TMI Blog2015 (12) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of section 35DDA was not brought to the notice of the court. Therefore these decisions render no help to the cause of the assessee. Thus we confirm the order of CIT (A) disallowing the claim of the assessee u/s 37(1) of the act on account of payment made under voluntary retirement scheme - Decided against assessee. Non granting adjustments of TDS - Held that:- CIT (A) is not justified in dismissing this ground of appeal. If the assessee has filed TDS certificates along with the return of income filed by the assessee and if the claim is according to the law , assessee should be granted the credit for such TDS certificate. In view of this we direct AO to grant credit of TDS certificates on merit after proper verification if the credit complies with the provision of section 199 of the Income Tax Act. - Decided in favour of assessee. Disallowance of carry forward of loss - Held that:- We direct that assessee should be allowed the carry forward of losses as shown by the return of income in view of press release of CBDT dated 22.12.2008 in No 402/92/2006-MC-(53 of 2008) where CBDT has accepted that returns filed electronically on 30.9.2008 where the acknowledgement date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to the income by way of dividend and as such no expenditure was to be deducted under Section 14A of the Act; 3. That the Commissioner (Appeals) erred in upholding the disallowance of ₹ 6,08,74,376/-paid to the employees in view of the Voluntary Retirement Scheme; 4. That the Commissioner (Appeals) erred in not directing the Assessing Officer to refund/adjust the tax deducted at source of ₹ 2,92,865/-; 4.1 He erred in holding that the requisite material in this regard was not there; 5. That the Commissioner (Appeals) erred in holding that the Appellant was not entitled to carry forward the business loss/or being set off of in the subsequent years; 5.1 That the Commissioner (Appeals) erred in holding that the return was not filed within the time allowed under Section 139(1) of the Act; 6. That the conclusions and inferences of the Assessing Officer and/or Commissioner (Appeals) are based on suspicions, conjectures, surmises and extraneous and irrelevant considerations; 7. That the reliefs prayed for may kindly be allowed and the order(s) of the Assessing Officer and/ or Commissioner (Appeals) may kindly be quashed, set a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O was of the view that as the claim of the assessee for allowance of VRS payments , same is covered by provisions of section 35DDA of The Income Tax Act and hence, not allowable u/s 37(1) of the Act. Assessee agitated the issue before CIT (A) who also confirmed the order of AO on same reasoning and therefore assessee is in appeal before us on this ground. 8. Before us Ld. AR of the assessee said that the claim is allowable u/s 37(1) of the Income Tax Act and he relied up on following decision of various courts. a. CIT V KJS India Private Limited 340 ITR 380 ( Delhi) b. CIT V Bhor Industries Limited 264 ITR 180 ( Bom) c. CIT V orient papers and Industries Limited 372 ITR 680 ( cal) d. CIT V Simpson co Limited 230 ITR 703 e. CIT V Swan Mills Limited 39 Taxmann.com 112 ( Bom) 9. Ld DR relied on the order of AO as well as CIT (A) and submitted that claim is not allowable u/s 37(1) of the Act as it is specifically allowable u/s 35DDA of the Income Tax Act. 10. We have carefully considered the rival submission of the parties and also perused the orders of lower authorities. We have also perused the decisions relied up on by the Ld AR of the assessee. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applied to the firm or the proprietary concern, if reorganization of business had not taken place. (5) No deduction shall be allowed in respect of the expenditure mentioned in sub-section (1) in the case of the amalgamating company referred to in sub-section (2), in the case of demerged company referred to in sub-section (3) and in the case of a firm or proprietary concern referred to in sub-section (4) of this section, for the previous year in which amalgamation, demerger or succession, as the case may be, takes place. (6) No deduction shall be allowed in respect of the expenditure mentioned in sub-section (1) under any other provision of this Act. According to this section the dispute has come to end that whether the VRS expenditure is capital or revenue in nature. With effect from AY 2001-02 , any expenditure incurred by assessee on Voluntary retirement scheme shall be allowed in five years i.e @ 20 % for each of the year. Further any expenditure which is in nature of expenditure of Voluntary retirement scheme shall not be allowed as deduction under any other section of the Income Tax Act. Analyzing the claim of the assessee it is apparent that claim of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be either revenue