1992 (11) TMI 140 - AT - Income Tax

Summary

Issues Involved:
1. Deduction u/s 80HHC.
2. Addition on account of designing charges.
3. Disallowance of commission paid to M/s Kamala Overseas.
4. Disallowance of car expenses and depreciation.

Summary:

1. Deduction u/s 80HHC:
The primary issue was whether the assessee could be denied deduction u/s 80HHC for failing to attach a certificate from an Accountant with the return of income, despite submitting it during the assessment proceedings. The Tribunal noted that the purpose of the certificate is to facilitate assessment and prevent inaccurate claims. The Tribunal held that the requirement to file the certificate along with the return is procedural. Since the certificate was available before the completion of the assessment, the assessee was eligible for the deduction. The Tribunal relied on the Supreme Court's decision in Mangalore Chemicals & Fertilizers Ltd. v. Dy. Commissioner, emphasizing that procedural conditions should be liberally construed.

2. Addition on account of designing charges:
The Assessing Officer (AO) had added Rs. 40,150 for designing charges, doubting the genuineness of the payments made in cash. The Tribunal found that while the vouchers raised suspicion, the AO had not conducted proper inquiries. The Tribunal remitted the matter back to the AO for fresh consideration, allowing the assessee to establish the genuineness of the payments and compliance with section 40A(3).

3. Disallowance of commission paid to M/s Kamala Overseas:
The AO disallowed the commission paid to M/s Kamala Overseas, questioning the justification and genuineness of the services rendered. The Tribunal noted that evidence supporting the claim was presented for the first time before the CIT(A) and not before the AO. The Tribunal remitted the issue back to the AO for fresh examination, considering the new evidence and giving the assessee a reasonable opportunity to be heard.

4. Disallowance of car expenses and depreciation:
The Tribunal upheld the disallowance of 1/5th of car expenses and depreciation for non-business purposes, finding the disallowance reasonable and declining to interfere.

Additional Note by Accountant Member:
The Accountant Member agreed on all issues but added a reference to section 12A(b) dealing with exemption u/s 11, which also requires a report from an Accountant to be furnished with the return of income. The Gujarat High Court and the Supreme Court had previously ruled in favor of the assessee in a similar context, which could be relevant if the revenue prefers a reference on this point.