2008 (1) TMI 938 - HC - Income Tax

Summary

Issues involved:
The judgment involves various issues related to income tax matters, including depreciation on machinery, expenditure on advertisement, excise duty liability deduction, insurance charges, weighted deduction on travelling expenses, admission of additional ground, and depreciation rates on specific units.

Depreciation on machinery:
The first question raised was whether the Income Tax Appellate Tribunal correctly confirmed the order allowing 50% depreciation on machinery installed in the premises. The court found the amount involved to be negligible, around Rs. 20,000, and returned the reference unanswered due to the insignificant tax impact.

Expenditure on advertisement:
The second question revolved around the correctness of treating a payment to the Souvenir Committee of a political party as expenditure on advertisement. The court noted that this issue required arguments and decision, unlike the first question.

Excise duty liability deduction:
The third question focused on whether the excise duty liability was allowable as a deduction in computing the Assessee's income. The court agreed that this deduction should be allowed based on the decision of the Supreme Court in a specific case.

Insurance charges on machinery:
The fourth question queried the correctness of allowing 50% of insurance charges on machinery. The court found the amount of insurance charges to be negligible and returned the reference unanswered for this question as well.

Weighted deduction on travelling expenses:
The fifth question dealt with whether the Assessee was entitled to weighted deduction under Section 35B of the Income Tax Act on travelling expenses related to a foreign project. The court noted that this question needed further arguments and decision.

Admission of additional ground:
The sixth question addressed whether an additional ground should have been admitted by the Commissioner of Income Tax regarding a specific claim. The court agreed that the additional ground should have been admitted based on a previous decision.

Depreciation rates on specific units:
The seventh question concerned the correctness of the depreciation rates allowed on specific units. The court found the amount involved to be negligible and returned the reference unanswered for this question.

Conclusion:
The court disposed of the reference after addressing the various issues raised, providing detailed reasoning for each question and determining whether to answer or return the reference unanswered based on the significance of the amounts involved and legal precedents.