Business deductions and temporary structure depreciation were upheld for customer refreshments, leave salary, VRS payments and fencing work.

Coffee, tea and similar items supplied to customers were treated as allowable business expenditure on the basis of binding High Court authority. Provision for the monetary value of unavailed leave salary was also held deductible, following the assessee's own earlier year decision. Notice pay and compensation paid to employees under a voluntary retirement scheme were likewise treated as deductible, in line with the earlier Tribunal view. Partition work with fencing was characterised as a purely temporary structure, so 100 per cent depreciation was allowed despite the use of wooden frame, square mesh and steel wire. The assessee succeeded on all disputed items and the departmental appeal failed.

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Issues: (i) whether expenditure on coffee, tea and similar items supplied to customers was an admissible deduction; (ii) whether provision for the monetary value of unavailed leave salary was deductible; (iii) whether notice pay and compensation paid to employees discharged under the voluntary retirement scheme was deductible; and (iv) whether 100 per cent depreciation was allowable on the cost of partition work with fencing treated as a purely temporary structure.

Issue (i): whether expenditure on coffee, tea and similar items supplied to customers was an admissible deduction.

Analysis: The issue was covered by binding High Court authority holding such expenditure to be allowable as a business deduction.

Conclusion: The deduction was admissible and the assessee's claim succeeded.

Issue (ii): whether provision for the monetary value of unavailed leave salary was deductible.

Analysis: The issue had already been decided against the Revenue in the assessee's own case for an earlier assessment year, and that reasoning was followed.

Conclusion: The deduction was allowable and the assessee's claim succeeded.

Issue (iii): whether notice pay and compensation paid to employees discharged under the voluntary retirement scheme was deductible.

Analysis: The issue was treated as covered by the earlier Tribunal decision in the assessee's favour, and that view was followed.

Conclusion: The deduction was allowable and the assessee's claim succeeded.

Issue (iv): whether 100 per cent depreciation was allowable on the cost of partition work with fencing treated as a purely temporary structure.

Analysis: The partition work was held to be a purely temporary structure. The use of wooden frame, square mesh and steel wire for fencing did not take it outside the category of temporary erections eligible for full depreciation.

Conclusion: 100 per cent depreciation was allowable and the assessee's claim succeeded.

Final Conclusion: The assessee succeeded on all disputed items and the departmental appeal was rejected in full.

Ratio Decidendi: A structure does not cease to be a purely temporary erection for depreciation purposes merely because materials other than wood are used in its construction, if its essential character remains temporary.

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