1994 (3) TMI 154 - AT - Income Tax

Issues Involved:
1. Disallowance of payment under the voluntary retirement scheme.
2. Remuneration to sales/field organizers.
3. Disallowance under section 40A(8) regarding fixed deposits.
4. Notional interest on interest-free loans to employees.
5. Business expenses incurred wholly and exclusively for business purposes.
6. Payment to M/s Lafarge Conseils and M/s Holtec Pvt. Ltd.
7. Retainership fee under section 80VV.
8. Addition under section 40A(5) for residential accommodation.
9. Definition of 'motor car' under section 37(3B) including 'jeep'.
10. Definition of 'motor car' under section 37(3B) including 'omni bus'.
11. Turnover bonus under section 37(3A).
12. Entertainment expenses as sales promotion expenses under section 37(3A).
13. Undervaluation of DBM Dust.
14. Deduction under section 80M for income from units.
15. Deduction under section 80HHC for basmati rice.
16. Loss of National Saving Certificate.
17. Use of cars for non-business purposes.
18. Deduction under section 35(1)(ii) for payment to M/s Dalmia Institute.
19. Addition for closing stock hypothecated to the bank.
20. Incentive to employees exceeding Bonus Act limits.
21. Foreign tour expenses of Shri Y.H. Dalmia.
22. Shifting of power line as revenue expenditure.
23. Construction of a new floor as revenue expenditure.
24. Expenses on criminal proceedings.
25. Market survey expenses for a new product.
26. Arrears of salary, DA, and other allowances.
27. Depreciation on coal-fixed furnace and steamax package boiler.
28. Depreciation on water distribution system.
29. Depreciation on telephone exchange.
30. Investment allowance and additional depreciation on water cooler.
31. Investment allowance and additional depreciation on diesel tractor.
32. Depreciation on new cars, scooter, and cycles.
33. Depreciation and ESA on increased cost due to exchange rate fluctuation.

Detailed Analysis:

1. Disallowance of Payment under the Voluntary Retirement Scheme:
The Tribunal found that the issue had been previously considered in the assessee's own case for earlier assessment years (1977-78 and 1984-85). The facts being similar, the Tribunal saw no reason to deviate from its earlier decision and rejected the ground.

2. Remuneration to Sales/Field Organizers:
The Tribunal noted that this issue was also previously considered in the assessee's own case for earlier assessment years (1983-84 and 1984-85). Following the earlier decision, the Tribunal rejected the ground.

3. Disallowance under Section 40A(8) regarding Fixed Deposits:
The Tribunal found that the issue had been previously considered in the assessee's own case for earlier assessment years (1979-80 and 1984-85). The facts being the same, the Tribunal rejected the ground.

4. Notional Interest on Interest-Free Loans to Employees:
The Tribunal, after considering the rival submissions and following its earlier decision in the assessee's own case for the assessment year 1984-85, rejected the ground.

5. Business Expenses Incurred Wholly and Exclusively for Business Purposes:
The Tribunal considered the detailed discussion by the CIT(A) on each item of expenditure and found no material to take a different view. The ground was rejected.

6. Payment to M/s Lafarge Conseils and M/s Holtec Pvt. Ltd.:
The Tribunal followed its earlier decision in the assessee's own case for the assessment year 1984-85, wherein it was held that the expenditure was not capital in nature and was therefore deductible. The ground was rejected.

7. Retainership Fee under Section 80VV:
The Tribunal found that the issue had been previously considered and decided that the provisions of section 80VV would not cover such expenditure. The ground was rejected.

8. Addition under Section 40A(5) for Residential Accommodation:
The Tribunal noted that this issue had been previously considered in the assessee's own case for the assessment year 1984-85. The ground was rejected.

9. Definition of 'Motor Car' under Section 37(3B) Including 'Jeep':
The Tribunal followed its earlier decision that the word "jeep" cannot be construed to include it within the definition of a motor car. The ground was rejected.

10. Definition of 'Motor Car' under Section 37(3B) Including 'Omni Bus':
Following the reasoning in ground 9, the Tribunal rejected this ground as well.

