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TMI Blog1985 (7) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... o force in this ground of appeal. 5. The next ground relates to the admissibility of the Development Rebate on the additions to plant and machinery installed in the premises of J.K. Cotton Spg. Wvg. Mills Co. Ltd. and Plastics Products Ltd. We find that for the asst. yr. 1971-72, the Tribunal had held that no development rebate was admissible on the additions to plant and machinery in question. Respectfully following the same, we find no force in this ground of appeal either. 6. The next ground relates to the disallowance of 50 per cent of the insurance charges for machinery installed in the premises of J.K. Cotton Spg. Wvg. Mills Co. Ltd. This disallowance was made by the IT authorities in view of the disallowance of 50 per cent of depreciation. However, after hearing the ld. Representatives, on both the sides, we find that under s. 31, if the machinery, plant or furniture is used for the purposes of the business or profession, the amount of insurance premium is fully allowable. Since, there is no finding that the machinery installed in the premises of J.K. Cotton Spg. Wvg. Mills Co. Ltd. was not used for the purposes of the business or profession, in our view the IT aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal for the asst. yr. 1971-72, restored the matter to the file of the ITO to examine the matter in the light of the relevant provisions of s. 37(3) regardless of the fact whether the expenditure was of a revenue nature or capital nature. After hearing the ld. Departmental Representative, we are of the view that a similar direction as issued by the Tribunal for the asst. yr. 1975-76 should be issued to the ITO and the matter similarly restored to the ITO for a decision afresh. We hold accordingly. 9. The next two grounds namely ground Nos. 7 8 of the assessee s appeal relate to (i) the jurisdiction of the ITO to reframe the entire assessment and, (ii) claim regarding additional bonus of Rs. 13,06,542. However, at the time of the hearing of the appeal, since they were not pressed n behalf of the assessee before us, they no longer survive for our consideration. 10. The next ground relates to the disallowance of Rs. 38,000 out of Director s remuneration. The ld. CIT(A) confirmed the disallowance, the following his own order for the asst. yr. 1980-81. For the asst. yr. 1971-72, the Tribunal had confirmed the disallowance made by the AAC, vide paras 80 81 of the Tribunal s or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, ground relates to disallowance out of general charges as follows: (a) Small presentations to business associates Rs. 27,134 (b) Lunches dinners, etc., 28,908 (c) Guest house expenses 2,433 2,433 (d) Ad hoc disallowance 80,000 The total claim of the assessee was Rs. 3,57,078 out of which the disallowance made by the ITO was for Rs. 106,604. On this point, the Department is also aggrieved. It has taken exception to the deletion of the disallowance of Rs. 48,129 on account of presentation to foreign business associates and the reduction of the disallowance of Rs. 1,50,000 to Rs. 80,000 on account of undetailed expenses (referred to above as ad hoc disallowance). Shri Unni urged that the expenses on foreign business associates are required to be allowed in view of the decision of the Hon ble Gujarat High Court in the case of CIT vs. S. L. M. Maniklal Industries Ltd. (1977) 107 ITR 133 (Guj). He also referred to the order of the Tribunal for the asst. yr. 1975-76. Next he pointed out that the CIT(A) had allowed these expenses for the asst. yr. 1980-81. We have heard the ld. Departmental Representative also. So far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of total expense of Rs. 3,97,706, the disallowance sustained by the CIT(A) was Rs. 1 lakh. For the asst. yr. 1981-82, the CIT(A) upheld a disallowance of Rs. 1,15,594 out of total expenses claimed at Rs. 8,00,928. After considering the same as also the facts and circumstances for the assessment year in question, we are of the view that no interference is called for in the ad hoc disallowance maintained by the ld. CIT(A) at Rs. 80,000. The result is that on the whole of this ground, the assessee succeeds only party. 15. The next ground relating to the non-admission of the claim of non-taxability of the amount of Rs. 11,69,802 not having been pressed before us at the time of the hearing of the appeal, no longer survives for our consideration. 16. The next ground relates to the disallowance of Rs. 23,330 out of travelling expenses. The details appear in para 33 of the order of the ITO. The total claim was Rs. 17,65,325. The ITO found from the scrutiny of the details that the expenses were incurred on business friends, customers and dealers. The details of the disallowance expenses have also been given in the ITO s order namely Rs. 25,897 were disallowed for 10 items specified t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have been directed to look into the provisions of rr. 40 and 117A. However, the ld. CIT(A) was under the impression that the assessee was only pleading for a consequential relief on the basis of re-computation of income. We find that for the asst. yr. 1975-76, the Tribunal vide para 20 of its order directed the ITO to giving a hearing to the assessee in accordance with rr. 40 and 117A before levying interest under ss. 139(8) and 215. Respectfully following the same, we give similar directions to the ITO for the asst. yr. 1975-76. 22. In the result, the appeal filed by the assessee partly succeeds as above. I.T.A. No. 1921/84 (Department s appeal) 23. The first ground relates to the deletion of a disallowance of Rs. 15,85,722 on account of interest pertaining to the P.V.C. production period for Acrylic, Cement SSF and Nylon Tyre Cord Plants. The ld. CIT(A) had deleted the disallowance following the order of the Tribunal for the asst. yr. Respectfully following the Tribunal s order, we find no force in this ground. 24. The next ground relates to the allowance of 50 per cent of the depreciation allowable on machinery installed at J.K. Cotton Spg. Wvg. Mills Co. Lt.d, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absolutely no justification for any interference with the order of the CIT (A) in that regard. 29. The next ground relates to the deletion of the disallowance of Rs. 48,129 on account of presentations to foreign business associates and reducing the addition of Rs. 1,50,000 to Rs. 80,000 on account of undetailed expenses under the head "General Charges" (Ad hoc disallowance). the CIT (A) had allowed the amount of Rs. 48,129 on the basis of his order for the asst. yr. 1980-81 as also on the basis of the decision of the Hon ble Gujarat High Court in the case of CIT vs. S. L. M. Maniklal Idustries. We are of the view that the allowance was on a sound basis and calls for no interference. So far as the ad hoc disallowance out of general charges is concerned, we have already discussed the same which discussing the ground No. 13 of the assessee s appeal and in view thereof, there is no force in this sub-ground of appeal of the Department. 30. The next ground relates to the deletion of the addition of Rs. 1,90,055 out of legal charges. The ld. CIT (A) following the order of the Tribunal for the asst. yr. 1971-72 deleted the disallowance, and withdrew the depreciation and development reb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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