1994 (3) TMI 155 - AT - Income Tax

Issues Involved:
1. Disallowance of expenditure on presentation articles.
2. Disallowance of business entertainment expenditure.
3. Disallowance of tax audit fee under section 80VV.
4. Disallowance of expenditure on New Year's gift articles.
5. Disallowance of deduction under section 80-I for vertical shaft kiln plant.
6. Disallowance of deduction under section 80HH.
7. Disallowance of pension liability under the "Dalmia Cement Executives Pension Scheme".
8. Disallowance of 20% of certain business expenses.
9. Disallowance under section 43B for accrued liability to pay cess and cess surcharge.
10. Valuation of closing stock of DBM dust.
11. Addition of deposits from non-Governmental buyers of cement as trading receipt.
12. Addition of unclaimed balances and unclaimed wages/bonus.
13. Disallowance of office maintenance and cooling facility charges.
14. Disallowance of extra shift depreciation for welding transformers.
15. Disallowance of depreciation for business premises.
16. Charging of interest under section 216.
17. Charging of interest under sections 215 and 139(8).

Detailed Analysis:

1. Disallowance of Expenditure on Presentation Articles:
The CIT(A) upheld the disallowance of Rs. 53,457 incurred on presentation articles given to customers, suppliers, and other business associates, treating it as entertainment expenditure not covered under Rule 6B of the IT Rules. The Tribunal, following its previous decision in Mangalam Cement Ltd., decided in favor of the assessee, setting aside the CIT(A)'s order.

2. Disallowance of Business Entertainment Expenditure:
The CIT(A) did not allow the deduction of Rs. 4,00,138 spent on business entertainment. The Tribunal, referencing its decisions in prior years, directed the CIT(A) to follow the Tribunal's orders, allowing the deduction.

3. Disallowance of Tax Audit Fee under Section 80VV:
The CIT(A) confirmed the inclusion of Rs. 10,000 paid for tax audit as covered under section 80VV. The Tribunal agreed with the assessee that this expenditure is a normal business expense and not covered under section 80VV, thus setting aside the CIT(A)'s order.

4. Disallowance of Expenditure on New Year's Gift Articles:
The CIT(A) upheld the disallowance of expenditure on New Year's gifts, treating it as entertainment. The Tribunal, considering the nominal cost and customary nature of the gifts, decided in favor of the assessee, stating that such expenditure is for fostering goodwill and is expedient in the interest of the business.

5. Disallowance of Deduction under Section 80-I for Vertical Shaft Kiln Plant:
The CIT(A) disallowed the deduction of Rs. 51,75,042 under section 80-I. The Tribunal, following its previous decision in the assessee's own case, held that the assessee is entitled to the deduction and decided in favor of the assessee.

6. Disallowance of Deduction under Section 80HH:
The CIT(A) disallowed the deduction under section 80HH. The Tribunal, referencing its earlier decision, directed the Assessing Officer to allow the deduction, setting aside the CIT(A)'s order.

7. Disallowance of Pension Liability under the "Dalmia Cement Executives Pension Scheme":
The CIT(A) upheld the disallowance of Rs. 2,82,79 towards pension liability. The Tribunal, following its previous order, held that the liability is allowable and directed the CIT(A) to allow the deduction.

8. Disallowance of 20% of Certain Business Expenses:
The CIT(A) upheld the disallowance of 20% of expenses on taxi charges, insurance premium, statutory notices/advertisements, and advertisement for sale of old assets. The Tribunal upheld the disallowance for taxi charges and statutory notices/advertisements but allowed the insurance premium and advertisement expenses, following relevant case laws.

9. Disallowance under Section 43B for Accrued Liability to Pay Cess and Cess Surcharge:
The CIT(A) disallowed Rs. 1,45,29,207 under section 43B. The Tribunal, following its previous decision, set aside the CIT(A)'s order and directed the Assessing Officer to delete the disallowance.

10. Valuation of Closing Stock of DBM Dust:
The ground regarding the valuation of DBM dust was not pressed during the hearing and was rejected as not pressed.

11. Addition of Deposits from Non-Governmental Buyers of Cement as Trading Receipt:
The CIT(A) upheld the addition of Rs. 26,10,483 collected as security deposits for potential sales-tax liability. The Tribunal, considering the nature of the deposits and relevant case laws, held that the amounts collected were deposits and not trading receipts, thus allowing the assessee's claim.

12. Addition of Unclaimed Balances and Unclaimed Wages/Bonus:
The CIT(A) upheld the addition of unclaimed balances and unclaimed wages/bonus. The Tribunal, following its previous decision, held that unclaimed balances are taxable, but unclaimed wages/bonus are allowable, thus partly allowing the assessee's claim.

13. Disallowance of Office Maintenance and Cooling Facility Charges:
The CIT(A) disallowed the office maintenance and cooling facility charges. The Tribunal, following its previous decision, allowed the actual payments made during the year as per the directions of the Delhi High Court, partly allowing the assessee's claim.

14. Disallowance of Extra Shift Depreciation for Welding Transformers:
The CIT(A) disallowed extra shift depreciation for welding transformers. The Tribunal, considering the technical note and the nature of the equipment, allowed the extra shift depreciation.

15. Disallowance of Depreciation for Business Premises:
The CIT(A) disallowed depreciation for business premises. The Tribunal, following its previous decision, upheld the CIT(A)'s order, rejecting the assessee's claim.

16. Charging of Interest under Section 216:
The CIT(A) upheld the charging of interest under section 216. The Tribunal, considering the bona fides of the assessee's estimates and relevant case laws, set aside the CIT(A)'s order, holding that no interest under section 216 can be charged.

17. Charging of Interest under Sections 215 and 139(8):
The issues regarding interest under sections 215 and 139(8) were consequential and required no comments at this stage.

Conclusion:
The appeal was partly allowed, with the Tribunal providing detailed directions on each issue based on previous decisions and relevant case laws.

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