TaxTMI 
TaxTMI 
2004 (12) TMI 31
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....d a return of income on November 29, 1996, admitting a loss of Rs. 26,47,02,780. The return was processed under section 143(1)(a) of the Income-tax Act on May 13, 1997. Notice under section 143(2) of the Act was issued on November 27, 1997, calling upon the petitioner to furnish various details for the purpose of completing the assessment. After the details were furnished, assessment was completed under section 143(3) of the Act on March 31, 1999. Subsequently, the first respondent had issued a notice on March 22, 2003, for reopening the completed assessment under section 148 of the Act. One of the grounds for reopening is the allowability of the amounts paid by the petitioner to its employees under the Voluntary Retirement Scheme (VRS) ....
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....l after referring to the circular, relies on the direction that the expenditure has to be treated as capital expenditure and therefore the said directions are prejudicial to the assessees. Learned counsel appearing for the Revenue, however, contends that the instructions are only in the form of guidelines and they are to be applied by the Assessing Officers only in the context of the facts of the case and the Assessing Officers are free to apply the circular only wherever it is appropriate. In the present case, in the assessment of the petitioner under section 148 it has already been considered and therefore nothing further survives for consideration. It is also represented that the petitioner has also filed an appeal as against the asse....
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....quired or brought into existence, it would be immaterial whether the source of payment was the capital or the income of the concern or whether payment was made once and for all or was made in instalments. While it is not ordinarily easy to evolve a fool-proof test for ascertaining whether in a given case, expenditure is capital or revenue, the Assessing Officers normally decide the character of expenditure on the facts and circumstances of each case. They consider the nature and the ordinary course of business and the objects for which the expenditure has been laid out. Towards this purpose, the test of enduring benefit is a useful tool in considering the ex-gratia amount, prima facie, as a capital expenditure. In this view of the matter, t....
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....agement of the work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of the provisions of sections 139, 143, 144,147,148, 154, 155, 158BFA, sub-section (1A) of section 201, sections 210, 211, 234A, 234B, 234C, 271 and 273 or otherwise), general or special orders in respect of any class of incomes or class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to the guidelines, principles or procedures to be followed by other income-tax authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties and any such order may, if the Board is of opinion that it is necessary in the pub....
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.... 119(1) will not be attracted considering that the said provision relates only to instructions and directions to be issued for the proper administration of the Act. Such directions can only relate to procedural and administrative matters and not to the criteria to be adopted in the matter of assessment. But under section 119(2), the Board is given the power to issue instructions to subordinate authorities for the purpose of proper and efficient management of the work of assessment and collection of revenue. Therefore, under section 119(2), the Board is enabled to issue such 12 instructions, provided that such directions and issues are not prejudicial to the assessees. Therefore, any instruction to be issued should not affect the interest....