9911796707
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Issues:
1. Disallowance of expenditure incurred on market survey and project preparation under section 35D. 2. Disallowance of relief under section 35D in respect of fees paid to Solicitors and Managers. 3. Refusal to allow capitalization of telephone charges and general staff salaries and wages. 4. Disallowance of expenditure claimed for scientific research under section 35. 5. Exclusion of project and pre-operative expenses for relief under section 80-J. 6. Dispute regarding depreciation on plant and machinery coming into contact with corrosive chemicals. 1. The judgment addressed the disallowance of an expenditure of Rs. 75,751 for market survey and project preparation under section 35D. The Income Tax Officer (ITO) and the Commissioner of Income Tax (Appeals) (CIT (A)) denied the deduction, stating that the expenses were not directly incurred by the assessee. However, the Appellate Tribunal found that the expenses were indeed incurred by the assessee through a third party, allowing the deduction as the payment was made after 31st March 1970, meeting the requirements of section 35D for amortization. 2. The next issue involved the disallowance of relief under section 35D for fees paid to Solicitors and Managers. The CIT (A) had allowed only a portion of the claim, but the Tribunal held that the entire amount was eligible for relief under section 35D, citing a previous Tribunal decision. The Tribunal set aside the CIT (A) order in this regard, allowing the full claim for relief. 3. The judgment also dealt with the refusal to capitalize telephone charges and general staff salaries and wages. The assessee argued for capitalization based on a Supreme Court decision, and the Tribunal agreed, directing the allowance of capitalization for the specified expenses, setting aside the CIT (A) order on this matter. 4. Regarding the claim for expenditure on scientific research under section 35, the Tribunal declined to entertain the ground, stating that the determination of whether an activity constitutes scientific research should be settled by the Board, and the assessee should approach the Board for clarification. 5. The exclusion of project and pre-operative expenses for relief under section 80-J was also addressed. The ITO's rejection of the claim was overturned by the Tribunal, citing a High Court decision that assets purchased for an undertaking, even if not utilized, should be considered capital employed, thereby entitling the assessee to the necessary relief. 6. The final issue involved the dispute over depreciation on plant and machinery coming into contact with corrosive chemicals. The Tribunal found that the evidence presented had not been properly considered by the authorities below, directing the matter back to the ITO for a final decision based on further evidence and expert opinion.
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