1991 (4) TMI 173 - AT - Income Tax

Issues Involved:
1. Deletion of addition on account of bonus paid in excess.
2. Deletion of addition on account of expenses for preparing a feasibility report.
3. Deletion of addition under Section 40(c).
4. Deletion of addition on account of money spent on a feeder line from the Electricity Board.
5. Allowance of depreciation on roads.
6. Extra shift depreciation allowance on electric installations, transformers, electric sub-stations, and weighing scales.
7. Allowance of loss on shares.
8. Computation of loss.
9. Carry forward of relief under Section 80J.
10. Allowance of relief under Section 80J on head office balances in the rolling division.

Detailed Analysis:

1. Deletion of Addition on Account of Bonus Paid in Excess:
The first issue involves the deletion of an addition of Rs. 2,02,010 made by the assessing authority regarding bonus paid in excess of the limit laid down in the Payment of Bonus Act. The Commissioner relied on various Tribunal decisions and past practices where similar bonuses were allowed as deductions. The assessee argued that the bonus was customary and admissible under Section 37(1). The Tribunal found that the bonus was paid during the accounting period and was not a provision. The Commissioner's decision to delete the addition was upheld, and this ground was rejected.

2. Deletion of Addition on Account of Expenses for Preparing a Feasibility Report:
The second issue pertains to the deletion of an addition of Rs. 1,00,000 for expenses on preparing a feasibility report. The assessing authority considered it as capital expenditure, while the Commissioner found that the consultancy report was for further expansion and had been capitalized separately. The feasibility report was meant for converting furnaces from mild steel to alloy steel, which was deemed revenue expenditure. The Tribunal upheld the Commissioner's decision, rejecting the Revenue's contention.

3. Deletion of Addition under Section 40(c):
The third issue involves the deletion of an addition of Rs. 19,752 under Section 40(c). The assessing authority disallowed Rs. 20,591, which was unclear. The Commissioner discussed contributions to the provident fund and commission paid to the Managing Director. The Tribunal held that the commission payment of Rs. 13,677 should be included in the disallowance, reversing the Commissioner's deletion. However, the provident fund contribution of Rs. 4,867 was confirmed to be excluded from the disallowance. This ground was partly allowed.

4. Deletion of Addition on Account of Money Spent on Feeder Line from the Electricity Board:
The fourth issue concerns the deletion of an addition of Rs. 3,86,359 for money spent on a feeder line. The assessing authority considered it capital expenditure, but the Commissioner treated it as revenue expenditure, as the feeder line was for uninterrupted power supply and could be used by others. The Tribunal agreed with the Commissioner, rejecting the Revenue's appeal.

5. Allowance of Depreciation on Roads:
The fifth issue deals with the allowance of depreciation on roads. The Commissioner directed that depreciation be allowed on roads, citing previous decisions and judgments from the Bombay and Andhra Pradesh High Courts. The Tribunal upheld this direction, rejecting the Revenue's ground.

6. Extra Shift Depreciation Allowance on Electric Installations, Transformers, Electric Sub-Stations, and Weighing Scales:
The sixth issue involves extra shift depreciation allowance. The Commissioner followed previous decisions allowing extra shift allowance on electric installations and weighing scales but disallowed it for electric sub-stations and transformers. The Tribunal upheld the Commissioner's decision for electric installations and weighing scales but reversed it for electric sub-stations and transformers.

7. Allowance of Loss on Shares:
The seventh issue pertains to the allowance of a loss of Rs. 68,93,000 on shares. The Commissioner allowed the adjustment of this loss against taxable income, citing the Supreme Court judgment in Miss Dhun Dadabhoy Kapadia's case. The Tribunal agreed with the Commissioner, rejecting the Revenue's appeal.

8. Computation of Loss:
The eighth issue involves the computation of loss. The Commissioner allowed a loss of Rs. 68,93,000, but the Revenue argued it should be Rs. 67,93,000. The Tribunal directed the assessing authority to give the assessee an opportunity to determine the correct figure.

9. Carry Forward of Relief under Section 80J:
The ninth issue concerns the carry forward of relief under Section 80J amounting to Rs. 22,242. The Commissioner allowed this relief, and the Tribunal found no error in the quantum. This ground was rejected.

10. Allowance of Relief under Section 80J on Head Office Balances in the Rolling Division:
The tenth issue involves the allowance of relief under Section 80J on head office balances in the rolling division. The Commissioner directed the allowance of additional relief, citing maintained separate books and compliance with financial institutions' requirements. The Tribunal upheld this direction, rejecting the Revenue's ground.

Conclusion:
The appeal was partly allowed, with specific grounds being rejected or partly allowed based on detailed analysis and adherence to legal precedents and factual findings.

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