9911796707
TMI Blog2001 (11) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... ject, legal fees, etc., for the period from 1975 to 1978 aggregated to Rs.37,55,159. The assessee sought to claim these items as deductible items as expenditure for the assessment year 1981-82. That claim of the assessee was negatived by the Assessing Officer, by the appellate authority as also by the Appellate Tribunal. At the instance of the assessee, the correctness of the Tribunal's decision has been called into question. It is clear from the assessee's own case that the expenditure was incurred for the purpose of setting up a new project. The expenditure had been incurred in the years prior to the assessment year in question. The assessee's case that it subsequently abandoned that project does not on that score convert what was an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d incurred expenditure by way of entering into a collaboration agreement for purchase of machinery but had abandoned the same. The fact that the assessee continued to carry on its old business does not on that score render the expenditure incurred by it in the setting up of a new project for the manufacture of a new product, a revenue expenditure. The Supreme Court in the case of Swadeshi Cotton Mills Co. Ltd. v. CIT [1967] 63 ITR 65, considered the case of an assessee who was carrying on the business of manufacture and sale of cloth and other textile goods and who had entered into contract for the purchase of textile machinery for the purposes of expanding its factory. The assessee therein subsequently cancelled the contracts and paid co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. The other question referred to us is: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the medical expenses reimbursed by the assessee to its employees would be part of the salary paid to them for purposes of computing the amount disallowable under section 40A(5)/40(c) of the Income-tax Act, 1961?" This question has to be and is answered in favour of the Revenue in the light of the decision of the Supreme Court in the case of CIT v. Mafatlal Gangabhai and Co. P. Ltd. [1996] 219 ITR 644, wherein it has been held that the medical expenses reimbursed by the assessee to its employees would be part of the salary paid to them for the purpose of computing the amount disallowable unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not succeeding in the court in the pending litigation, that amount could not be regarded as a trading receipt. The other question referred to us at the instance of the Revenue, is as to whether the Tribunal was correct in holding that the assessee is entitled to higher rate of depreciation on the basis of the certificate obtained from the chemical engineer. The assessee had claimed higher rate of depreciation at the rate of 15 per cent. on certain machinery on the ground that they came into contact with corrosive chemicals. The Tribunal has merely confirmed the order of the Commissioner (Appeals) who had directed the Income-tax Officer to take the help of an engineer and to ascertain as to whether the chemicals were corrosive and identi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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