1991 (7) TMI 128 - AT - Income Tax

Issues:
1. Disallowance of sur-tax liability deduction.
2. Disallowances under s. 80VV of the Act.
3. Disallowance of wealth-tax liability deduction.
4. Disallowance under s. 37(3A) of the Act for commission paid to agents.
5. Disallowance under s. 37(3A) of the Act for advertisement expenditure.
6. Disallowance of ex gratia amounts paid to employees.
7. Disallowance of contribution to recognized provident fund.
8. Treatment of cash compensatory support received by the assessee.
9. Charging of interest under ss. 216 and 139(8) of the Act.

Analysis:

1. Disallowance of Sur-tax Liability Deduction:
The assessee contested the disallowance of sur-tax liability deduction amounting to Rs. 30 lakhs. The advocate acknowledged the decision of the Hon'ble Bombay High Court favoring the Revenue but requested a direction contingent on a pending SLP at the Supreme Court. The Tribunal upheld the disallowance citing the High Court decision and declined to give directions due to the pending SLP.

2. Disallowances under s. 80VV of the Act:
The issue involved disallowances under s. 80VV of the Act related to fees paid to certain parties. The Tribunal allowed only Rs. 4,000 to be disallowed, as it was connected to income-tax proceedings, while the remaining amount was allowed under s. 37(1) of the Act based on precedents and Tribunal orders.

3. Disallowance of Wealth-tax Liability Deduction:
The disallowance of wealth-tax liability deduction under s. 40(a)(iia) of the Act was contested by the assessee, arguing that the wealth tax paid was not under the WT Act, 1957, but under the Finance Act, 1983. The Tribunal upheld the IT authorities' decision based on a previous order rejecting similar contentions.

4. Disallowance under s. 37(3A) of the Act for Commission Paid to Agents:
The issue involved disallowance of commission paid to agents under s. 37(3A) of the Act. The Tribunal, in line with previous orders, directed the IAC not to consider the amount for disallowance under the said section.

5. Disallowance under s. 37(3A) of the Act for Advertisement Expenditure:
Regarding expenditure on advertisement for staff recruitment, the Tribunal, following precedent, directed the IAC not to consider the expenditure for disallowance under s. 37(3A) of the Act.

6. Disallowance of Ex Gratia Amounts Paid to Employees:
The disallowance of ex gratia amounts paid to employees was challenged by the assessee, contending that the bonus paid was already considered for disallowance under s. 40A(5) of the Act. The Tribunal agreed with the assessee and deleted the disallowance made by the IT authorities.

7. Disallowance of Contribution to Recognized Provident Fund:
The Tribunal directed the IAC to accept the assessee's claim for deduction in respect of the contribution to the recognized provident fund based on a previous decision for the relevant assessment year.

8. Treatment of Cash Compensatory Support Received:
The treatment of cash compensatory support received by the assessee was acknowledged by the advocate following a retrospective amendment. The Tribunal upheld the IT authorities' action in treating the amount as income chargeable to tax.

9. Charging of Interest under ss. 216 and 139(8) of the Act:
The issue of charging interest under ss. 216 and 139(8) of the Act was deemed consequential and subject to the Tribunal's decision on other issues. The IAC was directed to rework the interest chargeable under these sections accordingly.

In conclusion, the appeal was partly allowed, with various disallowances upheld or modified based on legal interpretations and precedents cited during the proceedings.

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