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Issues:
1. Inclusion of commission paid to managing directors in remuneration under section 40(c) of the Act. 2. Treatment of foreign exchange difference as capital expenditure. 3. Admissibility of depreciation for machinery installed in earlier years for research and development. 4. Allowability of surtax payment as expenditure for computing total income. 5. Classification of factory 'road' as a 'plant' for investment allowance. 6. Availability of weighted deduction under section 35 for export outward freight charges. Analysis: Issue 1: The Tribunal had to decide whether the commission paid to managing directors should be included in remuneration under section 40(c) of the Act. The assessee did not press for a decision on this issue, leading to the court declining to answer the question. Issue 2: Regarding the treatment of a foreign exchange difference as capital expenditure, the Tribunal held in favor of the assessee, stating that the amount paid was not to be considered capital expenditure. Issue 3: The Tribunal had to determine the admissibility of depreciation for machinery installed in earlier years for research and development. The court found in favor of the assessee, stating that no depreciation was admissible for such machinery. Issue 4: The question of whether the payment of surtax is admissible as an expenditure while computing total income was raised. The Tribunal ruled that the payment of surtax is not an admissible expenditure for computing total income. Issue 5: The Tribunal had to decide whether the factory 'road' could be treated as a 'plant' for investment allowance. The court held that the factory road cannot be treated as a plant, and thus no investment allowance was admissible. Issue 6: The availability of weighted deduction under section 35 for export outward freight charges was questioned. The court ruled that weighted deduction under section 35 is not available for export outward freight charges. In a separate set of questions referred by the Tribunal at the instance of the Revenue, the court examined whether the telephone expenses incurred by the company for the managing directors' residences should be considered as perquisites. The Tribunal found that there was no evidence to show that the telephones were installed to provide benefits or amenities to the directors. As a result, the court held in favor of the assessee, stating that the provisions of section 40A(5) or section 40(c) did not apply in this case. Ultimately, the court answered the questions referred by the Revenue in favor of the assessee and against the Revenue, with no order as to costs.
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