9911796707
TMI Blog1994 (9) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... o asst. yr. 1982-83. He, however, hastened to add that the appeal had been filed to keep the matter alive. The learned Departmental Representative, on the other hand, supported the orders passed by the CIT(A). 4. In view of the aforesaid submissions, we uphold the view taken by the tax authorities following in this connection the order of the Tribunal for asst. yr. 1982-83. 5. Ground No. 2 in the appeal pertains to the action on the part of the ITO on subjecting to tax a sum of Rs. 1,99,457 representing the credit balances in the accounts of customers, employees, etc., written back by the assessee to the P L account. The ITO rejected the view-point canvassed on behalf of the assessee vis- a-vis the exclusion of the aforesaid amount by reference to the reasons expressed in the assessment order for asst. yr. 1982-83. The CIT(A) did likewise and following the order of his predecessor for the earlier year, confirmed the action on the part of the ITO. 6. We have heard both the parties and have also perused the orders passed by the tax authorities. The learned counsel stated that the issue stood concluded in favour of the assessee by the order of the Tribunal for asst. yr. 1982-83 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the effect that relief in full be allowed and all that which was being argued was that some part of the expenditure be treated as being outside the purview of s. 37(2A) vis-a-vis the participation of the employees and directors of the company. He was fair enough to state that in the preceding assessment year the Tribunal had allowed deduction to the extent of 10%, but the learned counsel made a claim for higher deduction in the assessment year under appeal on the basis of the following reported decisions: (i) CIT vs. Expo Machinery Ltd. (1992) 107 CTR (Del) 4 : (1991) 190 ITR 576 (Del); (ii) Indokem Ltd. vs. ITO (1989) 34 TTJ (Bom) 89; (iii) Orissa Cement Ltd. vs. ITO (1990) 36 TTJ (Del) 236; and (iv) Kelvinator of India Ltd. vs. IAC (1989) 34 TTJ (Del) 80 : (1989) 29 ITD 469 (Del). The learned Departmental Representative, on the other hand, supported the orders passed by the tax authorities. According to him there were no details available on record to show that any expenditure had been incurred by the employees. The further submission on his part was that in any case the relief be restricted to 10% as held by the Tribunal in asst. yr. 1982-83. 12. We have examined the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... livered after the decision of the Tribunal. These, according to him, were: (i) CIT vs. Chase Bright Steel Ltd. (1989) 75 CTR (Bom) 60 : (1989) 177 ITR 124 (Bom); (ii) CIT vs. Kaira Dist. Co-operative Mill Producers Union Ltd. (1991) 100 CTR (Guj) 22 : (1991) 192 ITR 608 (Guj); and (iii) CIT vs. Ahmedabad Mfg. Calico Printing Co. Ltd. (1992) 105 CTR (Guj) 327 : (1992) 197 ITR 538 (Guj). 16. As regards item No. (iii), viz., salaries and wages, the learned counsel was fair enough to state that this had been decided against the assessee in the preceding assessment year, but hastened to add that the appeal had been filed with a view to keep the matter alive. In respect of item No. (iv), i.e., cost of provisions amounting to Rs. 7,55,127 the learned counsel stated that the Tribunal in a consolidated order pertaining to asst. yrs. 1979-80 and 1983-84 passed on 12th Jan., 1993 in ITA Nos. 3309 and 3310/Del of 1989 had taken the view that 25% of the expenditure was required to be allocated to the employees of the company "while on tour and occupying the rest house". It was accordingly urged that since the matter had already been decided by the Tribunal for the assessment under app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee's claim in respect of a part of the expenditure pertaining to the "Nepal Project". The ITO in the course of the assessment proceedings referred to the directors' report wherein it had been stated that during the year under consideration the construction and erection of a brewery had been completed inNepal. On being asked to give a detailed note regarding the aforesaid project the assessee stated that it had entered into a technical know-how agreement with M/s Himalayan Breweries Ltd.,Nepaland the plant had been commissioned for commercial production on2nd Feb., 1983. It was also explained that besides providing technical know-how and earning royalty income the assessee had acquired shares in the foreign company. The ITO asked for further details from the assessee and by means of a written reply it was explained that a total expenditure of Rs. 4,80,731 had been incurred during the assessment year under consideration. It was also pointed out to the ITO that no further expenses had been incurred in the subsequent assessment years. The further facts which emerged were that the assessee had supplied machinery to theNepalparty for a consideration of Rs. 1,05,98,335 and the shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief to the tune of Rs. 1,70,479. 