9911796707
TMI Blog2004 (1) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... led its return in respect of the assessment year 1989-90. The assessee is a limited company and the method of accounting is the mercantile system. The assessment, by the authority concerned, was made under section 143(3) of the Income-tax Act, 1961. The Assessing Officer did not entertain the claim of the assessee in respect of certain items amongst which the disallowance of deduction claimed under section 32AB of the Income-tax Act, 1961, and the disallowance of Rs. 5,93,126 under section 37(2A) of the Income-tax Act, 1961, are relevant so far as the present hearing is concerned. Being aggrieved by the decision of the Assessing Officer in respect of those two items, the assessee preferred appeal before the Commissioner of Income-tax (Appeals) and thereafter the matter finally came before the learned Income-tax Appellate Tribunal for decision. The learned Tribunal allowed Rs. 78,135 in favour of the assessee-company treating it as expenditure for business purposes. However, the claim in respect of the expenditure of Rs. 5,00,000 on this head was not allowed by the Tribunal. As such, being asked by the assessee the learned Tribunal referred the question before this court which is as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned advocates for both the sides. Let us now answer those two questions one after another. So far as the first question is concerned, it appears that the assessee claimed deduction to the extent of Rs. 5,93,126 on account of expenditure pertaining to various clubs. While the learned Tribunal allowed the subscription fees of the clubs as paid by the assessee-company, still the Tribunal rejected the prayer of deduction in respect of the subscription of Rs. 5,00,000 which was paid by the assessee-company to the concerned club for repairs, renovation and extension of the club building, on the ground that such repair could not be allowed as the club building was not owned by the assessee-company. The learned advocate for the assessee-company argued that the learned Tribunal was not at all justified in rejecting this prayer for deduction of Rs. 5,00,000. It appears that as per the provisions of section 37 of the Income-tax Act in respect of such an expenditure this type of deduction is allowable. It appears from the facts, which have been considered by the Assessing Officer, the Commissioner of Income-tax (Appeals) as well as the learned Tribunal, that the assessee-company claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee cited an unreported decision passed by this High Court in Income-tax Reference No.33 of 1993 wherein their Lordships clearly decided that a payment as made by the assessee to the Chamber of Commerce should be held to be a business expenditure and accordingly therein that case the question was decided in favour of the assessee. So far as the present case is concerned, it appears that the learned Tribunal while allowing deduction in respect of subscription paid to the clubs, disallowed the amount of Rs. 5,00,000 which was paid by the company on account of renovation/repair of the said club on the ground that the company was not the owner of the said club. That there was a payment in that respect, there is no dispute before us. The Tribunal is the final fact-finding authority and unless its decision is challenged on the ground of perversity, there is no reason to disbelieve the said fact. In this respect we rely on the decision reported in CIT v. Manna Ramji and Co. [1972] 86 ITR 29 (SC); Aluminium Corporation of India Ltd. v. CIT [1972] 86 ITR 11 (SC). From those decisions it will appear clearly that the fact as stated by the Tribunal at the time of the reference, unless it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee-company under section 32AB of the Act. In support of his contention he cited the decisions reported in CIT v. Dinjoye Tea Estate (P.) Ltd. [1997] 224 ITR 263 (Gauhati) and CIT v. Warren Tea Ltd. [2001] 251 ITR 382 (Cal). In those two decisions it has been held that as the assessee is the owner of the tea gardens and derives income of selling tea leaves the investment in shares is not a business of the assessee and as such, such investment cannot be held to be the business of the assessee and so deduction on that account is not permissible. He has also cited the decision reported in Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273 (SC). If we look into this decision then it will appear that the Hon'ble Supreme Court was pleased to hold: "Therefore, in our opinion, the dividend income earned by the assessee-company from its investment in the U.T.I. should be included in computing the profits of eligible business under section 32AB of the Act". As such, it appears that this decision practically supports the contention of the assessee-company. In view of this decision of the hon'ble Supreme Court, we do not prefer to consider the decision as cited in CIT v. Warren Tea Ltd. [2001] 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal fact-finding authority accepted the claim of the company that the assessee acquired certain new plant and machinery and made investment in deposit accounts and the auditor's report was also placed before the said Tribunal. The auditors issued certificate and thereafter recommended 20 per cent. deduction which amounted to Rs. 8,80,587. The Tribunal has clearly stated in its judgment that the purchase of plant and machinery worth Rs. 12,44,993 was not disputed. It is also not disputed before the said Tribunal that the assessee was entitled to deduction under section 32AB of the Income-tax Act. The decisions as relied by the assessee-company and as cited before hand clearly show that the Supreme Court and other courts held that although income of the business arising from different sources may be classified under different heads of income, but by that break up, the income does not cease to remain income of the business. The ratio as decided by these decisions is that whatever income has been earned by an assessee either from its activities of manufacture or production for sale or from its activities as long as they constituted the same business, or will fall under the category of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
