- (1.) THE only question argued by Ms. Smita Das De, learned advocate appearing for the appellant is the question No. 1 which reads as follows: Whether, on the facts and in the circumstances of the case, the order of the Income Tax Appellate Tribunal allowing deduction of payment of Rs. 1,08,41,068 on retrenchment of workmen is perverse on facts and erroneous in law.
(2.) THE Assessing Officer refused to treat this expenditure of a sum of Rs. 1,08,41,068/ - as revenue expenditure on the ground that: The records show that the assessee did never revive operation or manufacturing during this year or in any other subsequent years. In subsequent year the assessee earned income from rent of warehousing and sale of accumulated old stock. It has no relation to the manufacturing unit where all the 193 (one hundred and ninety three) workers were retrenched and the factory was fully closed. Case of the assessee is fully identical with the case of M/s. Binani Printers (P) Ltd. -Vs. -C.I.T. Calcutta ( : 143 -ITR, page 338/Calcutta H.C.). In the circumstances, a reasonable conclusion that can be drawn is that the compensation claimed to have been paid to the workmen was in connection with the complete closure of the factory and manufacturing unit of the assessee Co. Improvement/development or increase in financial viability was never the purpose of the Co. Aggrieved by the order of the Assessing Officer, an appeal was preferred by the assessee.
(3.) THE C.I.T. appeal reversed the order of the Assessing Officer, holding inter alia as follows: I am accordingly inclined to the view that the essential element in establishing that there had been cessation of business of the appellant company during the accounting year relevant to the assessment year 1992 -93 is found to be absolutely wanting. Facts on record, mode of computation of total income in assessment and treatment of the accounts and the different items of expenditure run counter to the conclusion drawn in rejecting claim for allowance of deduction in respect of payment of compensation to workers under the Voluntary Separation scheme. Accordingly it is held that there is no case for disallowance of any part of the expenditure of Rs. 1,08,41,068/ -.;