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TMI Blog1983 (7) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of this case, the assessee is entitled to a deduction of Rs. 20,313 under section 35A of the Income-tax Act, 1961, for the assessment year 1969-70 ? " The Revenue also has sought and obtained a reference on the following question as arising out of the same order of the Tribunal: " Whether, on the facts and circumstances of this case, the assessee is entitled to a deduction under section 80J at six, per cent. of the capital employed without it being limited on a proportionate time basis for the assessment year 1968-69 ? So far as the question referred at the instance of the Revenue in T.C. No. 862 of 1977 is concerned, we find that the question is covered by the decision of this court in CIT v. Simpson Company [1980] 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are either patent rights or copyrights, for, the deduction under section 35A of the Income-tax Act is only applicable in respect of an acquisition of patent rights and copyrights. The agreement between the assessee and Rockweld Limited, England, does not indicate that the material which is the subject-matter of a bargain is either patent rights or copyrights. Nor has any material been placed before the authorities below by the assessee to show that what he has bargained for with the foreign company is for the acquisition of either copyrights or patent rights. On the materials on record, we, therefore, find that both the Appellate Assistant Commissioner as well as the Tribunal are right in their conclusion that the assessee is not entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en effect to. In that case, the moneys borrowed by the assessee for the purpose of the business was directed to be taken as part of the capital employed. According to the learned counsel for the assessee, the principle of the said decision will apply to this case as well and that the expression " borrowed moneys " and " debts owed by the assessee " occurring in sub-rule (3) of rule 19A are synonymous. We are of the view that both sides have put forward contentions. The Revenue contends that the debts owed by the assessee have to be excluded from the aggregate of the amounts ascertained under sub-rule (2) of rule 19A as the debts owed cannot in any sense be construed as capital employed as contemplated under section 80J of the Act. On the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities also have not gone into the nature of the said liability, since on the facts available, unless the assessee shows that this liability has been incurred for augmenting the capital of the company, he cannot treat the liability as part of the capital employed. Thus, the matter requires farther investigation. The Tribunal has, therefore, necessarily to go into the question as to the nature of the liability and whether the incurring of that liability has resulted in the augmentation of the capital. The result is, on the materials on record, it is not possible to answer the said question unless there is a further investigation into the nature of the liabilities in respect of which the assessee claims relief in the computation of the cap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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