2011 (9) TMI 1232 - HC - Income Tax

Summary

Issues involved:
The judgment addresses various questions of law raised by the revenue in the appeal, including the justification of allowing certain claims, expenses, and deductions under different sections of the Income Tax Act.

Question (a):
The Tribunal was justified in allowing the assessee's claim for enhancing actual cost of plant & machinery due to increase in foreign exchange liability resulting from exchange rate fluctuations in subsequent years and allowing the investment allowance on such enhanced cost. The revenue's question was answered against them by the decision of the Apex Court in CIT V/s. Woodward Governor India P. Ltd.

Question (b):
The Tribunal was justified in holding that certain expenses did not constitute entertainment expenses within the meaning of Sec. 37(2) of the I.T. Act, 1961. The revenue did not press this question as similar decisions in earlier assessment years have been accepted.

Question (c):
The Tribunal was justified in allowing certain expenditures incurred on account of fabric show, meeting, sales conference, and opening ceremony of a retail showroom as business expenditure. The revenue did not press this question as similar decisions in earlier assessment years have been accepted.

Question (d):
The Tribunal was justified in allowing foreign travel expenses of employees as revenue expenditure, contrary to the assessing officer's treatment as capital expenditure. The revenue did not press this question as similar decisions in earlier assessment years have been accepted.

Question (e):
The Tribunal was justified in deleting the disallowance of certain interest amounts made under Sec.43B of the I.T. Act. The revenue did not press this question as similar decisions in earlier assessment years have been accepted.

Question (f):
The Tribunal was justified in allowing a sum incurred on contribution to a local organization as business expenditure. The revenue did not press this question as similar decisions in earlier assessment years have been accepted.

Question (g):
The Tribunal was justified in allowing certain expenditure on providing tea, snacks, etc. to shareholders at the time of Annual General Meeting, holding that the same are not entertainment expenses. The revenue did not press this question as similar decisions in earlier assessment years have been accepted.

Question (h) & (l):
The Tribunal was justified in allowing certain claims regarding exclusion of inter-divisional transfer from total turnover and depreciation on non-business assets. The revenue could not challenge these decisions as the ITAT's order for AY 1990-91 had attained finality.

Question (i):
The Tribunal was justified in holding that interest accrued but not due on securities should not be taxed as income for the year. The revenue did not press this question as the ITAT followed the decision of the Madras High Court.

Question (j):
The Tribunal was justified in allowing proportionate premium payable on the redemption of bonds during the year as expenditure. The revenue did not press this question as similar decisions in earlier assessment years have been accepted.

Question (k):
The Tribunal was justified in allowing depreciation on certain assets at the applicable rate. The revenue did not press this question as similar decisions in earlier assessment years have been accepted.

Question (m):
The Tribunal was justified in allowing certain expenditure as admissible business expenditure, despite the absence of the assessee's logo on the distributed articles. The revenue could not challenge this decision as it was answered against them by the decision of the Bombay High Court.

Question (n):
The Tribunal was justified in deleting the disallowance on account of expenses on the issue of debenture. The revenue could not challenge this decision as it was answered against them by the Apex Court.

The appeal was disposed of with no order as to costs.