1999 PLP 3483 (PTD)
COMMISSIONER OF INCOME-TAX Versus SIMPSON & CO. LTD. (N0.1)
| Citation | 1999 PLP 3483 (PTD) |
| Forum / Court | 230 I T R 703 |
| Bench Members | K.A. Thanikkachalam and N. V. Balasubramanian, JJ |
| Parties | COMMISSIONER OF INCOME-TAX Versus SIMPSON & CO. LTD. (N0.1) |
| Primary Law | Income-tax |
Q1: What are the key laws and sections cited in 1999 PLP 3483 (PTD)?
This judgment primarily cites: Income-tax as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 1999 PLP 3483 (PTD)?
The case was heard and decided by the 230 I T R 703 bench comprising: K.A. Thanikkachalam and N. V. Balasubramanian, JJ.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 1999 PLP 3483 (PTD) (COMMISSIONER OF INCOME-TAX Versus SIMPSON & CO. LTD. (N0.1)). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Representation
- In so far as question No.2 is concerned, that was not pressed by learned standing counsel for the Department. In so far as question No.1 is concerned, it relates to the assessment year 1976-77, relevant to the accounting year ending on May 31, 1975. The Income-tax Officer in the assessment had disallowed the assessee s claim for deduction of the sum of Rs.10,00,803 being the amount paid under the Voluntary Retirement Scheme: The Income-tax Officer rejected this claim as in the earlier years: On the assessee's appeal the Commissioner of Income-tax (Appeals) held that the payment was deductible following his order for the assessment year 1975-76. On further appeal by the Revenue, the Tribunal sustained the Commissioner of Income-tax's view, following the earlier order of the Tribunal in I.T.As. Nos.2104 to 2107 (Mad.) 1979 for the assessment years 1972-73 to 1975-76 in the assessee's own case. A similar view was also taken by the Tribunal in the case of George Oakes Ltd., in I.T.As. Nos.979 to 981 (Mds.) 1977-78, dated August 3, 1973. This decision of the Tribunal, came up on reference before this Court in CIT v. George Oakes Ltd., (1992) 197 ITR 288, where under this Court held that retrenchment was done for reorganising the branch and thereby reducing the wage bill as well., Therefore, it was considered that these matters pertain to business considerations and expediency and the expenditure incurred by the assessee in this regard was for the purposes of business and also with a view to maintaining good relationship with the labour and that expenditure had to be considered as having been laid out wholly and exclusively for the purpose of business of the assessee. Therefore, this Court ultimately came to the conclusion that the expenditure incurred was deductible. In doing so, this Court also followed the decision of the Supreme Court in Sassoon J. David & Co. (P.) Ltd. v. CIT (1979) 118 ITR 261. A similar view was also taken by this Court in a matter like this in CIT v. Sri Ramavilas Service Ltd., (1995) 211 ITR 763. In view of the foregoing decisions, we answer question No. 1 in the affirmative and against the Department. No costs.
Headnotes / Summary
Amount paid to employees under Voluntary Retirement Scheme
Was paid on grounds of 'commercial expediency-- Expenditure laid out wholly and exclusively for purposes of business
Is deductible
Indian Income Tax Act, 1961, S.37. Held, that the amount paid to employees under the Voluntary Retirement Scheme was an allowable deduction as the expenditure was incurred on grounds of commercial expediency and the expenditure was laid out wholly and exclusively for purposes of the business of the assessee. CIT v. George Oakes Ltd. (1992) 197 ITR 288 (Mad.); CIT v. Sri Ramavilas Service Ltd. '1995) 211 ITR 763 (Mad.) and Sassoon J. David & Co. (P.), Ltd. v. CIT (.1979) 118 ITR 261 (SC) fol. C-.V. Rajan for the Commissioner. P.P.S. Janarthana Raja for the Assessee.
Judgment & Decree
K.A. THANIKKACHALAM, J.
At the instance of the Department, the Tribunal. referred the following two questions for the opinion of this Court under section 256(1) of the Income Tax Act, 1961: "(1) Whether, on the facts and in the circumstances of the case, the Appellate' Tribunal was right in holding that the amount paid to employees under the Voluntary Retirement Scheme should be allowed as a deduction? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the amount claimed as monetary value of un-availed leave should be allowed as a deduction in computing the total income of the assessee?" In so far as question No.2 is concerned, that was not pressed by learned standing counsel for the Department. In so far as question No.1 is concerned, it relates to the assessment year 1976-77, relevant to the accounting year ending on May 31, 1975. The Income-tax Officer in the assessment had disallowed the assessee s claim for deduction of the sum of Rs.10,00,803 being the amount paid under the Voluntary Retirement Scheme: The Income-tax Officer rejected this claim as in the earlier years: On the assessee's appeal the Commissioner of Income-tax (Appeals) held that the payment was deductible following his order for the assessment year 1975-76. On further appeal by the Revenue, the Tribunal sustained the Commissioner of Income-tax's view, following the earlier order of the Tribunal in I.T.As. Nos.2104 to 2107 (Mad.) 1979 for the assessment years 1972-73 to 1975-76 in the assessee's own case. A similar view was also taken by the Tribunal in the case of George Oakes Ltd., in I.T.As. Nos.979 to 981 (Mds.) 1977-78, dated August 3, 1973. This decision of the Tribunal, came up on reference before this Court in CIT v. George Oakes Ltd., (1992) 197 ITR 288, where under this Court held that retrenchment was done for reorganising the branch and thereby reducing the wage bill as well., Therefore, it was considered that these matters pertain to business considerations and expediency and the expenditure incurred by the assessee in this regard was for the purposes of business and also with a view to maintaining good relationship with the labour and that expenditure had to be considered as having been laid out wholly and exclusively for the purpose of business of the assessee. Therefore, this Court ultimately came to the conclusion that the expenditure incurred was deductible. In doing so, this Court also followed the decision of the Supreme Court in Sassoon J. David & Co. (P.) Ltd. v. CIT (1979) 118 ITR
261. A similar view was also taken by this Court in a matter like this in CIT v. Sri Ramavilas Service Ltd., (1995) 211 ITR
763. In view of the foregoing decisions, we answer question No. 1 in the affirmative and against the Department. No costs. M.B.A.3125/FC Reference answered.