1989 (8) TMI 123 - AT - Income Tax

Summary

Issues:
1. Depreciation claim based on IT (Fourth Amendment) Rules, 1983 for asst. yr. 1983-84.
2. Disallowance of professional fee paid to Mrs. Bhanu Patil.
3. Charging of interest without giving an opportunity to the assessee.

Analysis:

1. Depreciation Claim:
The appeal involves a dispute over the depreciation claim by the assessee for the assessment year 1983-84. The assessee revised their claim based on the IT (Fourth Amendment) Rules, 1983, seeking a higher depreciation amount. The controversy revolves around the effective date of the amendment, which came into force on 2nd April 1983. The Special Bench decision and the Andhra Cement's case are cited, arguing that the amendment should be deemed effective from 1st April 1983 due to it being a Sunday. The Tribunal, considering the submissions, upholds the appellant's plea, ruling that the higher depreciation claim is applicable for the asst. yr. 1983-84.

2. Professional Fee Disallowance:
The second issue pertains to the disallowance of a professional fee paid to Mrs. Bhanu Patil. The Assessing Officer allowed a portion of the fee, but the Commissioner disallowed the remainder, citing non-settlement in the relevant accounting year. The Tribunal, after careful consideration, finds that Mrs. Patil's services were taken for genuine business consideration. Her qualifications and expertise in management were acknowledged, and her advice led to beneficial business decisions. The Tribunal emphasizes that in the absence of evidence indicating impropriety, the engagement of Mrs. Patil should be considered a valid business expense. Therefore, the disallowance is deleted.

3. Charging of Interest:
The final issue concerns the charging of interest without providing the assessee with an opportunity to be heard. Citing the decision in Central Provinces Maganese Ore Co. Ltd. vs. CIT, the Tribunal notes that interest charges are not appealable unless the assessee is not liable to pay at all. While the assessee relied on a cautionary observation by the Andhra Pradesh High Court, the Tribunal finds that the assessee's argument is not supported by the legal precedents cited. Consequently, the Tribunal rules against the assessee on this issue.

In conclusion, the Tribunal partially allows the appeal, upholding the higher depreciation claim, deleting the disallowance of the professional fee, but ruling against the assessee on the issue of charging interest without prior opportunity for representation.