1990 (7) TMI 154 - AT - Income Tax

Issues Involved:
1. Depreciation claim for the assessment year 1976-77.
2. Consultation fees paid to Indian Hotels Co. Ltd. for the assessment year 1982-83.
3. Additional depreciation for the assessment year 1982-83.
4. Additional telephone rent for the assessment year 1982-83.
5. Weighted deduction under Section 35B for the assessment year 1982-83.
6. Investment allowance for the assessment years 1982-83 and 1983-84.
7. Hotel receipts tax for the assessment year 1983-84.
8. Deduction under Section 80-0 for the assessment year 1983-84.
9. Extra depreciation on plant and machinery for the assessment year 1983-84.
10. Weighted deduction under Section 35B for the assessment year 1983-84.
11. Bonus paid to employees for the assessment year 1983-84.

Detailed Analysis:

1. Depreciation Claim for the Assessment Year 1976-77:
The Tribunal recalled its order in ITA No. 317/Bom/84, recognizing that the assessee raised a ground concerning depreciation before CIT(A). The Tribunal directed the authorities to regard the buildings used by the hotels as plant and allow depreciation at the appropriate rate, following the rationale in Hotel Srilekha (P) Ltd. and Ram Bagh Palace Hotel (P) Ltd. The appeal for the assessment year 1976-77 was treated as allowed.

2. Consultation Fees Paid to Indian Hotels Co. Ltd. for the Assessment Year 1982-83:
The CIT(A) directed the ITO to allow Rs. 7,93,767 as consultation fees, following his decision for the assessment years 1980-81 and 1981-82. The Tribunal confirmed this finding, rejecting the first ground of the departmental appeal.

3. Additional Depreciation for the Assessment Year 1982-83:
The CIT(A) allowed additional depreciation of Rs. 1,55,407, following his order for the assessment years 1980-81 and 1981-82. The Tribunal upheld this decision, rejecting the second ground of the departmental appeal.

4. Additional Telephone Rent for the Assessment Year 1982-83:
The CIT(A) deleted the disallowance of Rs. 3,80,950, noting that the liability was ascertained and not contingent. The Tribunal found no substance in the department's ground and rejected it, confirming the CIT(A)'s order.

5. Weighted Deduction under Section 35B for the Assessment Year 1982-83:
The CIT(A) granted weighted deduction for commission paid to foreign travel agents. The Tribunal confirmed this, noting that the section's amendment did not affect the availability of the deduction for this year. The fourth ground of the departmental appeal was rejected.

6. Investment Allowance for the Assessment Years 1982-83 and 1983-84:
The issue was pending before the Supreme Court. The Tribunal set aside the CIT(A)'s order and directed the ITO to dispose of the claim in conformity with the Supreme Court's order. This ground was treated as allowed for statistical purposes for both years.

7. Hotel Receipts Tax for the Assessment Year 1983-84:
The CIT(A) held that the tax collected was a trading receipt and not a deductible liability. The Tribunal confirmed that the tax collected was income but allowed the deduction of the liability as it arose by the operation of the statute. The first ground of the assessee's appeal was allowed in part.

8. Deduction under Section 80-0 for the Assessment Year 1983-84:
The CIT(A) rejected the claim for deduction as approval from the CBDT was not received. The Tribunal confirmed the disallowance but directed the Assessing Officer to allow the claim upon receiving approval.

9. Extra Depreciation on Plant and Machinery for the Assessment Year 1983-84:
The CIT(A) omitted to consider the claim for extra depreciation. The Tribunal directed that extra depreciation be allowed on the same basis as for earlier years, modifying the CIT(A)'s order.

10. Weighted Deduction under Section 35B for the Assessment Year 1983-84:
The CIT(A) disallowed weighted deduction for commission paid to foreign travel agents. The Tribunal allowed this ground, granting the deduction under Section 35B(1)(b)(iv).

11. Bonus Paid to Employees for the Assessment Year 1983-84:
The CIT(A) upheld the disallowance of Rs. 87,839 paid as bonus. The Tribunal found that the payment was made following an agreement with the employees, satisfying the conditions of the second proviso to Section 36(1)(ii). The order of the CIT(A) was modified to allow the bonus payment.

Conclusion:
- ITA No. 317/Bom/84 for 1976-77 by the assessee: Allowed.
- ITA No. 5654/Bom/85 for 1982-83 by the department: Allowed in part.
- ITA No. 4707/Bom/87 for 1983-84 by the department: Allowed in part.
- ITA No. 4548/Bom/87 for 1983-84 by the assessee: Allowed in part.

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