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TMI Blog2012 (12) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- (3) Taxing of expenditure on scientific research u/s 41(1) Rs.25,00,000/- (4) Increase in value of closing stock of finished goods Rs.18,20,000/- (5) Taxing of Profit u/s 41(3) being Capital Expenditure on Scientific Research Rs. 1,50,000/- (6) Legality of Order However, issue no.(6) regarding legality of order was not pressed at the time of hearing and, therefore, it does not require any adjudication. 3. For the sake of convenience, we will deal with Issue nos.(1), (3), (4) and (5) together. Brief facts of the case are that the return of income was filed by the assessee-company on 31- 03-1979 showing total income of Rs.27,40,806/-. The original assessment was made u/s 143(3) read with section 144B on 24- 09-1981 det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation on plant & machinery Rs.87,26,224/- (b) Profit u/s 41(3) being capital expenditure On Scientific Research Rs. 1,50,000/- (c) Profit u/s 41(1) being revenue expenditure on Scientific Research Rs.25,00,000/- (d) Difference in value of finished products Rs.18,20,000/- Rs.131,96,224 The holding company agreed to purchase the transfer and assignment and goodwill of these business and activities as well as other intangible benefits thereof accruing or appurtenant thereto under all licence and quotas etc. As per agreement all stocks of finished goods, raw materials etc. were transferred to the purchasing company at its book value. In the deed of assignment dated 28-6-77 the values have been shown for fixed assets, current ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her group cases by the Hon'ble Gujarat High Court and therefore similar guidelines may be laid down for fresh determination of the issues by the AO. The ld. counsel invited our attention to para 20 of the decision of High Court which reads as under: "Before concluding, we must note that even while not accepting the major arguments urged on behalf of the assessee, there is some substance in the contention of Mr. R K Patel for the assessee that the provisions of sec. 41(2) govern only building, machinery, plant or furniture and that, therefore, other assets cannot be included within the scope of sec. 41(2) for taxing the difference between the written down value and the actual cost. We also find that in view of the provisions of section 47 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, assessee has not substantiated their claims and has also not given any details as regards sale consideration of individual items of assets. In the absence of these details and since assessee has not substantiated the claims, the profits u/s 41(2) as taxed originally Rs.87,26,224/- are not deleted." (b) Profit u/s 41(3) being capital expenditure On Scientific Research Rs. 1,50,000/- (c) Profit u/s 41(1) being revenue expenditure on Scientific Research Rs.25,00,000/- (d) Difference in value of finished products Rs.18,20,000/- As regards item (b), (c) & (d), assessee has not produced any additional details and hence he has nothing to say against the impugned addition. Therefore, the addition of as mentioned in item (b), (c) and (d) ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nos. 1, 3, 4 & 5 are dismissed. 9. As regards the addition of Rs.4,75,000/-, the Tribunal vide its order dated 25-10-1991 has dealt with the issue as under:- "5. Ground No.5 is against sustaining the addition of Rs.4,75,000/- on account of right to receive royalty fees. The AO has dealt with the matter vide para 16 of the assessment order as under: "The asseasee company entered into agreement with Dr. Syed Mohd. won Syed Hussein and Dr. Lourdenedin of Kaulalumpur on 28.8.7S. The company agreed to provide technical knowhow. The company had already rendered services and were entitled to receive royalty in two instalment of 50,000 malaysian shillings in the year 1978 and 1979. The present value of the right to receive the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been accounted for in the deed of assignment in respect of three units of the assessee company to the holding company. Since major issues arising in the present appeal as above have been set aside by us to the file of the AO, we would set aside this issue also to the AO for fresh adjudication after going into the facts and evidence to be produced by the assessee." 10. In pursuance of this order, the AO gave an opportunity to the assessee. Before him, the assessee reiterated the submissions made and documents produced at the time of original assessment. The assessee did not produce any further evidence or material justifying their case for non-taxability of the amount in question. In view of this, the addition made of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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