(A) deleted disallowance - Held that:- Assessee has not closed down his business as a whole but had stopped the processing division, which is only one of the division of the Textile business carried on by the assessee. The closure of the processing division was done on commercial expediency. A perusal of the various documents placed on record also makes it clear that there was interconnection, interlacing and unity of control and management, common decision making mechanism and use of common funds in respect of entire textile business of the assessee. The assessee has taken a decision on commercial expediency to downsize its operation and effected the closure of processing unit which has not resulted into closure of the textile business of the assessee as a whole. The detailed findings recorded by the CIT(A) have not been controverted by the department by brining any positive material on record. The case of Gemini Cashew Sales Corporation [1967 (4) TMI 4 - SUPREME Court] as applied by the AO is distinguishable on facts, insofar as business of the erstwhile partnership was dissolved by death of one of the two partners. The partnership firm was dissolved, it was held by the Hon'ble Court that retrenchment compensation was not allowable in the year of dissolution of partnership firm, whereas the facts in the instant case clearly distinguishable wherein textile business of assessee was continued. The findings recorded by CIT(A) are as per material on record, which have not been controverted by Ld DR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the findings recorded by the CIT(A), which resulted into deletion of addition made by the AO. - Decided against revenue.
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