25. We have heard both the parties in respect of the assessee's claim to the tune of Rs. 3,10,253. The learned counsel took us through the material on record and which had already been considered both by the ITO as also by the CIT(A). It was his case that the expenditure was revenue in nature and pertained to salary and wages as also traveling expenses in respect of the personnel deputed toNepalin connection with the foreign project. The further submission on the part of the learned counsel was that the agreement set out the various circumstances under which specified items of expenditure were to be borne by the Nepalese company whereas these were to be borne by the assessee-company under certain other circumstances. According to him, the assessee-company in terms of the agreement had debited the expenditure under consideration, to the account of the Nepalese company, but there being some resistance on their side to bearing the said expenditure the matter strictly in the interest of business was amicably settled in asst. yr. 1985-86. It was stated that the project was a large one involving supply of substantial amount of machinery to the Nepalese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relief allowed by the CIT(A) to the tune of Rs. 1,70,479. In view of the aforesaid facts, we cannot help but comment on the observations of the first appellate authority while deciding the appeal for asst. yr. 1985-86 wherein he has categorically stated that the finding given by the CIT(A) in asst. yr. 1983-84 "is not correct and, therefore, is not binding on the ITO". In our opinion, the CIT(A) need not have expressed any opinion about the order passed by his colleague in asst. yr. 1983-84 when the said decision had become final. It was quite another thing if he would have rejected the claim in asst. yr. 1985-86 on merits. 27. In our opinion, the facts of the case as brought out in the preceding paras are somewhat peculiar as the ITO in asst. yr. 1983-84 accepts that a part of the expenditure is allowable, but in asst. yr. 1985-86 and the CIT(A) confirms the aforesaid view, but in asst. yr. 1985-86 the CIT(A) opines that the earlier view is not correct and the claim is not allowable in that assessment year, viz., 1985-86. In other words, the assessee is denied the claim in both the assessment years on these facts and circumstances of the case we are of the view that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1975 and 31st March, 1976 a sum of Rs. 1,51,575 was written back to the P L account for the year ending 31st March, 1983 as the same was no longer required. Further in the return of income the amount of Rs. 1,51,575 had been disallowed in the year in which the provision was made and, hence, it was not liable to tax. The CIT(A) verified the aforesaid facts with reference to the material on record and came to the conclusion that the stand taken on behalf of the assessee was correct and required to be accepted. He accordingly deleted the addition. 30(a). After hearing both the parties, we find no good ground to interfere with the decision taken by the CIT(A) as relief has been allowed after verifying relevant facts from the record and thereafter giving a categorical finding that the amount which had been written back in the P L account had not been claimed as deduction in the relevant preceding assessment years. The learned Departmental Representative, however, sought to canvass before us that the stand taken by the assessee before the ITO and that taken before the CIT(A) was different, but we do not find any such contradiction in the stand at both the stages. In this view of the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal pertains to the relief of Rs. 2,34,953 given by the CIT(A) in respect of Kirtan and Pooja expenses. The claim which was initially rejected at the assessment stage came to be allowed by the CIT(A) placing reliance on the orders of the Tribunal in the assessee's own case for the asst. yrs. 1979-80 and 1980-81. The decision of the Hon'ble Delhi High Court in the case of CIT vs. Bhanna Mal Co. P. Ltd. (1971) 82 ITR 138 (Del) relied upon by the ITO was distinguished by the CIT(A) on the ground that the facts were entirely different. After hearing both the parties, we do not find any reason to interfere with the decision taken by the CIT(A) to allow necessary relief in accordance with the earlier decisions of the Tribunal in the assessee's own case. 35. Ground No. 6 in the appeal has three separate limbs, viz., (a), (b) and (c) and the subsequent discussion disposes of all these. The relevant details pertaining to this ground are stated in para 8.4 of the order of the CIT(A) and the expenditure is on meals, tea, cold drinks, etc., tips, articles for presentation, wall decorations, lunch and dinner to excise staff, refreshment expenses at various units, cost of dry fruits, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given vis-a-vis "effluent drainage scheme". The claim was rejected by the ITO, but allowed by the CIT(A) who followed the order of his predecessor for the asst. yr. 1982-83. 