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TMI Blog1981 (4) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... this year the company claimed inauguration expenses of Rs. 22,863 which, inter alia, included cost of lunch provided on the occasion of inauguration on 23rd April, 1976, travelling expenses of certain guests, cost of marble stone, taxi hire charges, rent for tent, furniture and decoration items, printing charges of invitation cards etc. The assessee claimed deduction of this amount as business expenditure. But the ITO did not accept the claim. On appeal before CIT (A) it was submitted on behalf of the assessee that the expenses incurred on the occasion of inauguration of the assessee s business by inviting distinguished guests including Ministers of Rajasthan and of Central Government constituted business expenditure and, therefore, the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration to the rival submissions and the authorities cited by the parties. In our opinion, the ratio of the decision of the Gujarat High Court is not applicable in the facts of the case. In the case the assessee which was a co-operative society celebrated its silver jubilee and on that occasion it sent certain employees is to Bombay for the purpose of purchase of wall clocks for presentation to other co-operative societies who were members of the assessee. The assessee also purchased certain stainless steel utensils which were distributed to the members of the assessee society. It was held by the High Court that the articles were distributed only amongst the assessee society's members and, therefore, the expenditure incurred was wholly and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wise of inaugural expenses. The Bombay High Court has held that the expenses on inauguration are not admissible as a deduction under s. 37 of the Act. Following this decision we are of the opinion that these expenses have rightly been disallowed by the authorities below. No interference is, therefore, called for. 6. In the second ground of appeal it has been submitted that the authorities below have erred in allowing 80J claim of Rs. 25,525 only instead of Rs. 6,15,478 claimed by the assessee by not treating the borrowed money and debts as capital employed on business. While rejecting the claim of the assessee that borrowed capital is not to form part and parcel of the capital employed for the purpose of s. 80J of the IT Act, 1961, the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, called for. 9. It is also contended that the authorities below have erred in allowing 80J claim in proportion to the actual working period instead of full year. It appears that during the accounting period relevant to the assessment year under appeal the industrial undertaking worked for a period of 1 1/2 months only. The deduction under s. 80J in the case of the assessee company is at the rate of 7 1/2 per cent to the capital employed. Since the assessee company worked for a period of 1 1/2 months, the ITO allowed deduction proportionately for 1 1/2 months only. This working has been upheld by the CIT(A). While upholding the action of the ITO, the CIT(A) has observed as under: ".......there appear to be different views in the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary has been brought to our notice on behalf of the Revenue. Respectfully following the decision of the Madras High Court we are unable to sustain the orders of the authorities below. We, therefore, direct that the relief under s. 80J should be allowed for the whole year. The ITO shall recompute the relief accordingly. 11. In the last ground of appeal it is submitted that the authorities below have erred in not allowing depreciation on business promotion expenses of Rs. 6,778 and training expenses of Rs. 43,831 incurred by the assessee before commencement of production which have been capitalised by the assessee. The assessee claimed depreciation on the following expenses capitalised and incurred before the production stated: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehalf of the assessee that the engineers of the company were sent abroad for the purpose of getting the training for installation of machinery and, therefore, the authorities below were not justified in not allowing the capitalisation of the same for the purpose of allowing depreciation on machinery. It is submitted that it is wrong to say that no evidence was produced before the ITO in respect of the contention that the engineers of the company were sent abroad for the purpose of getting training in installation of the machinery. All the vouches and bills were shown to the ITO for all travelling expenses. Before us a copy of letter dt. 12th Feb., 1975 has been filed alongwith the copy of the bill entitled as "Details of Staff Training Expe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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