9911796707
TMI Blog1989 (12) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... year under appeal, it had added a new printing machine, which was imported fromU.S.A.The assessee company installed the machine in a newly constructed building and had also obtained a separate power connection. This imported machine was also used for the purpose of printing and publishing of magazines. The assessee maintained only one set of account books for its business carried on with the use of the old and the imported machine. The assessee had claimed that the imported machine was a separate and independent unit and therefore it was eligible for deduction at 7 1/2 % of the capital employed on this machine, the electric installation etc. The IAC (Asst.) after examination of the facts had rejected the claim on the reasonings :-- (a) separate sets of accounts are not maintained; (b) it was just another printing machine; (c) by its addition, the existing production facility had only been enlarged, for there were several other machines also installed in the same hall; and (d) the machine was used for the same business of publishing, as was carried on earlier. The CIT(A) had allowed the relief on the reasoning that :-- (a) separate set of accounts was not a necessary condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as the quantum of relief claimed at Rs. 62,220 was not disputed by the revenue. 4. We have given our very careful consideration to the rival submissions. The revenue's objection is on three factors, viz. (i) separate set of accounts not maintained; (ii) the imported machine has only enlarged the production capacity; and (iii) the same business of publishing was carried on with the help of the imported machine. The assessee's claim is based on a few factors, such as, a new and separate building was constructed for the installation and use of the imported machine, separate power connection was taken, the imported offset press was a complete press in itself and that there is no restriction in the Act that the new unit must carry on a totally different business. 4.1 The undisputed facts of the case are briefly recapitulated for the sake of facility. The imported item Colour King Web Offset Press is a combination of several of the printing unit rolled into one, as from the input stage till the output stage it manages and carries on the operations all by itself and does not require any additional machinery. This press is of the latest of the technology which was introduced v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en at cost less depreciation wherever admissible, nominal value of debts owing to the undertaking and the balances of cash in hand and at banks are to be aggregated. The liabilities that need to be deducted from the aggregate value of the assets are the borrowings and debts owed and any element of tax. From the net value of the assets so arrived at, the further amounts to be deducted are the investment incomes which are not taken into account while computing the profits of the business and in cases where the investments so made exceed the borrowed funds. The resultant figure would be the capital employed in the undertaking on which the assessee shall have to be allowed the deduction at 7 1/2%. The computing period has been defined to mean the period for which the profits of the undertaking are computed as per sections 28 to 43A of the Act. 4.4 The heading nor any part of the section state that, a separate set of accounts should be maintained for each industrial unit so as to be eligible for making the claim under this section and therefore, the primary objection of the revenue in refusing the claim is totally baseless and is not in accordance with law. The conditions (1), (2) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly rejected. On these facts, the offset press decidedly satisfies the third of the conditions of manufacture or production of articles. We are therefore of the view that the assessee had clearly satisfied all the four conditions prescribed by the Act, and is thus fully justified in making its claim that the offset press is a separate and independent industrial unit. Since the revenue has not argued on the working of the capital employed as also on the quantum of relief under this section amounting to Rs. 62,220, we direct the Assessing Officer to allow the deduction of Rs. 62,220. 5. The next objection of the revenue is regarding the allowing of the deduction of the foreign travel expenses of Sh. Vishwanath and the local travel expenses of Sh. Vishwanath and his wife, who are neither directors nor employees of the company, but are relations of the directors. 5.1 The ld. DR pleaded that CIT(A) was wrong in allowing the deductions disregarding the fact of close relationship of the persons with the directors of the assessee company. 5.2 The plea made by the ld. counsel Sh. Dinodia was that for allowing an expenditure as deduction from the income, the factor that needs to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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