40. We have heard both the parties and it is not the case of the Department that the order of the CIT(A) for asst. yr. 1982-83 came to be subsequently upset on the basis of an appeal filed before the Tribunal. We in fact have available with us a copy of the order of the Tribunal deciding appeals of both the parties for asst. yr. 1982-83. A perusal thereof shows that no ground has been raised in the Revenue's appeal vis-a-vis the item under consideration and in respect of which the assessee had obtained relief at the hands of CIT(A). The present order of the CIT(A) allowing necessary relief is accordingly confirmed. 41. Item (b) in the ground under consideration pertains to the addition of Rs. 1,65,193 made by the ITO on the ground that the same represented capital expenditure. On further appeal, however, the CIT(A) perused the details and came to the conclusion that the expenditure had been incurred on repairs and no fresh construction was involved. 42. The learned Departmental Representative supported t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isposing of the assessee's appeal on the same point and having already expressed opinion, the present ground raised by the Revenue needs no further comment on our part. 47. Ground No. 11 in the appeal has two limbs, namely, (a) and (b). The first issue which has been raised before us is the question of perquisite value for the personal use of the company's cars by the directors of the company. The ITO made an addition of Rs. 30,000, viz., Rs. 10,000 per director. Before the CIT(A) it was contended that the estimate of Rs. 10,000 per director was excessive as the cars were being used by them mainly for the company's business and personal element, if any, was very small. It was also pointed out that Rs. 100 per month had been charged, from the directors as reimbursement for the personal use of the cars. 48. The CIT(A) considering the aforesaid submissions took the view that the perquisite value was to be taken in accordance with r. 3 of the IT Rules, i.e., at Rs. 5,400 per month and which was to be further reduced by Rs. 1,200 being the reimbursement from their side. The balance of Rs. 4,200 was to be treated as perquisite to be considered under s. 40(c). 49. We have heard both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay Tribunal in the case of IAC vs. Kodak Ltd. 3 SOT 517. It was further reiterated that the gratuity of Rs. 16,750 was much below the limit laid down in s. 10(10). The aforesaid submissions found favour with the CIT(A), who proceeded to delete the addition. 53. The learned Departmental Representative, at the outset, supported the orders passed by the ITO, but specifically contending before us that the matter be restored back to the ITO for reconsidering the matter after bringing on record the fact pertaining to the payment of gratuity to Shri P.C. Goswamy in the earlier years. The learned counsel for the assessee, on the other hand, supported the order of the CIT(A). 54. We have considered the rival submissions and have also perused the material on record, to which our attention was invited. We find on a perusal of the assessment order that the ITO had himself mentioned that gratuity to the tune of Rs. 30,000 was paid to the said director, in asst. yr. 1981-82. We also find that the gratuity had been paid in accordance with terms of the appointment of the said director as approved by the Department of Company Affairs, Govt. of India. At page 73 of the assessee's compilation is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A) on the ground that whereas the sales-tax liability pertaining to the Hops Project was created by means of an assessment order dt.31st Dec., 1982the sales-tax liability in respect of Solan Brewery was created by an order dt.2nd March, 1983. The copies of the assessment orders were produced before the CIT(A) and it was stated that these were also filed with the ITO. Being of the view that the liabilities were created in the assessment year under appeal, the CIT(A) proceeded to delete both the additions aggregating Rs. 66,811. After considering the rival submissions, we are inclined to confirm the view taken by the CIT(A) to allow necessary relief to the assessee. As the orders have been passed during the previous year under consideration by the sales-tax authorities, it is not possible to hold that the liability pertains to an assessment year other than the one under appeal. 58. Ground No. 15 and which is the last ground in the Revenue's appeal once again has two limbs, namely, (a) and (b) and the former pertains to the disallowance of a sum of Rs. 5,57,684 pertaining to depreciation on empty bottles and wooden shells. The second issue which has been raised pertains to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
