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Issues involved:
1. Whether expenses incurred on foreign tours represent an element of actual cost of machinery and plant for depreciation and development rebate. 2. Whether expenses incurred on foreign tours of technical officers represent an element of actual cost of machinery and plant for depreciation and development rebate. 3. Whether expenditure incurred in organizing a football tournament is an allowable deduction u/s. 37 of the Income-tax Act, 1961. Judgment Details: Issue 1: The respondent-company claimed expenses on foreign tours for selecting suitable machinery and know-how, which the ITO deemed capital in nature. The AAC allowed expenses for one director but not the rest. The Tribunal directed the ITO to include expenditure related to the new project in the actual cost for granting rebate. Citing precedent, the court held that such expenses can be capitalized if related to a project, affirming the Tribunal's decision. Issue 2: Expenses on foreign tours of technical officers were disallowed by the ITO as capital in nature. The AAC considered it capital expenditure related to machinery purchase and directed rebate if admissible. The Tribunal agreed, capitalizing the amount as integral to the machinery. Issue 3: The ITO disallowed expenses for holding a football tournament, but the AAC allowed it. The Tribunal upheld the allowance, citing a previous decision. The court found the tournament's promotion of the company's name as a valid business expense, dismissing the argument against it. Following precedent, the court affirmed the allowance of the expenditure. This judgment clarifies the treatment of expenses on foreign tours in relation to machinery costs and the deductibility of expenses for organizing promotional events under the Income-tax Act, 1961.
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