TaxTMI 
TaxTMI 
2009 (1) TMI 2
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....n law in allowing deduction of Rs 8,71,20,781/- to the assessee being retrenchment compensation paid by the assessee to the employees of DCM Unit situated at Bara Hindu Rao on its closure on 01.04.1989? (ii) Whether ITAT was correct in law in allowing the deduction of retrenchment compensation, which was incurred by the assessee not for the purposes of carrying on of the business but on the closure of its business on 01.04.1989? (iii) Whether ITAT was correct in law in allowing deduction of Rs 1,86,69,703/-to the assessee being interest paid on money borrowed for the purposes of making payment of retrenchment compensation and PF to the employees of DCM Unit on its closure? (iv) Whether ITAT was correct in law in allowin....
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....ort of her submissions she adverted to the Assessment Order. 3. We find that not only the Commissioner of Income Tax Appeals [hereinafter referred to as in short as "CIT(A)"] but also the Tribunal has considered the matter in some detail and returned a finding of fact in paragraph 85 and 86 of the impugned judgment. Briefly, the Tribunal has held that it is not disputed that the Assessee had several businesses like manufacturing of textile, vanaspati, chemicals, rayon tyre cord, PVC, sugar, fertilizers, cement etc. It also noted that the fact that in so far as the business of textile was concerned it has four manufacturing units, out of which , one unit i.e. DCM mills unit located in Delhi had to be closed down as according to the ....
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....s were taken at the head Office. The Tribunal also noted the fact that the Head Office provided funds required for various units and that there were common marketing facilities for all textile units. The Tribunal upon application of the tests laid down by the Supreme Court in the case of CIT vs Prithvi Insurance Co; (1967) 63 ITR 638 and Produce Exchange Corporation Ltd vs CIT; 77 ITR 739 (SC), came to the conclusion that there was inter-connection, inter-lacing and unity of control and management, common decision making mechanism and use of common funds in respect of all four units. It repelled the arguments of the Revenue, which was, once again pressed before us for consideration that, the DCM mill unit was a separate business and henc....
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....der the Act. Since the income from securities was exempt under Section 10(25) of the Act and was not included in computing the total income of the assessee, the expenditure incurred could not be claimed as deduction by the assessee. She further contended that the deduction could also not be claimed as it was an expense connected to the closure of DCM mill unit which was a separate and distinct business from that of the other 3 units. According to us, both the submission made on behalf of the Revenue are untenable. With respect to the second submission we may only note that having concurred with the view of the Tribunal that there was no closure of the business this submission is rejected and hence need not detain us any further. As....
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....rate paid by the Central Government. Undoubtedly there was a loss on sale of security. The Assessee in order to ensure that the employees, in accordance with the approval granted by the RPF Commissioner, would be paid a rate of interest equivalent to that paid by the Central Government, incurred an expenditure of Rs 1,80,20,261/-. 7. A bare reading of the aforementioned undisputed facts would show that this was an expense incurred by the Assessee towards its employees. The loss on sale of securities was only a trigger based on which these expenses had to be incurred by the assessee. In view of this the provisions of Section 14A of the Act, according to us, have no applicability whatsoever. We find no fault with impugned judgment ev....