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Issues Involved:
1. Club Subscription as Revenue Expenditure 2. Disallowance under Section 37(3A) of the Income-tax Act 3. Professional Fees under Section 80VV 4. Repairs and Maintenance of Maker Tower Flat 5. Salary and Perquisite Disallowance under Section 40A(5) 6. Remuneration to Directors under Section 40(c) 7. Conference Expenses under Section 37(3A) 8. Terminal Allowance on Data Processing Equipment and Computers 9. Disallowance under Section 43B 10. Deemed Income under Section 41(1) 11. Investment Allowance on Leased Equipment 12. Insurance Premium under Collective Personal Account Policy 13. Maintenance of Garden within Factory Premises 14. Disallowance under Section 37(3A) for Advertisement and Car Expenses 15. Rent and Depreciation on Guest House under Section 37(4) 16. Perquisites under Section 40A(5) 17. Bonus Payment to Employees not under Payment of Bonus Act 18. Excise & Customs Duty in Closing Stock 19. Interest under Section 215 Detailed Analysis: 1. Club Subscription as Revenue Expenditure The assessee claimed that club subscription fees of Rs. 15,400 should be treated as revenue expenditure. The Tribunal upheld this claim, citing the jurisdictional High Court's decision in Otis Elevator Co. (India) Ltd. v. CIT, which allowed such expenses as deductible. 2. Disallowance under Section 37(3A) of the Income-tax Act The assessee contested disallowances related to various expenses including travel, car maintenance, and conference expenses. The Tribunal upheld the disallowance of taxi hire charges for consistency but allowed driver's salary and rates and taxes on motor cars, citing the jurisdictional High Court's decision in CIT v. Chase Bright Steel Ltd. The Tribunal also directed the Assessing Officer to aggregate travel expenses per employee for disallowance calculations and allowed partial relief on conference expenses, treating a portion as staff welfare. 3. Professional Fees under Section 80VV The Tribunal examined disallowances of professional fees paid to Crawford Bailey & Co. and A.F. Ferguson & Co. It deleted the disallowance for Crawford Bailey & Co. as the fees were for consultation only but upheld the disallowance for A.F. Ferguson & Co. for fees related to representation before authorities. 4. Repairs and Maintenance of Maker Tower Flat The Tribunal upheld the assessee's claim that expenses incurred to restore a fire-damaged flat used as an office were revenue expenditures, as these did not bring about any new asset. 5. Salary and Perquisite Disallowance under Section 40A(5) The Tribunal directed the exclusion of house rent allowance from salary for perquisite calculations, adhering to the provisions of Section 10(13A). It upheld the disallowance of actual rent paid and one-third of car expenses and driver's salary as perquisites. 6. Remuneration to Directors under Section 40(c) The Tribunal upheld the inclusion of medical expense reimbursements as salary, following the Supreme Court's decision in CIT v. Mafatlal Gangabhai & Co. (P.) Ltd. It directed the perquisite value of residential flats to be calculated similarly to salary income and approved the inclusion of car expenses and driver's salary. 7. Conference Expenses under Section 37(3A) The Tribunal applied the same reasoning as in ground no. 5, allowing partial relief on conference expenses by treating a portion as staff welfare. 8. Terminal Allowance on Data Processing Equipment and Computers The Tribunal upheld the assessee's practice of writing off obsolete equipment without scrap value, as this was accepted in earlier years for consistency. 9. Disallowance under Section 43B The Tribunal upheld the assessee's claim that excise duty should not be included in closing stock valuation, following the Special Bench decision in ITO v. Food Specialities Ltd. It directed the Assessing Officer to verify refunds of excess sales tax collected and adjust the disallowance accordingly. 10. Deemed Income under Section 41(1) The Tribunal upheld the revenue's action of treating certain credit balances as deemed income, as these were credited to the profit and loss account. 11. Investment Allowance on Leased Equipment The Tribunal allowed investment allowance on data processing equipment and computers leased out by the assessee, following the Madras High Court and Karnataka High Court decisions. It directed the Assessing Officer to verify the use of leased equipment in manufacturing or production of non-Schedule 11 items. 12. Insurance Premium under Collective Personal Account Policy The Tribunal upheld the CIT (A)'s decision allowing the insurance premium, following the Tribunal's earlier decision for consistency. 13. Maintenance of Garden within Factory Premises The Tribunal upheld the CIT (A)'s decision allowing the maintenance expenses of the garden within the factory premises. 14. Disallowance under Section 37(3A) for Advertisement and Car Expenses The Tribunal upheld the CIT (A)'s decision allowing expenses on advertisement, repairs, and insurance of cars, citing the jurisdictional High Court's decision in Chase Bright Steel Ltd. 15. Rent and Depreciation on Guest House under Section 37(4) The Tribunal upheld the CIT (A)'s direction to exclude guest house rent and depreciation from disallowance calculations, following the jurisdictional High Court's decisions in Chase Bright Steel Ltd. and Century Spg. & Mfg. Co. Ltd. 16. Perquisites under Section 40A(5) The Tribunal upheld the exclusion of hospital contributions and repairs to flats from perquisite calculations. It directed the Assessing Officer to verify the beneficiary of personal accident insurance policies and include the premium as a perquisite if the beneficiary is the employee. 17. Bonus Payment to Employees not under Payment of Bonus Act The Tribunal upheld the CIT (A)'s decision allowing bonus payments to employees not covered under the Payment of Bonus Act, following the jurisdictional High Court's decision in Voltas Ltd. v. CIT. 18. Excise & Customs Duty in Closing Stock The Tribunal's earlier decision in paragraph 11 covered this issue, accepting the assessee's contention that excise duty should not be included in closing stock valuation. 19. Interest under Section 215 The Tribunal upheld the CIT (A)'s direction to rework interest under Section 215, finding it reasonable. In conclusion, both appeals were allowed in part, with detailed directions provided for each issue.
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