TMI Blog2020 (11) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... contractual obligation and was an ascertained liability. It is also pertinent to mention here that the genuineness of the scheme was not doubted by any of the authorities, rather the same was approved by Chief CIT. CIT(Appeals) as well as the tribunal held that payment of compensation under the scheme was to induce workmen to retire prematurely and the decision of the assessee was purely on the ground of commercial expediency to curtail the expenditure in future and to facilitate for carrying on the business. Thus, the expenditure incurred under the scheme has been treated as revenue expenditure. It is pertinent to mention that Supreme Court in 'EMPLOYERS IN RELATION TO THE MANAGEMENT OF INDIAN CABLE CO[ 1972 (4) TMI 100 - SUPREM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness? (ii) Whether Appellate Authorities were correct in failing to take into consideration that the business of M/s. Elpro International continue and taking over of the employees eligible for voluntary retirement was a device to avoid tax and recorded a perverse finding? 2. Facts leading to filing of this appeal briefly stated are that the assessee is in the business of manufacture and marketing of x-ray medical equipments and other allied activities. The assessee filed its return of income for the Assessment Year 2000-01. In the profit and loss account, the assessee had written off an amount of ₹ 7,41,13,368/- being compensation paid towards voluntary retirement scheme (hereinafter referred to as 'the scheme' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , this appeal has been filed. 4. Learned counsel for the revenue submitted that the tribunal ought to have appreciated that the transaction between the assessee and M/s. Elpro International was only purchase of shares and therefore, expenditure incurred by the assessee under the scheme was not in the course of business of the assessee. It is further submitted that liability of payment of the amount under the scheme was of M/s. Elpro International, which amounts to third party liability in the nature of personal expenditure. It is also argued that the scheme was floated in view of services rendered by the employees to M/s. Elpro International and not to the assessee and therefore, the expenditure is not the liability of the assessee and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Bombay vide order dated 16.08.2018 for want of prosecution. It is urged that an inference can be drawn that the revenue has accepted the view taken by the Pune Bench of the tribunal in case of the assessee. Learned Senior counsel for the assessee has also invited our attention to the facts mentioned in paragraphs 2.1, 3, 4 and 5 of the order passed by the Pune Bench of the tribunal. It is further submitted that after the introduction of the scheme, 153 employees had opted for the scheme, out of which 119 employees were the employees of erstwhile M/s. Elpro International and rest of the employees were original employees of assessee. It is pointed out that the scheme was formulated for all the original employees and the compensation, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PUNE, ITA NO.1073 1074/PN/2003. 6. We have considered the submissions made by learned counsel for the parties and have perused the record. Section 37(1) of the Act provides that any expenditure not being expenditure of the nature described in Sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee, laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head Profits and gains of business or profession. M/s G.E.Pacific was incorporated in Singapore and another company viz., M/s. Elpro International, in India. The aforesaid two companies entered into a joint venture agreement on 09.12.199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees who availed benefit of the scheme. Under the scheme, compensation was paid not only for past services but also for remaining years of service with the company. The employees had also filed a complaint against the assessee under the Labour Laws and therefore, the assessee had to offer a scheme to avoid any kind of future problems. 7. It is pertinent to mention here that the scheme was admittedly sanctioned by the Chief Commissioner for the exemption under Section 10(10C) of the Act and it was a contractual obligation and was an ascertained liability. It is also pertinent to mention here that the genuineness of the scheme was not doubted by any of the authorities, rather the same was approved by Chief Commissioner of Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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