2009 (3) TMI 47 - HC - Income Tax

Tribunal rejected claim for weighted deduction u/s 35C on Expenses incurred on distillation services of farmers, transportation services provided to farmers and Depreciation on Distillation Assets - held that deduction u/s 35C not admissible on expenses on distillation services and depreciation on distillation asset transportation services were in respect of transporting of crops and had no relation to any goods, services or facilities as outlined u/s 35C tribunal rightly rejected the claim

Summary

Issues:
1. Whether the Appellate Tribunal was justified in rejecting the claim of the assessee-company for weighted deduction under section 35C of the Income-tax Act on expenses incurred for distillation services and transportation services provided to farmers, as well as on depreciation of distillation assets.

Analysis:
The judgment delivered by the High Court addressed three main issues raised in the case. Firstly, the Court considered the claim for weighted deduction under section 35C of the Income-tax Act on expenses incurred for distillation services and transportation services provided to farmers, as well as on depreciation of distillation assets. The Court referred to a previous judgment passed in a similar case involving the same assessee, where it was held that expenses on distillation services provided to the cultivator would not be admissible for a deduction under Section 35-C. The Court reasoned that the position regarding depreciation on such distillation assets would not be different. Consequently, the Court answered questions regarding expenses on distillation services and depreciation in the affirmative and against the assessee based on the previous judgment.

Secondly, the Court examined the issue of expenses under the head of transportation services provided to farmers. The Tribunal had disallowed the deduction based on findings from earlier assessment years, stating that the transportation services were related to crops after harvesting and not covered under Section 35-C. The Court concurred with the Tribunal's findings, emphasizing that the transportation services provided did not relate to goods, services, or facilities outlined under Section 35-C. Therefore, the Court answered this question in the affirmative and against the assessee.

Finally, based on the answers provided for the aforementioned issues, the Court disposed of the reference with no orders as to costs. The judgment provided a comprehensive analysis of the issues raised, relying on previous decisions and factual findings to reach a conclusion on the admissibility of deductions under section 35C of the Income-tax Act.