expenditure or capital expenditure. Further, section 37 as such is a general provision which provides for deduction of expenditure while computing the income chargeable under the head Profits and gains of business or profession of the assessee, if the expenditure is of revenue nature and not personal expenses of the assessee and if the said expenditure is laid out or expended wholly and exclusively for the purpose of business or profession. Hence, if the expenses are not covered by the specific provisions of sections 30 to 36 and yet the said expenses are laid out or expended wholly and exclusively for the purposes of the business or profession and they are not in the nature of capital expenditure or personal expenses of the assessee, then deduction is required to be given for the said expenses. It is quite possible that with regard to some expenses there may be overlapping between sections 30 to 36 and section 37. In that set of circumstances, if the expenses are deductible under sections 30 to 36, then section 37 is not to be resorted to. But if the said expenses are not deductible under sections 30 to 36 and the conditions prescribed under section 37 are sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 ITR 380 (Delhi), however provision of section 35DDA was not brought to the notice of the court. Therefore these decisions render no help to the cause of the assessee. 16. In view of above facts we confirm the order of CIT (A) disallowing the claim of the assessee of ₹ 6,08,74,376/- u/s 37(1) of the act on account of payment made under voluntary retirement scheme. Therefore ground no 3 of the appeal is dismissed. 17. Ground No 4 of the appeal is against not granting adjustments of TDS of ₹ 292865/-. Assessee has dully filed the TDS certificates along with the return of income. CIT (A) has not adjudicated on this issue for the reason that there is an alternative remedy available with the assessee. Therefore this ground was dismissed by CIT (A). Before us assessee submitted that as the TDS certificates are filed by the assessee along with the return of income it should have been granted credit for the same. 18. We have carefully considered the rivals contentions. We are of the View that CIT (A) is not justified in dismissing this ground of appeal. If the assessee has filed TDS certificates along with the return of income filed by the assessee and if the claim is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny had claimed prior period expense of ₹ 22,47,126/-. Accordingly, he required the appellant company to explain as to why the expenses in question should not be disallowed and added back to the declared income for the AY under consideration. Assessee submitted that such expenses are settled for payment in the AY under reference and this is the policy of the assessee company booking such expenses and Further Hon'ble ITAT had allowed the prior period expenses in the AY 2004-05. Assessee consistently follows this method of accounting from beginning and accepted by the department. However, the reply furnished by the appellant company was not found satisfactory by the Id.AO and he disallowed the same. On appeal CIT (A) allowed the claim of the assessee. Therefore revenue has raised this ground. 25. Before us LD DR submitted that prior period expenses are not allowable and supported the order of AO. 26. Ld AR submitted that the expenses of ₹ 22,47,126/- have actually not been claimed by the appellant company during the year under consideration and therefore, there was no reason for the AO to disallow the same. In support of his aforesaid claim, the Id. counsel has s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - actually represents the reversal of interest income which was shown on estimate basis for the AY 2007-08. In my view, the amount in question does not represent the prepaid expenses for the reasons discussed herein before and accordingly, the AO is directed to delete the disalowar.ee of ₹ 1077555/-. b. Bonus - It is submitted by the Id. counsel for the appellant that the amount in question represented a provision created for FY 2006-07 and forms part o total disallowance of ₹ 9199024/- suo motto made by the appellant company in terms of section 43B of the IT Act, 1961. In support, the Id. counsels have filed complete details of disallowance made u/s 43B of the IT Act along with the breakup of total bonus of ₹ 1901544/- credited during the year under consideration and the amount of ₹ 1888724/- considered for disallowance u/s 43B of the IT Act, 1961. In view of the aforesaid, I am of the view that since the entire unpaid bonus of ₹ 1888724/- including the bonus of ₹ 65092/- pertaining to FY 2006-07 has been disallowed by the appellant itself, no further disallowance was called for in the assessment. The AO is therefore, directed to delete th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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