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TMI Blog1996 (7) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment under section 147(a) of the Income-tax Act ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal had materials before it in restricting the capitalisation of the pre-production expenses to 50 per cent. of such expenses?" The assessment year is 1981-82. The assessee is a company in which the public are not substantially interested. It was set up some time in 1976 to manufacture the products out of latex available in the neighbourhood with the main object to establish and carry on business in the manufacture and sale of goods from natural rubber latex specified in the memorandum of association. There was one ancillary object also in regard to the business of mining and processing of china clay requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such expenses to be taken into account for the computation of capital gains. In the reopened proceedings the Income-tax Officer took into consideration the cost of machinery at Rs. 8,33,337, interest paid to the Kerala Financial Corporation at Rs. 1,13,244 and, with regard to the capitalised pre-production expenses of Rs. 3,09,106, on estimate basis Rs. 30,000 came to be taken and not Rs. 3,09,106 as was claimed. The question is whether the authorities were justified to hold that there was failure on the part of the assessee to disclose all primary facts relating to the purchase, sale and computation of capital gains in respect of the machinery in question. We find that with regard to this amount of Rs. 3,09,106 there was no questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim with regard to the amount of Rs. 3,09,106 relatable to capitalisation of pre-production expenses would be a matter which will have to be understood as a failure on the part of the assessee to disclose the primary fact relating to the purchase, sale and computation of the capital gains in respect of the machinery in question. Thus, apart from the situation that there is material staring in the face of the record showing failure, the question represents really one of pure factual existence. With regard to the second question the authorities proceeded on estimate basis and granted deduction of Rs. 30,000 with regard to the aspect in question. Since the authorities have considered this in this manner, in regard to which there is no gri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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