9911796707
TMI Blog1984 (8) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... that there was only a net deficiency of capital employed and, therefore, denied the relief of Rs. 12,53,218 claimed by the assessee. 2. On appeal the action of the ITO was upheld by the CIT(A) as he found that the view taken by the ITO was in accordance with the provision of s. 80j as amended by the Finance (No. 2) Act, 1980 which operated retrospectively with effect from 1st April, 1972. 3. The ld. Representative of the assessee submitted that the claim of the assessee was to be admitted inasmuch as the retrospectivity of the amendment made by the Finance (No. 2) Act, 1980 was under challenge before the Supreme Court. On the other hand, the ld. Departmental Representative supported the order of the CIT(A). 4. After due consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the first contention that the expenditure was incurred in earlier years and, therefore, could not be allowed in the previous year relevant, for the asst. yr. 1978-79. Further he considered that the entire expenditure was capital in nature of which only 50 per cent resulted in creation of plant . For coming to this conclusion he was analysed the break up of expenditure shown by the assessee, which were reproduced in para 13 of his order, and came to the conclusion that the action of the ITO in allowing depreciation on 50 per cent of the expenditure resulting in creation of "plant" was quitted fair and judicious and the assessee was not entitled to any further relief by way of depreciation. 7. The learned counsel for the assessee has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which promoted the assessee company and agreed to contribute of the share capital of the company in consideration of its undertaking to supply technical know-how to the assessee was allowable as a business expenditure or not. It this connection it to be pointed out that the American company was allotted further shares of Rs. 45,000 was for cash while the remaining shares of Rs. 2,35,000 was for non-cash consideration, viz., supply of technical know-how to the company. The Madras High Court held that subscription of shares otherwise than for cash would not have the effect of making the non-cash consideration an item of company s expenditure and it was not a trading expenditure and the offer of know-how by the foreign company to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it can be inferred that the value of engineering design and engineering fees could be Rs. 1.50 lakhs which has been estimated by the Govt. of India. In this case the CIT(A) has estimated 50 per cent of Rs. 7.50 lakhs as resulting in creation of "plant" and directed the allowance of depreciation thereon. In our view, the decision of the CIT(A) is quite fair and judicious and in the absence of any appeal by the Revenue or cross objection by it, we uphold the order of the CIT(A) on this issue and we hold that the assessee is not entitled to any further relief. 10. The third issue pertains to entitlement of investment allowance in respect of technical know-how which has been acquired on payment of Rs. 7.50 lakhs and which is treated as "plan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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