1993 (3) TMI 20 - HC - Income Tax

Actual Cost, Appeal To AAC, Benefit, Amenity Or Perquisite To Employee, Business Expenditure, Depreciation, Income From Property, New Industrial Undertaking, Power To Admit Additional Ground, Special Deduction, Surtax

Summary

Issues:
1. Interpretation of expenditure incurred on payment of listing fees for shares.
2. Classification of rental income derived from factory building under 'Income from house property' and allowance of depreciation.
3. Allowability of depreciation on factory building under section 32(1) and section 38(2) of the Income-tax Act.
4. Classification of increased liability as revenue or capital nature for assessment year 1974-75.
5. Granting relief under section 35B of the Income-tax Act for additional claim.
6. Allowability of surtax liability as a deduction in computing business income.
7. Determination of payment of bonus and other allowances exceeding 20% of annual salary as benefit, amenity, or perquisite under section 40A(5) of the Income-tax Act.
8. Requirement to deduct debts and liabilities while computing capital under section 80J.

Analysis:
The judgment addressed various questions raised by both the assessee and the Revenue. Questions 1, 2, and 7 were previously decided in the case of the assessee itself. The court referred to its earlier decisions to answer these questions. Question 3 was dependent on the answer to question 2 and was not required to be answered separately. Question 4 was answered based on a previous decision of the court regarding the nature of increased liability. Question 6 was answered in line with a previous decision in S.L.M. Maneklal Industries Ltd. v. CIT. Question 8 was answered based on a Supreme Court decision in Lohia Machines Ltd. v. Union of India.

The main issue requiring consideration was question 5, involving the allowance of weighted deduction for additional claim items. The Appellate Assistant Commissioner had denied the assessee the opportunity to raise this claim during appeal. However, the court found merit in the contention that the Appellate Assistant Commissioner should have allowed the additional claim based on the interpretation of relevant legal principles. The court referred to a Supreme Court decision in Jute Corporation of India Ltd. v. CIT to support the assessee's position. The court emphasized that the Appellate Assistant Commissioner should exercise discretion in permitting additional grounds based on the facts and circumstances of each case.

Ultimately, the court answered the questions as follows:
- Question 1 was not answered due to reasons stated in a previous case.
- Question 2 was answered against the assessee and in favor of the Revenue.
- Question 3 was not required to be answered in view of the answer to question 2.
- Question 4 was answered against the Revenue to the extent indicated.
- Question 5 was answered in favor of the assessee and against the Revenue.
- Question 6 was answered in favor of the Revenue.
- Question 7 was answered in favor of the assessee.
- Question 8 was answered in favor of the Revenue.

The reference was disposed of accordingly, with no order as to costs.