1999 (3) TMI 105 - AT - Income Tax

Issues Involved:
1. Weighted deduction u/s 35C.
2. Claim u/s 35B for export promotion expenses.
3. Disallowances u/s 37(2A).
4. Gratuity payment and its treatment u/s 40A(5).
5. Investment Allowance, Depreciation, Additional Depreciation, and Extra Shift Allowance on account of foreign exchange fluctuations.
6. Additional depreciation for machinery coming into contact with corrosive chemicals.
7. Capitalization of foreign tour expenses.
8. Loss on demolished building.
9. Deduction of sur-tax liability.
10. Application of section 80VV to legal & professional fees.
11. Interest charged u/s 215.

Summary:

1. Weighted Deduction u/s 35C:
For both assessment years 1982-83 and 1983-84, the Tribunal held that the assessee was entitled to weighted deduction u/s 35C. The Tribunal relied on its earlier decision for assessment year 1981-82, where it was held that the payments made to farmers for development charges were allowable as weighted deduction.

2. Claim u/s 35B for Export Promotion Expenses:
For the assessment year 1982-83, the Tribunal allowed weighted deduction on certain expenses like foreign tour expenses but disallowed it on advertisement expenses in Indian media. For the assessment year 1983-84, the claim was not pressed by the assessee.

3. Disallowances u/s 37(2A):
The Tribunal allowed certain expenses related to sales conferences and tea/coffee provided to employees, distinguishing them from entertainment expenses. However, it upheld the disallowance of expenses that were not substantiated with details.

4. Gratuity Payment and its Treatment u/s 40A(5):
The Tribunal held that gratuity paid to an ex-employee should not be included in the ceiling limit prescribed u/s 40A(5). It relied on the Bombay High Court decision in Colgate Palmolive (I) (P.) Ltd.'s case and the Calcutta High Court decision in Hindustan Motors Ltd.'s case.

5. Investment Allowance, Depreciation, Additional Depreciation, and Extra Shift Allowance on Account of Foreign Exchange Fluctuations:
The Tribunal, bound by the Gujarat High Court decision in Windsor Foods Ltd.'s case, rejected the claim for investment allowance on the cumulative foreign exchange fluctuation over several years. However, it allowed depreciation, additional depreciation, and extra shift allowance on the incremental foreign exchange liability for each year.

6. Additional Depreciation for Machinery Coming into Contact with Corrosive Chemicals:
The Tribunal upheld the CIT(A)'s direction to ascertain the total machinery coming into contact with corrosive chemicals and allow higher depreciation accordingly.

7. Capitalization of Foreign Tour Expenses:
The Tribunal found no reason to interfere with the lower authorities' decision, which had disallowed certain foreign tour expenses for capitalization.

8. Loss on Demolished Building:
The Tribunal upheld the CIT(A)'s decision to allow a loss of Rs. 10,000 u/s 32(1)(iii) and disallow the remaining Rs. 5,153.

9. Deduction of Sur-tax Liability:
This ground was not pressed by the assessee and was therefore rejected.

10. Application of Section 80VV to Legal & Professional Fees:
The Tribunal allowed the claim for fees related to the preparation of income-tax returns and other non-proceedings related expenses, relying on various judicial precedents.

11. Interest Charged u/s 215:
The Tribunal directed that the interest u/s 215 be recalculated after giving effect to its order and the CIT(A)'s order, and that the application under rule 40 should be disposed of at an early date.

← Previous Next →