TaxTMI 
TaxTMI 
2014 (3) TMI 99
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....n deleting the disallowance of Rs. 48,25,600/- on account of VRS expenditure. ii) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made by the AO of Rs. 20,06,000/- on account of switching over from the cash system of accountancy to the mercantile system in respect of LTA and medical expense. iii) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of Rs. 13,50,33,619/- on account of warranty and optional service contract expenses. iv) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of Rs. 39,99,27,770/- (wrongly mentioned as Rs. 13,99,27,770/- 3.. Apropos deletion of d....
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....e 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 above that the expenditure on VRS are of revenue in nature. Accordingly, we uphold the order of the Ld. CIT(A) and decide the issue in favor of the assessee. 8. Apropos deletion of LTA and medical expenses On this issue AO noted that the Tax Auditors' in their Report have mentioned that there is a change in the method of accounting vis-a-vis method employed in the immediately preceding previous year.....
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....e is operating through different accounting divisions, prior to the previous year under consideration there was no uniformity in method of accounting of the above expenses since one unit was adopting cash and the other unit was adopting mercantile basis. This was due to the fact that during the preceding 3 assessment years 3 different legal entity had merged with the Assessee company. To 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 th....
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....eted. 12. Against the above order the Revenue is in appeal before us. 13. We have heard both the counsel and perused the records. We find that in this case some divisions of the assessee were maintaining books of accounts for medical expenses and LTA expenses on cash basis while some of the divisions were following mercantile system of accounting. The assessee in order to bring uniformity and to comply with the provisions of Companies Act and Accounting Standard accounted for the liability towards these expenses on mercantile basis. The assessee has claimed that the expenses were computed precisely. Hence, it was certain liability and not the contingent one. The case law referred by the assessee's counsel before the Ld. CIT(A) are....
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....as 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 assessee has made the provision in this regard on the basis ....