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TMI Blog2012 (10) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute that the issue in question is squarely covered in favour of the assessee by the earlier order of the Tribunal contained at page 4 of the paper book vide Tribunal's order dated 25th January, 1994 for the assessment year 1986-87 in ITA No.343/Del/90 and order dated 23rd June, 1993 for the assessment year 1985-86 in ITA No.4002/Del/89. In view of such mutually accepted position, we sustain the order impugned in this regard by following our earlier order cited supra and reject the stand of the revenue." 3. The appellant Revenue contends that having regard to the phraseology of Section 37(4) and Section 37(5) of the Income Tax Act, 1961 ("Act", for short) as it stood at the relevant point of time, these expenses were clearly not deductible. It is submitted that the term "residence by whatever name called" would employ all the kinds of accommodation used for transit accommodation of the employees of a company, for the duration of their visit to the place concerned. Saying this clearly brought out the parliamentary intention to execute from the ambit of Section 37, the deduction as a business expense. Counsel for the Revenue relied upon the decision of the Karnataka High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... execute a project in Iraq; it had contracted for supply of labour services especially providing for temporary accommodation to its workers and employees. These circumstances clearly demonstrate that the intention of the assessee was not to provide "guest house" accommodation for those who visited the project site on "tour" or "visit". In other words, even though the accommodation provided in this case was for the entire duration of the project, what is sought by Section 37(4) and 37(5) is the type of accommodation provided to the employee who merely used them on transitory or temporary basis and not in the circumstances of the present case. Any other interpretation would do not only violence to the express term - having regard to the controlling expression of "tour" and "visit" but also undermine the object of the provision. 4. For these reasons this question is answered against the Revenue and in favour of the assessee. 5. The second question which is referred in this appeal is as follows :- "Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is correct in holding that the depreciation claimed on motor cars purchased and used in Iraq is allowable to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er's speech and also considering the contentions, the High Court rejected the Revenue's contention stating as follows :- "On consideration of rival submissions, we are unable to accept the view put forward by learned counsel for the revenue. The speech of the Finance Minister clearly shows the purpose of exclusion by way of proviso of claims for depreciation of imported cars incorporated by the second proviso to Section 32(1)(ii) of the Act was not to deny depreciation on foreign cars used in foreign countries for business abroad. It cannot be denied that cars used for business abroad at a foreign site is eligible for claiming depreciation, but for the proviso. There is no justification to read the proviso as excluding the said benefit which is otherwise a legitimate claim. In the facts and circumstances of the case, the claim of the assessee for depreciation on foreign cars used at foreign sites for its business is clearly admissible. We, accordingly, decide these questions against the revenue and in favour of the assessee." 8. This Court is in agreement with the view taken by the Punjab & Haryana High Court. The Revenue urges that the phraseology in the Circular relied upon by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis instead of waiting for the completion of the project to account for the entire profitability of the project and the very same method has been consistently followed by the company and accepted by the Income tax department. The method employed by the appellant company is as under:- a) No profit on construction of a multi-storeyed project is recognized and recorded unless the progress of the project reaches 30% in the terms of the expenditures incurred and the projected total expenditure. b) When the progress reaches 30% or more, profit or loss is computed by taking on the debit side of the P&L account the costs incurred and on the credit side the same percentage of the sale values received/receivable as the cost actually incurred till the end of the year bears to the total estimated project cost. This percentage method continues to be employed every year till the progress of the project reaches 90% or more. c) When the progress of the project reaches 90% or more, then the profit of the project is accounted for by taking on the credit side 100% completion i.e, the entire sales values received/receivable of the project and on debit side the total costs actually incurred till t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied upon the decision of the Supreme Court in Calcatta Company Ltd. Vs. CIT reported in (1959) 37 ITR 1. The Tribunal after going through these decisions held that the circumstances of this case showed that the (Appeal)'s Commissioner reasoning were sound and convincing and that in the absence of any specific deviation from the accounting methods and practices by the assessee, the conclusion arrived at by the AO was not warranted. 15. This Court also recollects the decision of this very Court. The same is also covered by the decision of this Court in CIT Vs. Triveni Engineering and Industries Limited, reported in (2011) 336 ITR 374. 16. In view of the above, all the questions framed in this reference are answered in favour of the assessee and against the Revenue. The reference is therefore closed in above terms. In this reference, only one question i.e, the 4th question has been framed and answered by this Court by the above order (in ITR No. 112/1997). In view of the said question, which is again answered in favour of the assessee and against the Revenue, the reference is accordingly answered in favour of the assessee. All questions are therefore answered in favour of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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