11. Turnover Bonus under Section 37(3A):
The Tribunal agreed with the CIT(A) that the expenditure was related to sales and should not be considered as sales promotion or advertisement. The ground was rejected.

12. Entertainment Expenses as Sales Promotion Expenses under Section 37(3A):
The Tribunal noted that similar facts were involved in the earlier assessment year 1984-85 and rejected the ground.

13. Undervaluation of DBM Dust:
The Tribunal followed its earlier decision in the assessee's own case for the assessment year 1984-85 and rejected the ground.

14. Deduction under Section 80M for Income from Units:
The Tribunal agreed with the CIT(A) that the subsequent amendment by the Legislature allowed for the deduction. The ground was rejected.

15. Deduction under Section 80HHC for Basmati Rice:
The Tribunal agreed with the CIT(A) that basmati rice is a finished product and not an agricultural produce, thus eligible for deduction under section 80HHC. The ground was rejected.

16. Loss of National Saving Certificate:
The Tribunal agreed with the CIT(A) that the loss was allowable. The ground was rejected.

17. Use of Cars for Non-Business Purposes:
The Tribunal found that the CIT(A) had discussed the issue at length and recorded a finding of fact. The ground was rejected.

18. Deduction under Section 35(1)(ii) for Payment to M/s Dalmia Institute:
The Tribunal agreed with the CIT(A) that the conditions laid down under section 35(1)(ii) were satisfied. The ground was rejected.

19. Addition for Closing Stock Hypothecated to the Bank:
The Tribunal agreed with the CIT(A) that there was no discrepancy in the stock values. The ground was rejected.

20. Incentive to Employees Exceeding Bonus Act Limits:
The Tribunal agreed with the CIT(A) that the payment was customary and allowable under section 37(1). The ground was rejected.

21. Foreign Tour Expenses of Shri Y.H. Dalmia:
The Tribunal agreed with the CIT(A) that the expenses were related to the business of the assessee-company. The ground was rejected.

22. Shifting of Power Line as Revenue Expenditure:
The Tribunal agreed with the CIT(A) that the expenditure was of a revenue nature. The ground was rejected.

23. Construction of a New Floor as Revenue Expenditure:
The Tribunal agreed with the CIT(A) that the expenditure was for repair and maintenance and thus of a revenue nature. The ground was rejected.

24. Expenses on Criminal Proceedings:
The Tribunal agreed with the CIT(A) that the expenses were incurred wholly and exclusively for business purposes. The ground was rejected.

25. Market Survey Expenses for a New Product:
The Tribunal agreed with the CIT(A) that the expenditure was of a revenue nature. The ground was rejected.

26. Arrears of Salary, DA, and Other Allowances:
The Tribunal agreed with the CIT(A) that the liability arose during the relevant previous year and was allowable as business expenditure. The ground was rejected.

27. Depreciation on Coal-Fixed Furnace and Steamax Package Boiler:
The Tribunal agreed with the CIT(A) that the assessee was entitled to depreciation claimed. The ground was rejected.

28. Depreciation on Water Distribution System:
The Tribunal followed its earlier decision and agreed with the CIT(A). The ground was rejected.

29. Depreciation on Telephone Exchange:
The Tribunal followed its earlier decision and agreed with the CIT(A). The ground was rejected.

30. Investment Allowance and Additional Depreciation on Water Cooler:
The Tribunal agreed with the CIT(A) that the water cooler was not an item of furniture and allowed the investment allowance and additional depreciation. The ground was rejected.

31. Investment Allowance and Additional Depreciation on Diesel Tractor:
The Tribunal followed its earlier decision and agreed with the CIT(A). The ground was rejected.

32. Depreciation on New Cars, Scooter, and Cycles:
Following the finding on ground 17, the Tribunal agreed with the CIT(A) and rejected the ground.

33. Depreciation and ESA on Increased Cost Due to Exchange Rate Fluctuation:
The Tribunal followed the decision of the Hon'ble Supreme Court in the case of CIT vs. Arvind Mills Ltd. and agreed with the CIT(A). The ground was rejected.

Conclusion:
The appeal by the Revenue was dismissed, with all grounds raised being rejected based on precedents, factual findings, and legal interpretations consistent with earlier decisions and statutory provisions.

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