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TMI Blog1966 (5) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... he expenditure of Rs. 10,804 incurred by the assessee is allowable as a deduction under section 10 ? " The assessment year under consideration is 1955-56, the relevant previous year being 1953-54 ending on 30th June, 1954. The assessee is a public limited company carrying on the business of manufacturing sugar from sugarcane. Since sugarcane was in short supply, the assessee, with a view to avoiding uneconomic competition, entered into an agreement with Messrs. Joara Sugar Mills (hereinafter called the mills) on 4th November, 1953. The material term of that agreement is contained in clause 1, which reads: " The company will not work its factory for the season 1953-54 in consideration whereof the mills agree to share the profits on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. Ltd. v. Commissioner of Income-tax, which was later followed by the Rajasthan High Court in Educational Civil List Reserve Fund No. 1 v. Commissioner of Income-tax to the effect that, where a losing party applies under section 66(1) of the Act for a reference, the other party also may ask for a reference of other questions of law which arise from the order of the Tribunal. Before a reference can be made, there must be an application which is made within the period of limitation prescribed by section 66(1). Secondly, where it is made by an assessee, it must be accompanied by a deposit of Rs. 100. Thirdly, the application itself has to be made in the form prescribed by rule 22A of the Income-tax Rules, which must not only be signed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be held that the machinery was used for the purpose of business. In support of this view, the Tribunal relied upon Commissioner of Income-tax v. V. Bhaskar Sathe and Commissioner of Income-tax v. Dalmia Cement Ltd. We, however, agree with the contrary view taken in Bhikaji Venkatesh v. Commissioner of Income-tax and Central Provinces Manganese Ore Co. v. Commissioner of Income-tax. In our opinion, such allowance is given under section 10(2) of the Act not for depreciation of the machinery as such but for depreciation as a consequence of carrying on the business. We derive some support for our opinion from the following observations of the Supreme Court in Liquidators of Pursa Ltd. v. Commissioner of Income-tax: " The words 'used for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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