1985 (1) TMI 12 - HC - Income Tax

Summary

Issues involved: The judgment involves questions related to deductions under section 80J of the Income-tax Act, 1961, donations to political parties, foreign tour expenses, and admissibility of various expenditures for business income computation.

Question 1 - Donations to Political Parties: The court held that there was no established link between the payment to political parties and the business of the assessee, based on a previous ruling. The claim for donations was disallowed.

Question 2 - Deductions under Section 80J: The assessee claimed deductions for setting up ginning factories at Malout and Hissar. Following a Supreme Court decision and rectification in favor of the assessee, the question was not pressed.

Question 3 - Relief under Section 80J: The question of whether relief under section 80J should be worked out on the entire capital or only on the part reduced by borrowed moneys is pending before the Supreme Court, with both parties agreeing to abide by the Supreme Court's decision.

Question 4 - Deductibility of Foreign Tour Expenses: The court allowed the deduction for the expenditure incurred on a foreign tour for attending a business-related session, following established guidelines and a broad realistic approach.

Question 5 - Admissibility of Expenditure on DCM Football Tournament: The court held that the expenditure incurred for organizing football tournaments was an allowable deduction under section 10(2)(xv), based on a previous ruling.

Question 6 - Revenue Expenditure on Employee Training: The court allowed the deduction for tour expenses incurred for employee training, considering the necessity of updating and modernizing indigenous industries.

Question 7 - Capital or Revenue Expenditure on Employee Training in Japan: The court held that the expenditure on training in Japan should be treated as revenue expenditure and allowed as a deduction, as it was not related to establishing a new line of production.

Question 8 - Expenditure on Foreign Tours for Business Purposes: The court allowed the deduction for foreign tours undertaken by company officials for business purposes, emphasizing the importance of maintaining contact with foreign business houses and following established guidelines for such deductions.