1983 (11) TMI 102 - AT - Income Tax

Higher Rate Previous Year Rate Applicable Voluntary Disclosure Of Income Voluntary Disclosure Scheme

Summary

Issues:
- Disallowance of foreign travel expenses under rule 6D(1) and deduction under section 35B
- Depreciation rate on air-conditioner fitted to the car
- Deduction under section 80J, investment allowance, depreciation under section 38(2), interest under section 80V, and disallowance of conveyance and miscellaneous expenses

Analysis:
1. The appeal by the revenue challenged the deletion of disallowed foreign travel expenses and the direction to consider the amount for deduction under section 35B. The Tribunal found that rule 6D(1) applied to foreign travels, contrary to the AAC's view. The matter was remanded for reconsideration by the AAC.

2. Regarding the depreciation rate on the air-conditioner in the car, the Tribunal ruled against the assessee. It was specified in the Rules that the air-conditioner was entitled to 15% depreciation, not 20% as claimed by the assessee.

3. The cross-objection by the assessee raised multiple issues. The Tribunal directed the AAC to decide on the deduction under section 80J, remanded the investment allowance claim due to a Special Bench decision, and allowed full depreciation under section 38(2) for assets used for part of the year. The Tribunal also allowed interest deduction under section 80V for borrowings related to the Voluntary Disclosure Scheme, 1975, despite the ITO and AAC's disallowance.

4. The Tribunal interpreted section 80V broadly, considering the VDS as a supplemental Act to the main Act of 1961. It reasoned that interest on borrowings for tax payments under the VDS should be allowed as a deduction under section 80V. The Tribunal emphasized the importance of justice and reason in interpreting tax laws.

5. Lastly, the Tribunal addressed the disallowance of Rs. 1,500 for conveyance and miscellaneous expenses. It criticized the ad hoc disallowance without proper reasoning and directed the ITO to modify the assessment in accordance with law. The Tribunal emphasized the need to end outdated revenue collection practices and uphold legal standards in assessments.

6. In conclusion, both the appeal and the cross-objection were allowed in part, with various issues remanded or decided in favor of the assessee based on legal interpretations and procedural correctness.