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Issues:
1. Admissibility of relief under s. 35B for various items of expenditure. 2. Eligibility of certain items of expenditure for relief under s. 35B. 3. Admission of additional grounds for relief under s. 35B. 4. Determination of expenses proportionately eligible for weighted deduction. 5. Expenses fully eligible for weighted deduction. 6. Qualification of specific expenditures for relief under s. 35B. 7. Dispute regarding bank exchange booking expenditure under s. 35B. 8. Entertainment expenditure disallowed by the ITO under s. 37(2B). The judgment by the Appellate Tribunal ITAT BOMBAY-B involved an appeal related to the assessment for the assessment year 1976-77 concerning the admissibility of relief under section 35B of the Income Tax Act for various expenditures incurred by a company engaged in business activities. The disputes primarily revolved around the qualification of specific items of expenditure for the said relief. The Tribunal considered the percentage of export sales to total sales, following the precedent set by a Special Bench in a previous case. The Tribunal rejected the contention of the assessee regarding certain items of expenditure not qualifying for relief under section 35B, aligning with the previous order. The Tribunal also addressed the admission of additional grounds for relief under section 35B, allowing the assessee to claim relief for certain expenditures not previously claimed before the Income Tax Officer and the CIT (A). The Tribunal admitted the new grounds based on the principle established in a decision by the Andhra Pradesh High Court, despite opposition from the departmental representative. The judgment detailed the expenses proportionately eligible for weighted deduction, considering various categories of expenses such as salaries, bonuses, rent, and other miscellaneous expenses. Furthermore, the judgment discussed expenses fully eligible for weighted deduction, including subscriptions to institutions providing export market information and brokerage paid for securing export contracts. Specific details of expenditures eligible for relief under section 35B were analyzed, with certain items being accepted for relief while others were rejected. A dispute arose regarding the bank exchange booking expenditure under section 35B, leading to the Tribunal setting aside the CIT (A)'s order for further review. Lastly, the judgment addressed the disallowance of entertainment expenditure by the ITO under section 37(2B) of the IT Act, which was later deleted by the CIT (A). The Tribunal agreed with the CIT (A)'s approach, allowing the entire entertainment expenditure as a deduction since it was not considered lavish. Ultimately, the Tribunal partly allowed the assessee's appeal and deemed the department's appeal partly allowed, concluding the case.
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