1980 (3) TMI 130 - AT - Income Tax

Summary

Issues:
1. Disallowance of Puja expenses under the head of labour welfare.
2. Allowability of Development Rebate.
3. Rejection of claim under section 80J of the Income Tax Act, 1961.

Detailed Analysis:
1. The first issue pertains to the disallowance of Puja expenses claimed by the assessee under the head of labour welfare. The Income Tax Officer (ITO) disallowed an amount of Rs. 3,757.15 claimed as Puja expenses, stating it was inadmissible as business expenses. The Appellate Authority Commissioner (AAC) upheld the disallowance, ruling that Puja expenses could not be considered business-related. However, the assessee argued that Vishwakarma Puja was a customary practice in the industry, involving cleaning tools and machinery and invoking blessings for income and livelihood. The tribunal found that Vishwakarma Puja was a regular business practice in factories where tools are used, and the expenses were incidental to the business, thus allowing the claim and directing the deletion of the addition.

2. The second issue concerns the development rebate claimed by the assessee amounting to Rs. 26,700. The assessee contended that the claim should be allowed as all conditions under sections 33 and 34 of the Income Tax Act were met. However, the tribunal noted that this ground did not arise from the AAC's order and rejected the claim, stating that the assessee failed on this aspect.

3. The third issue involves the rejection of the assessee's claim under section 80J of the Income Tax Act, 1961. The tribunal referenced the decision of the Supreme Court in Addl. CIT Gujarat vs. Gurjargravures P. Ltd, indicating that the case was covered by this precedent. Consequently, the tribunal ruled against the assessee on this claim. Overall, the tribunal partially allowed the appeal by the assessee, succeeding on the Puja expenses issue but failing on the Development Rebate and section 80J claim matters.