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TMI Blog1980 (8) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 13,240 under s. 40A(b) of the Act the assessee had come in appeal before the Tribunal and in ITA No. 1619(Del)/1979, dt.17th July, 1980the said disallowance was deleted. Respectfully following this order, with which we agree, we delete the addition of Rs. 4,061. 3. The next ground in the assessee's appeal relates to an addition of Rs. 4,000 sustained by the CIT (A) out of the expenses claimed under the head 'Business development expenses'. The assessee claimed an expenditure of Rs. 26,417 mostly for the holding conferences of the customers and foreign buyers. These conferences were held in different hotels, like Hotel President, Hotel Maidens, Hotel Inter-Continental and I.M.A. Hall, etc. The expenses incurred include hire charges for the halls booked in different hotels, transportation charges of the dealers and delegates and also lunch and tea etc. at the time of conferences. The ITO disallowed a sum of Rs. 5,000 on the ground that the expenditure claimed included an element of expenditure in the nature of entertainment. On appeal, the CIT (A) allowed a sum of Rs. 1,000 and confirmed the disallowance of Rs. 4,000. In doing so he referred to the judgment in Brij Raman Dass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid Order while deleting the disallowance out of the car expenditure in the assessee's own case for the asst. yr. 1976-77 the Tribunal had followed its earlier orders in the case of M/s T.N. Shah (P) Ltd., in ITA Nos. 3765 to 3767 of 1972-73 and in the case of Pratibha Ceramics (P) Ltd., in ITA Nos. 612 and 613 of 78-79, dt.18th Oct., 1979. Respectfully following the aforesaid order of the Tribunal in the assessee's own case, we delete the disallowance of Rs. 3,000. 8. Te next ground in the assessee's appeal relates to the depreciation on the car. In view of our aforesaid decision regarding the expenses on car, we direct that full depreciation should be allowed on the car. 9. The next ground relates to the weighted deduction under s. 35B. Before the ITO the assessee claimed weighted deduction on the expenditure of Rs. 2,57,616 for which details were furnished alongwith the revised return. Out of the expenditure of Rs. 1,48,627 the assessee claimed weighted deduction on Rs. 68,993 on postage, telephones, cables and telex etc. and the ITO allowed weighted deduction on estimated expenditure of Rs. 21,000. Out of the foreign travelling expenses of Rs. 78,074 including expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 12,000 which was claimed out of the total expenditure on rent of Rs. 46,525. The grievance of the Revenue, on the other hand, is that weighted deduction should not have been allowed on the expenditure of Rs. 23,149 on foreign travelling, Rs. 25,093 on salaries and Rs. 6,000 on rent. 10. We have heard the ld. Representatives of both the parties. We will take up the expenditure on foreign travelling first. We notice from the assessment order that the assessee claimed foreign travelling expenses of Rs. 78,074 which was fully allowed in the assessment. When, however, the assessee claimed weighted deduction on this expenditure the ITO allowed weighted deduction on the expenditure of Rs. 31,776 but did not allow weighted deduction on the balance expenditure of Rs. 46,298. The sum of Rs. 46,298 comprises: (1) Rs. 27,460 being the air ticket of shri A.C. Gulati and Shri S.K. Gulati for foreign tour of U.K., Western Europe, Middle East and Gulf countries paid to Travel India Bureau (P) Ltd., New Delhi; and (2) Rs. 18,838 being tour expenses of Shri A.C. Gulati and Shri S.K. Gulati on their visits to the aforesaid countries. The reason for not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explained before us that the expenditure claimed was on the salary of export manager, clerk, steno and a peon and this expenditure was only in respect of those persons who were wholly and exclusively looking after the export business. It was also explained that the assessee was maintaining a separate export division and since the entire expenditure of Rs. 50,186 was incurred on the employees of export division, weighted deduction should be allowed on the entire sum of Rs. 50,186. The ld. Deptl. Rep. however, submitted that the expenditure on salaries does not fall under any of the sub-clauses to s. 35B(1)(b) and, therefore, weighted deduction should not have been allowed on any part of the expenditure. In the Special Bench order in ITA Nos. 3255 and 3330 (Bom)/1976-77 dt.17th June, 1978in the case of M/s J.H. Co.,Bombayvs. The 2nd ITO, B-II Ward,Bombayand vice versa weighted deduction was allowed on 75 per cent of the salaries of persons exclusively handling export business. The submission of the ld. counsel for the assessee, however, is that weighted deduction should be allowed on the entire expenditure of Rs. 50,186. We would respectfully follow the aforesaid order of the Spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d which was allowed. The plant atPoonadid not work well and the part of the machinery "Drier and Spraying Unit" committed to be supplied initially had ultimately to be supplied by the assessee in honouring the commitment to M/s Maharashtra Safety Glass Works Pvt. Ltd. and M/s Maharashtra State Finance Corporation. This equipment was quoted in 1973 for Rs. 50,000 and if the assessee had to manufacture this machinery in the present year and had then to supply it, the cost would have been about Rs. 1,50,000. The assessee, therefore, thought it prudent to supply a part of its own machinery at the cost of Rs. 51,500. The written down value of this machinery was Rs. 66,534 and it is in this manner that the assessee incurred a loss of Rs. 15,034. The ITO disallowed the loss by observing that the Directors of the assessee company and Directors of the Poona company were common and the arrangement to supply the machinery was with a view to reduce the incidence of tax. The CIT (A), however, held that there was no material on record to show that the sale was made deliberately at a low price with a view to benefit M/s Maharashtra Safety Glass Works Pvt. Ltd., and he, therefore, allowed the loss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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