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2015 (12) TMI 301 - AT - Income TaxDisallowance of liability on account of leave encashment crystallized although has not fallen due for payment as on 31st March, 1996 - Held that:- The fact in the instant case is similar to the case of Bharat Earth Movers (2000 (8) TMI 4 - SUPREME Court). Now from the above facts, it is clear that liability towards leave encashment is a definite liability which has accrued and arisen during the year ending on March of this year. However, payment of the same does not fall during the relevant previous year but under the mercantile system of accounting this expenditure requires recognition in the books of accounts. - Decided in favour of assessee. Disallowance of liability of Voluntary Retirement Scheme (VRS) - Held that:- Once the agreement for severance has been signed by the employee the liability for the VRS amount become crystallized in the year of signing the agreement. Hence the timing of payment for the VRS amount is not relevant. So the liability for the same has to be recognized for the same and assessee prayed for the allowabilty of the VRS amount. As during the year 735 employees had opted for VRS as per the scheme of the assessee. Accordingly the expense to be made towards VRS to those staff has become definite expense. Although the payment of VRS was due in future date. Therefore the AO has disallowed the expenditure and same was confirmed by Ld. CIT(A) as it was not due for payment in the year under consideration. However, we find that this Tribunal has decided in assessee's own case where the expenses for VRS was allowed and keeping a consistent view we reverse the orders of authorities below. - Decided in favour of assessee. Disallowance of excessive depreciation - CIT(A) deleted the addition - Held that:- For determining the capital gain, from the full value of the consideration received or accruing as a result of transfer of capital asset, cost of acquisition of asset as well as cost of any improvement of such asset is to be reduced/. If cost of improvement of a particular asset cannot be ascertained than capital gain cannot be computed. While taking this view, we derive support from the decision of Hon'ble Apex Court in the case of B.C. Srinivasa Setty 1981 (2) TMI 1 - SUPREME Court ) relied upon by the Ld. Counsel for the assessee. The ITAT Hyderabad Bench in the case of Coromandel Fertilisers Ltd. (2003 (11) TMI 303 - ITAT HYDERABAD-B ) held that it is not possible to determine the cost of improvement of an undertaking, specially when undertaking has so many intangible asset, like trade mark, licence, goodwill etc. We entirely agree with the above conclusion of the ITAT, Hyderabad bench. In view of above, we respectfully following the decision of Hyderabad Bench in the case of Coromandel Fertilisers Ltd. (supra) uphold the order of the Ld. CIT(A) and dismiss the revenue's appeal - Decided in favour of assessee. Treatment to deemed recovery as the actual recovery by CIT(A) - Held that:- Recovery from the employees for the use of guest house was allowed in its own case by this Tribunal. Respectfully, following the decision of this Tribunal we decide this issue in favour of assessee Up-gradation cost on account of millennium up-gradation cost - whether treated as revenue expenditure and allowable deduction u/s. 37(1) - Held that:- Business of assessee is located in different place of the country and most of the expenditure incurred on making the computer Y2K compliant was in the nature of travelling and no enduring benefit is arising from making of existing computers of Y2K compliant only some small chips are required to upgrade the system. From the above discussion, we find that the major expenses were incurred on travelling to make the computer system of assessee Y2K compliant and no new fixed asset was purchased by assessee. Therefore, we treat the expenses incurred to make computer system Y2K as revenue expenditure - Decided in favour of assessee
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