1982 (4) TMI 128 - AT - Income Tax

Summary

Issues:
- Weighted deduction allowed by CIT (A) in respect of commission paid to Mr. Sham Sunder Sud
- Disputed items in the assessee's appeal regarding weighted deduction

Analysis:

1. The judgment pertains to two appeals, one by the revenue and the other by the assessee, relating to the assessment year 1976-77 of M/s Pretty Cycle Industries. The main issue raised in the revenue's appeal concerns the weighted deduction allowed by the CIT (A) for commission paid to Mr. Sham Sunder Sud. The ITO accepted part of the claim but rejected a portion related to Mr. Sud's commission and salary. The CIT (A) restricted the claim for salary but allowed the commission. The revenue's contention, based on a special bench decision, was rejected, and the weighted deduction was adjusted accordingly.

2. Moving on to the disputed items in the assessee's appeal, various expenses were examined. The tribunal upheld the rejection of certain claims like freight expenses, insurance, inspection fee, and traveling expenses based on the special bench decision. However, the tribunal allowed a higher deduction for the salary to an export clerk and granted weighted deduction for items like Export Credit and Guarantee Corporation expenses, Engineering Export Promotion Council fees, and Ludhiana Productivity Council expenses.

3. The tribunal also addressed the disallowance of amounts related to telephone expenses and worker's welfare. It confirmed the disallowance of a portion of these expenses based on the findings of the CIT (A). The final issue considered was the disallowed demurrage charges. The ITO and CIT (A) had disallowed a portion of the demurrage claim. However, the tribunal, considering the mercantile system of accounting and relevant case law, allowed the deduction for the disputed demurrage charges, thereby partly allowing the assessee's appeal.

4. In conclusion, the tribunal dismissed the revenue's appeal and partly allowed the assessee's appeal, making adjustments to the weighted deductions and allowing the disputed demurrage charges based on accounting principles and legal precedents.