1994 (2) TMI 88 - AT - Income Tax

2012 (11) TMI 160 - AT

Issues Involved:
1. Withdrawal of appeal for asst. yr. 1985-86.
2. Depreciation allowance, extra shift allowance, and investment allowance on concast shed.
3. Depreciation, additional depreciation allowance, extra shift allowance, and investment allowance on scrap bay and rolling mill sheds.
4. Sales-tax incentive treated as revenue receipt.
5. Disallowance of professional fees for asst. yr. 1983-84.
6. Deduction of service charges and lease rent paid to GIDC for asst. yr. 1983-84.
7. Disallowance of 50% of expenditure on advertisement in souvenirs.
8. Disallowance of motor car expenses under s. 37(3A) to (3D) for asst. yr. 1985-86.
9. Addition of unpaid sales-tax liability under s. 43B for asst. yr. 1985-86 and 1987-88.
10. Disallowance of function expenses for asst. yr. 1987-88.
11. Disallowance of commitment/service charges paid to GIIC for asst. yr. 1987-88.
12. Disallowance of miscellaneous expenses for asst. yr. 1987-88.
13. Addition of rent paid to landlord for asst. yr. 1987-88.
14. Deduction of interest charged under s. 220 for asst. yr. 1987-88.
15. Disallowance of contribution to recreation center under s. 40A(9) for asst. yr. 1987-88.

Detailed Analysis:

1. Withdrawal of Appeal for Asst. Yr. 1985-86:
The appeal No. 5331/Ahd/91 for asst. yr. 1985-86 was directed against the order dated 17th July 1991 passed by the CIT(A) against an order under s. 154 passed by the AO on 9th May 1990. The learned counsel for the assessee did not press this appeal and expressed his desire to withdraw the same. Hence, this appeal is dismissed as withdrawn.

2. Depreciation Allowance, Extra Shift Allowance, and Investment Allowance on Concast Shed:
The common ground in the remaining appeals relates to the assessee's claim for depreciation allowance, extra shift allowance, and investment allowance on "concast shed" at rates applicable to plant and machinery. The AO and CIT(A) held that concast shed is a superstructure and not plant or machinery. However, the Tribunal in the assessee's own case for asst. yr. 1982-83 held that concast shed should be treated as plant and machinery. Respectfully following the same, the AO is directed to allow depreciation, extra shift allowance, and investment allowance on concast shed by treating it as plant and machinery.

3. Depreciation, Additional Depreciation Allowance, Extra Shift Allowance, and Investment Allowance on Scrap Bay and Rolling Mill Sheds:
The second common ground relates to the treatment of "scrap bay" and "rolling mill" sheds. The AO treated these as superstructures similar to concast shed. The Tribunal, following its decision for asst. yr. 1982-83, directed the AO to treat these assets as plant and machinery and grant the respective allowances, subject to fulfilment of other conditions.

4. Sales-Tax Incentive Treated as Revenue Receipt:
The assessee did not press the ground regarding sales-tax incentives treated as revenue receipts. The AO treated these items as revenue receipts based on discussions in the assessee's case for asst. yr. 1986-87. As the assessee's appeal for 1986-87 was not fixed along with these appeals, this ground is rejected as not pressed.

5. Disallowance of Professional Fees for Asst. Yr. 1983-84:
The ground relating to the disallowance of Rs. 9,000 out of professional fees for asst. yr. 1983-84 was not pressed by the learned counsel for the assessee. Hence, it is rejected as not pressed.

6. Deduction of Service Charges and Lease Rent Paid to GIDC for Asst. Yr. 1983-84:
The ground relating to the deduction of Rs. 50,262 and Rs. 99,254 out of service charges and lease rent paid to GIDC was not pressed by the learned counsel. Hence, it is also rejected.

7. Disallowance of 50% of Expenditure on Advertisement in Souvenirs:
The CIT(A) directed the AO to allow only 50% of Rs. 23,951 being expenditure on advertisement in souvenirs. The Tribunal, referencing Circular No. 200 and the Bombay High Court decision in Century Spinning & Mfg. Co. vs. CIT, directed the AO to allow the entire expenditure, as the reality of the expenditure was not doubted.

8. Disallowance of Motor Car Expenses Under S. 37(3A) to (3D) for Asst. Yr. 1985-86:
The assessee contended that expenses for hiring a Matador should not be treated as motor car expenses. The Tribunal directed the AO to examine the relevant details and recompute the amount disallowable under s. 37(3A) in accordance with judgments from the Bombay and Gujarat High Courts.

9. Addition of Unpaid Sales-Tax Liability Under S. 43B for Asst. Yr. 1985-86 and 1987-88:
The Tribunal directed the AO to verify the corresponding payments made in the next year to ensure they were made within the time prescribed under s. 139(1). The AO is to decide the claim in accordance with the principles laid down in the Tribunal's decision in Chandulal Venichand vs. ITO.

10. Disallowance of Function Expenses for Asst. Yr. 1987-88:
The CIT(A) disallowed Rs. 20,000 out of Rs. 33,381 as function expenses, considering them as entertainment expenses. The Tribunal directed the AO to allow the entire expenditure, as it was incurred for the inauguration of the third furnace and was wholly and exclusively for business purposes.

11. Disallowance of Commitment/Service Charges Paid to GIIC for Asst. Yr. 1987-88:
The ground relating to the disallowance of Rs. 52,537 being commitment/service charges paid to GIIC was not pressed by the learned counsel. Hence, it is rejected as not pressed.

12. Disallowance of Miscellaneous Expenses for Asst. Yr. 1987-88:
The ground relating to the disallowance of Rs. 9,615 out of Rs. 37,944 as miscellaneous expenses was not pressed by the learned counsel. Hence, it is also rejected as not pressed.

13. Addition of Rent Paid to Landlord for Asst. Yr. 1987-88:
The ground relating to the addition of Rs. 15,000 being rent paid to the landlord was not pressed by the learned counsel. Hence, it is also rejected as not pressed.

14. Deduction of Interest Charged Under S. 220 for Asst. Yr. 1987-88:
The Tribunal confirmed the CIT(A)'s view denying the deduction of Rs. 8,43,309 being interest charged under s. 220, referencing the judgment of the Allahabad High Court in Dhampur Sugar Mills Ltd. vs. CIT and consistent views taken by the Ahmedabad Benches of the Tribunal.

15. Disallowance of Contribution to Recreation Center Under S. 40A(9) for Asst. Yr. 1987-88:
The Tribunal confirmed the CIT(A)'s disallowance of Rs. 3,400 being contribution to a recreation center, as the learned counsel did not provide details to counter the applicability of s. 40A(9).

Conclusion:
The appeal No. 5331/Ahd/91 is dismissed as withdrawn, and all other appeals are partly allowed.

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