ITAT Remands Decommissioning and Retention Bonus Disallowances for Fresh Adjudication:

Siemens Gamesa Renewable Power Private Limited filed its return of income for AY 2017-18, which was subsequently revised. During scrutiny assessment under Section 143(3) of the Income Tax Act, 1961, the AO disallowed a provision for decommissioning expenses amounting to Rs. 9,04,020 and a provision for retention bonus amounting to Rs. 30,06,674 under Section 37 of the Act. Consequently, the assessed income was determined at Rs. 2,00,58,864.

The assessee challenged the disallowances before the CIT(A), but the additions were sustained. 

The assessee submitted that the provision for decommissioning related to a liability originally created by Siemens Limited in connection with leased premises and subsequently transferred to the assessee under a slump sale in December 2016. It contended that the provision had neither been debited to its profit and loss account nor claimed as a deduction while computing its taxable income for the relevant assessment year.

The Tribunal noted that the assessee’s submissions before it were materially different from the contentions advanced before the lower authorities. Considering the fresh arguments concerning the transfer of the liability under the slump sale and the absence of a deduction claim in the assessee’s own books, the Tribunal restored the issue to the file of the CIT(A) for examination and decision in accordance with law.

The Tribunal remanded both issues, the disallowance of the Rs. 9.04 lakh decommissioning provision and the Rs. 30.06 lakh retention bonus provision to the CIT(A) for fresh adjudication. The Tribunal did not finally decide the allowability of either provision under Section 37 of the Income Tax Act, 1961.