- (1.) This appeal under Section 260A of the Income-tax Act, 1961 ( Act ) is at the instance of an assessee and is directed against an order dated March 3, 2004 passed by the Income-tax Appellate Tribunal, C Bench, Kolkata in ITA No.867 (kol) of 2002 for the Assessment Year 1998-99, dismissing the appeal filed by the assessee against an order dated March 4, 2003 passed under Section 263 of the Act.
(2.) Being dissatisfied, the assessee has come up with the present appeal.
(3.) The facts giving rise to filing of the present appeal may be summarized thus: a) The appellant is, inter alia, engaged in the business of manufacturing electrical equipments and is assessed to tax under the provision of the Act. The present appeal relates to the appellant s assessment for the Assessment Year 1998-99 the relevant previous year being the year ended on March 31, 1998. b) The appellant claimed that it had large number of surplus employees which was affecting its economical day-to-day working and causing financial hardship and as a result, the appellant framed a Voluntary Retirement Scheme giving an option to its employees to seek voluntary retirement between October 15, 1996 and March 31, 1997. The said option to seek the voluntary retirement was later extended till October, 1997. c) The VRS Scheme was duly approved by the Director General of Income-tax (Investigation) under Section 10(10C) of the Act and Rule 2BA of the Income-tax Rules, 1962. In terms of the said VRS Scheme the appellant incurred an expenditure of 3,38,09,825/- during the relevant previous year for the Assessment Year 1998-99 and the said sum was claimed by the appellant in its return filed for the Assessment Year 1998-99 as a revenue expenditure. d) The Assessing Officer in course of the assessment proceedings obtained full details of the said expenditure incurred on account of VRS and after considering all the facts and circumstances allowed deduction for the same. e) Subsequently, the Commissioner of Income-tax initiated proceedings under Section 263 of the Act questioning the allowance of the said payments made on account of VRS by the Assessing Officer and an order under Section 263 of the Act dated March 4, 2003 was passed by the Commissioner under Section 263 of the Act. In the said order the Commissioner observed that the Assessing Officer was bound by the Circular dated January 23, 2001 issued by the Board as to the eligibility of deduction of such payment on account of VRS and he should not have allowed such payment. The Commissioner set aside the entire assessment for being made de novo and directed the Assessing Officer to make fresh assessment in the light of the said Circular of the Board. f) Being dissatisfied, the appellant preferred an appeal before the Income-tax Appellate Tribunal and by the order impugned herein the said Tribunal has affirmed the order passed by the Commissioner under Section 263 of the Act. The Tribunal held that the Assessing Officer was duty bound to follow the instruction of the Central Board of Direct Taxes and non-compliance of such instructions amounted to dereliction of duty and subordination. g) Being dissatisfied, the appellant has come up with the present appeal.;