1989 (4) TMI 114 - AT - Income Tax

Issues Involved:
1. Entitlement to weighted deduction under Section 35C of the IT Act.
2. Deduction of central subsidy from the value of assets for depreciation/development rebate.
3. Disallowance of managing director's remuneration.
4. Weighted deduction under Section 35B for traveling expenses.
5. Investment allowance claim.
6. Disallowance of insurance premium under group gratuity scheme.

Detailed Analysis:

1. Entitlement to Weighted Deduction under Section 35C
- ITA 3781/Bom/85: The Revenue argued that the assessee was not entitled to weighted deduction under Section 35C as it was not engaged in manufacturing or processing any article from agricultural products. The Tribunal held that the assessee, engaged in processing hybrid seeds, was entitled to weighted deduction on certain expenses under Section 35C. The case was remanded to the ITO to scrutinize the expenses and allow deductions only for those directly related to services and facilities provided to farmers, excluding costs charged to the farmers.
- ITA 3782/Bom/85, ITA 3783/Bom/85, ITA 3784/Bom/85, ITA 3785/Bom/85, ITA 3786/Bom/85, ITA 6844/Bom/88: Similar issues were raised, and the Tribunal followed the same reasoning as in ITA 3781/Bom/85, remanding the cases back to the ITO for detailed scrutiny of expenses.

2. Deduction of Central Subsidy from the Value of Assets for Depreciation/Development Rebate
- ITA 3782/Bom/85: The CIT(A) directed the ITO not to deduct the central subsidy from the value of assets for depreciation/development rebate purposes. The Tribunal upheld this decision, referencing a Special Bench decision in favor of the assessee.

3. Disallowance of Managing Director's Remuneration
- C.O. 257/Bom/85: The assessee objected to the disallowance of Rs. 12,000 from the managing director's remuneration. The CIT(A) had directed the ITO to verify the actual claim. The Tribunal found no reason for the assessee to appeal at this stage, as the ITO would verify the facts, and the assessee could appeal again if aggrieved by the ITO's findings.

4. Weighted Deduction under Section 35B for Traveling Expenses
- C.O. 257/Bom/85: The assessee objected to the non-allowance of weighted deduction under Section 35B for traveling expenses of Rs. 14,000. The CIT(A) had already deleted this disallowance, and the Tribunal found no further action was required.

5. Investment Allowance Claim
- C.O. 258/Bom/85: The assessee contested the non-allowance of investment allowance of Rs. 16,484. The CIT(A) rejected the claim due to the absence of a statutory reserve, a requirement for such allowance. The Tribunal upheld the CIT(A)'s decision, finding no infirmity.

6. Disallowance of Insurance Premium under Group Gratuity Scheme
- C.O. 259/Bom/85: The assessee objected to the disallowance of Rs. 14,000 for insurance premium under the group gratuity scheme. The CIT(A) and the Tribunal found the disallowance justified as the expense pertained to a previous assessment year.

Conclusion:
- Cross Objections: Dismissed.
- Revenue Appeals: Allowed for statistical purposes, with directions for the ITO to reframe the assessment orders in accordance with the Tribunal's detailed instructions, particularly concerning the scrutiny of expenses under Section 35C.

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