2001 (5) TMI 173 - AT - Income Tax

Summary

Issues Involved:
1. Addition on account of revenue recognition on percentage of completion method.
2. Addition on account of warranty provision.
3. Disallowance u/s 37(2A) for business lunches.
4. Disallowance of investment allowance.
5. Deduction of pro rata lease premium.
6. Deduction for royalty and technical know-how fees.
7. Addition in respect of provision made for foreign travel expenses.

Summary of Judgment:

1. Addition on Account of Revenue Recognition on Percentage of Completion Method:
The assessee's grievance regarding the addition of Rs. 96,37,000 on account of provisioning made for revenue recognition on the percentage of completion method was addressed. The Tribunal held that there was no justification for the impugned addition and deleted the same, applying the decision from I.T.A. No. 157/Pune/1995 for the assessment year 1990-91.

2. Addition on Account of Warranty Provision:
The assessee contested the addition of Rs. 31,51,000 on account of warranty provision. The Tribunal decided in favor of the assessee, referencing their earlier decision in I.T.A. No. 157/Pune/1995. However, there was a dissenting opinion by one of the members, who upheld the CIT(A)'s confirmation of the disallowance. The matter was referred to a Third Member, who concurred with the dissenting view, resulting in the issue being decided against the assessee.

3. Disallowance u/s 37(2A) for Business Lunches:
The assessee argued that the CIT(A) erred in restricting the claim for deduction on account of business lunches to 20% of the expenditure. The Tribunal directed the Assessing Officer to allow 50% of the total expenditure on business lunches as attributable to employees, following the precedent set in I.T.A. No. 157/Pune/95.

4. Disallowance of Investment Allowance:
The assessee's claim for investment allowance of Rs. 3,60,096 was disallowed by the Assessing Officer on the grounds that the machinery was not installed during the relevant previous year. The CIT(A) confirmed this disallowance. The Tribunal upheld the CIT(A)'s decision, referencing the Supreme Court's judgment in the case of Shri Shubhalaxmi Mills Ltd.

5. Deduction of Pro Rata Lease Premium:
The assessee's ground for deduction of pro rata lease premium of Rs. 46,163 was dismissed as it was agreed that the issue was covered against the assessee by the decision in the case of Maharashtra Scooters Ltd.

6. Deduction for Royalty and Technical Know-How Fees:
The assessee's ground for deduction of Rs. 24,41,000 towards royalty and technical know-how fees was not pressed during the hearing and was accordingly dismissed.

7. Addition in Respect of Provision Made for Foreign Travel Expenses:
The assessee's ground regarding the addition of Rs. 4,70,000 for foreign travel expenses was also not pressed during the hearing and was dismissed.

Conclusion:
The appeal was allowed in part, with specific issues being decided in favor of the assessee, while others were upheld against them based on legal precedents and detailed examination of the facts and arguments presented.