Law:

Section:

I. Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 2000-01 - Whether provision for a liability is amenable to deduction if there is an element of certainty that it shall be incurred and it is possible to estimate liability with reasonable certainty, even though actual quantification may not be possible - Held, yes - Assessee-company, which was following mercantile system of accounting, had evolved a scheme, whereby employees who rendered long period of service to assessee were made entitled to monetary awards at various stages of their employment equivalent to a defined period of time - It, based on actuarial calculation, made provision for 'long service award' payable by it to its employees under said scheme and claimed deduction of same - Assessing Officer disallowed assessee's claim on ground that grant of award was at discretion of management of assessee and, therefore, could not be said to be a provision towards ascertained liability - On appeal, Commissioner (Appeals) allowed claim of assessee holding that provision for 'long service award' was akin to provision for gratuity and when such a provision was made on a scientific basis, it would be in nature of an ascertained liability and not a contingent liability - Tribunal upheld order of Commissioner (Appeals) - Whether, on facts, Tribunal had taken correct view - Held, yes II. Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/Rate of - Assessment year 2000-01 - Whether expression 'used for purposes of business' appearing in section 32 takes into account emergency spares also which even though ready for use are not as a matter of fact consumed or used during relevant period as these are spares specific to a fixed asset and will, in all probability, be useless once asset is discarded - Held, yes - Whether therefore, depreciation under section 32 is allowable in respect of emergency spares of plant and machinery even though they have not been used during relevant period - Held, yes FACTS-I The assessee-company had evolved a scheme, whereby employees, who rendered long period of service to the assessee, were made entitled to monetary awards…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492