Income Tax Act, 1961

--Capital or revenue expenditure--Expenditure incurred on Voluntary Retirement Scheme Closure of two units of assessee--Assessee claimed expenditure in respect of voluntary retirement scheme offered to its employees of two units as revenue expenditure as the two units were closed as a part of restructuring its business. Assessing officer disallowed the claim holding it as capital expenditure. Held: Was not justified, as the closure of assessee's two units had not resulted in closure of its business. This was done for the purposes of restructuring so as to achieve modernisation. Therefore, expenditure paid could only be considered as an expenditure incurred in the course of the business allowable under section 37(1).

Income Tax Act, 1961 Section 37(1)

In the Bombay High Court