TMI Blog2014 (3) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me into effect from asstt. year 2001-02 and as such apportionment cannot be done in this year, as it was not applicable. Accordingly, Ld. CIT(A) held that the VRS here is allowable in full. 5. Against the above order the Revenue is in appeal before us. 6. We have heard both the counsel and perused the records. Ld. Counsel of the assessee submitted that the issue is squarely covered in favor of the assessee by the decision of this Tribunal in assessee's own case in I.T.A. No. 2058/Del/2007 for asstt. year 1998-99. In this case the tribunal has held that 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. Therefore, these were not applicable to asstt. year 1998-99. Further the tribunal held that the expenditure in this case has to be treated as revenue expenditure. 7. We have carefully considered the submissions. We find that the as held by the CIT(A) and the Tribunal as above the provision of section 35DDA are effective from April, 2001. Hence, the same are not applicable to the current assessment year. Furthermore, it has already been held in decision cited abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adopt a uniform accounting method for accounting of the above expenses, the assessee has changed the method of accounting and in future years consistently follows the same method of accounting. Hence, considering the facts of the case and the nature of expenses which is not specifically debarred in law, the amount claimed by the assessee due to change in the method of accounting should be accepted. 10. However, the AO was not satisfied with the above, he held that the assessee has failed to discharge its onus by furnishing documentary evidence in support of its contention. Accordingly, AO held that the addition of Rs. 20.06 lacs shall be made to the total income of the assessee. 11. Before the Ld. CIT(A) assessee submitted that some of the Divisions were accounting accounts for medical expenses and LTA expenses on mercantile basis, but some of the divisions were following the cash basis. Assessee submitted that as per the provision of section 209(3) of the Companies Act and the Accounting Guidelines / Standard issued by the ICAI, the assessee was mandatorily required to maintain its books on mercantile basis. Provision for LTA expenses and medical expenses were computed on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted purpose of examining the veracity of computation of the liability in this regard. Needless to add that the assessee should be given adequate opportunity of being heard. 16. Apropos deletion of disallowance of warranty and option services contract expenses. On this issue the AO disallowed Rs. 13,50,33,619/- being provision of warranty and optional services contract expenses provided on the basis of actuarial valuation certificate. 17. Before the Ld. CIT(A) assessee submitted that this issue has to be decided in favor of the assessee as they are decisions in favor of the assessee. Furthermore, it was submitted that this issue was decided in assessee's own case by ITAT for asstt. year 1993-94 in ITA No. 1722/Del/99 where the ITAT has observed that provision had been made on actuarial valuation and AO has not been pointed out any discrepancy and the defect in the actuarial calculation. The ITAT opined that AO was not justified in making disallowance, accordingly, Ld. CIT(A) decided the issue in favor of the assessee. 18. Against the above order the Revenue is in appeal before us. 19. We have considered the rival submissions and perused the records. We find that a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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