9911796707
TMI Blog1986 (12) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... th the various parties by which they were provided commission for providing the assessee the various services such as provision of godown, safety of the goods and also finances. This was a composite contract and cannot be said to be in the nature of interest payment alone. Further the Department is not disputing the fact that the other parties have shown the income in their hands and they have also been taxed. The plea of the assessee before us was that if the non deduction of tax at source on these payments had not resulted in the lose of revenue to the Govt. then there was no necessity of levying the interest under s. 201 on the assessee. For this proposition the assessee placed reliance on CIT vs. LIC (1986) 52 CTR (MP) 278 and CIT vs. K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the payments have been made and it is also accepted that the payees have been identified and the contract of services also available and these persons have not been examined by the Department to establish that they have not done any service goes only to indicate that the explanation provided by the assessee has been merely rejected. We therefore allow this claim of the assessee. 3. The next of the issue is regarding disallowance out of car expenses which has not been pressed before us. 4. The next ground is regarding claim under s. 35B which has been set aside by the CIT(A) to follow the decision of the Special Bench of the Tribunal in the case of J. Hemchand and Co. The plea before us was that a modification of the direction may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts. We have only to uphold the order of the CIT(A) on this issue. The next issue is regarding subsidy being reduced from the cost of plant and machinery for the purpose of depreciation and investment allowance as well as reduction under 80J. The subsidy is not a contribution of cost by the Govt. towards any particular asset and, therefore, cannot be deducted from the cost of asset for the purpose of depreciation and investment allowance. However, for deduction under s. 80J in view of the condition laid down by the Govt. for the grant of subsidy unless and until the period of 5 years lapses it cannot be treated as capital reserve. We accordingly restore the order of the ITO on the issue of s. 80J only. 7. In the result both the appeals ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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