TaxTMI 
TaxTMI 
2014 (7) TMI 606
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....mber 2011. By the impugned order, the ITAT has allowed in favour of the assessee the deductions of the amounts paid by it to its employees on account of severance pay. The ITAT took the view that though the Assessee was not entitled to claim the said deduction under section 37(1), it could be amortized under the provisions of section 35DDA of the Act. Being aggrieved by this finding of the ITAT, the present Appeal has been filed. 2. Mr Tejveer Singh, the learned counsel appearing on behalf of the Appellant, submitted that the ITAT erred in applying the provisions of section 35DDA of the Act inasmuch as, in the facts of the present case, the Assessee had transferred its domestic whisky business (i.e. its manufacturing facility at Nira, Pu....
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.... being a sum of Rs. 7,93,355/- in the current Assessment Year and the balance in the next immediately four succeeding years. Thereafter, the Assessing Officer went on to hold that since the business of the Assessee qua its manufacturing facility located at Nira, Pune had been sold / transferred and the manufacturing business of the Assessee in relation to the Indian made foreign liquor had ceased, the Assessee was not entitled to the said deduction even under the provisions of section 35DDA, as these expenses were not incurred for carrying on the business of the Assessee. 4. Being aggrieved by the order of the Assessing Officer dated 29th December 2006, the Assessee preferred an Appeal before the CIT (Appeals) who, by his order dated 7th....
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....the assessee continues to remain in the same business even after these payments, are normally deductible under section 37(1) of the Act. However, overriding provisions of section 35DDA(1) w.e.f. 1st April 2001 specifically provide that "where an assessee incurs any expenditure in any previous year by way of payment of any sum to an employee in connection with his voluntary retirement, in accordance with any scheme or schemes of voluntary retirement, one-fifth of the amount so paid shall be deducted in computing the profits and gains of the business for that previous year, and the balance shall be deducted in equal installments for each of the four immediately succeeding previous years" and section 35DDA(6) further provides that "no deductio....
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....own the business. 7. In view thereof and in our opinion rightly, the ITAT held that the Assessee would be entitled to the deduction of Rs. 39,66,774/- in relation to severance pay. However, the ITAT further held that the Assessee would not be entitled to the said deduction under section 37(1) of the Act but under section 35DDA thereof. It is in the light of the provisions of section 35DDA that the ITAT held that the deduction claimed by the Assessee of Rs. 39,66,774/- will have to be amortized under section 35DDA and only 1/5th of the expenditure was allowable in the current assessment year and the Assessee would be entitled to deduction of the same amount in each of the four subsequent assessment years as well. Not only are we in agreem....