1982 (3) TMI 168 - AT - Income Tax

Summary

Issues:
1. Inclusion of income in the total income of the firm.
2. Addition of driver's salary.
3. Disallowance of expenses related to motor car maintenance, motor car depreciation, telephone expenses, and rent.
4. Disallowance of 50% of subscription to clubs.
5. Credit for advance tax and reduction of interest.
6. Capital gains computation.

Analysis:

1. The first issue revolves around the inclusion of income in the total income of the firm. The department argued that the income should be assessed in an individual's hands, but since the receipts were admitted in the firm's return, the income was included as a protective measure. Referring to a previous Tribunal order, it was directed that the inclusion of the amount should be revised based on the final adjudication on whose hands the income should be assessed. The Tribunal directed suitable revision or modification in this regard.

2. The second issue concerns the addition of the driver's salary. The assessee pointed out that a similar disallowance in the previous year was deleted by the Tribunal. Following the earlier order, the Tribunal deleted the disallowance of this amount.

3. The third issue involves the disallowance of expenses related to motor car maintenance, motor car depreciation, telephone expenses, and rent. The Tribunal rejected the objection on motor car maintenance and depreciation, as similar disallowances in the past were not disputed. Regarding telephone expenses and rent, the disallowances were restricted based on previous Tribunal orders.

4. The fourth issue relates to the disallowance of 50% of subscription to clubs. The Tribunal noted that membership of clubs facilitated the business or profession of the assessee. As no reason was provided to restrict the allowance, the Tribunal deleted the disallowance.

5. The fifth issue was about the credit for advance tax and the consequent reduction of interest. The assessee did not press this objection, leading to its rejection.

6. The final issue pertains to the computation of capital gains. The assessee claimed that the capital gain should be restricted to the amount actually received from the purchaser, despite an initial agreement for a higher amount. The Tribunal directed the assessing officer to verify if the assessee had given up the claim for the balance of the sale price and to recompute the capital gains accordingly, emphasizing the importance of considering the actual price received.

In conclusion, the appeal was partly allowed, addressing each issue raised by the appellant in detail and providing specific directions for further action where necessary.