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TMI Blog1967 (10) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... her is an item of Rs. 6,600, in respect of which the assessee claimed exemption under section 15B of the Income-tax Act. We will separately state the facts relating to each item as we deal with it. Regarding the sum of Rs. 53,634, on account of depreciation, the facts in brief are that the Cement Marketing Co. of India Ltd., which is a subsidiary of the assessee, the Associated Cement Co. Ltd., was at one time appointed a common sales manager for the assessee and several other companies, namely, the Patiala Cement Co. Ltd. and the Dalmia group of cement companies. This was by an agreement dated 4th June, 1942. In 1948, however, the Dalmia group dropped out of the arrangement and since then the Cement Marketing Company was only attending t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of marketing the products of the assessee and its subsidiary, in their capacity as sales manager. It was on these assets that the figure of Rs. 53,634 was computed as the annual depreciation for the assessment year 1956-57, and the short question that has been posed is whether the assessee-company would be entitled to be allowed this depreciation in the year of account. The Income-tax Officer took the view that the Cement Marketing Company was a separate legal entity from the assessee-company and since the assets were in fact being used by the Cement Marketing Company, it cannot really be said that the assets were being used for the purpose of the assessee's business. This order was set aside by the Appellate Assistant Commissioner in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant Commissioner and the Tribunal have concurrently found that the assets belonged to the assessee-company and that the assets in question have only been used by the assessee in the course of carrying on its business. No doubt they are being used by the Cement Marketing Company, but the position of the Cement Marketing Company is no more than that of a sales manager and, therefore, if the property of the assessee has been used by the sales manager it is still the property of the assessee, the assets being used by them for and on behalf of the assessee. Upon these facts, we have no doubt whatever that this item of depreciation was rightly allowed to the assessee. We can see nothing wrong in the view taken by the Tribunal. In that view the q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal furnace for this department, which will enable us to complete an investigation of national importance." Pursuant to this request the board of directors of the assessee-company passed two resolutions. The first was on the 26th June, 1953. By it they sanctioned a sum of Rs. 5,000 for the " Pilot Kiln-Department of Chemical Technology, University of Bombay. " It appears that thereafter the preparation of the pilot kiln was undertaken but its actual cost came to Rs. 6,600 and since the amount of Rs. 5,000 sanctioned had run short, the second resolution was passed as follows : " Rs. 1,600 the extra cost of manufacturing a pilot kiln for presentation to the University, Department of Chemical Technology, Bombay, in addition to Rs. 5,000 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , is technical in the extreme, but if one were to look to the substance of this transaction, there is no doubt that in substance what the assessee-company gave to the University of Bombay was ultimately a sum of Rs. 6,600. That amount ultimately went out of its coffers and in another shape was received by the University of Bombay. If instead of passing the two resolutions, which it did and then undertaking the preparation of the kiln and supplying the kiln to the University, the assessee had made out a cheque for that amount, handed it over to the University, got it re-endorsed in their favour and then had undertaken the preparation of the kiln, we suppose that the department would have had no objection. Rather than resorting to such an obv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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