1979 (1) TMI 121 - AT - Income Tax

Summary

Issues:
1. Allowability of weighted deduction on certain expenses under section 35B of the Income Tax Act, 1961.
2. Treatment of loss on the sale of an imported car under section 32(1)(iii) and section 71(3) of the Act.
3. Disallowance of foreign travelling expenses and entitlement to weighted deduction under section 35B.

Analysis:

Issue 1: Allowability of weighted deduction under section 35B
- The appeals by the Revenue contested the allowance of weighted deduction on commission, salary, bonus, and postage by the Assessing Officer. The AAC allowed the deductions, citing a Special Bench decision. The Tribunal upheld the AAC's decision based on the precedent and confirmed the relief granted to the assessee for the relevant assessment years.

Issue 2: Treatment of loss on the sale of an imported car
- The assessee claimed a loss of Rs. 37,913 on the sale of an imported car, which was disallowed by the ITO and confirmed by the AAC. The Tribunal found that the lower authorities erred in disallowing the claim as the car was a capital asset, and depreciation had been allowed on it. The Tribunal allowed the loss under the head of "Short-term Capital Loss" as per section 71(3) of the Act, directing the ITO to adjust the loss against the business income.

Issue 3: Disallowance of foreign travelling expenses and entitlement to weighted deduction
- The ITO disallowed Rs. 5,600 of foreign and inland travelling expenses, which was confirmed by the AAC. The Tribunal determined that the entire expenses on travelling, including lodging and boarding, could not be allowed. The disallowance was restricted to Rs. 5000, with the Tribunal modifying the order to allow Rs. 2,500 as foreign travelling expenses for weighted deduction. The appeal was partly allowed in this regard.

This judgment addressed various issues related to the allowance of deductions, treatment of losses, and disallowance of expenses under the Income Tax Act, 1961. The Tribunal's decisions were based on legal provisions and precedents, ensuring a fair and reasoned outcome for both the Revenue and the assessee.