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TMI Blog1984 (8) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... and 1970-71. The questions posed in Income-tax Reference No. 350 of 1975 read thus: " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the expenditure of Rs. 60,309+ Rs.6,748 + Rs.11,000 + Rs.24,243 + Rs.20,527 + Rs.46,709, which was included by the Income-tax Officer in the total amount of 'entertainment expenditure' of the assessee for the assessment years 1964-65, 1965-66, 1966-67, 1967-68 and 1968-69, was not expenditure in the nature of entertainment expenditure falling within the ambit of section 37(2) of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amounts of Rs. 6,286, Rs. 39,26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acture and sale of oil engines, within the meaning of section 80-I of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amount of Rs. 7,59,868 paid by the assessee to its foreign collaborator, M/s. AGROM (France), for the assessment year 1969-70 as technical fees in pursuance of clause 21(1)(b) of the agreement dated July 25, 1961, between them was allowable revenue expenditure and not capital expenditure? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amount of Rs. 66,366 paid by the assessee to its foreign collaborator, M/s. M.A.N. (West Germany), for the assessment year 1969-70 as tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dry fruits and sold them and made profits. The assessee claimed deductions under section 89-I in respect of such profits, contending that these were profits and gains attributable to its priority industry. The Income-tax Officer disallowed the assessee's claim. The Appellate Assistant Commissioner, on the assessee's appeal, took the same view. The assessee appealed to the Income-tax Appellate Tribunal. The Tribunal observed that the expression " attributable to " covered a wider field than that covered by the expression " derived from ". In using the expression " attributable to ", Parliament had intended to cover sources beyond the first degree. The immediate and effective source of the profits, that is, the direct source or the source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf by an agent. Our attention was drawn by Mr. Inamdar to the Supreme Court judgment in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84. The learned judges of the Supreme Court there held that where the expression of wider import, namely, " attributable to ", had been used, the Legislature intended to cover receipts from sources other than the actual conduct of the priority business. Our attention was also drawn to two judgments of the Madras High Court, CIT v. Universal Radiators P. Ltd. [1981] 128 ITR 531 and Shardlow India Ltd. v. CIT [1981] 128 ITR 5 71. In both the cases, the assessees had sold the import entitlements granted as export incentives. It was held that the profits on the sale were directly attributab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ten years. Under clause 21, thereof remuneration was to be paid by the assessee to M/s. AGROM calculated at 3% on the net sale proceeds of the engines and spare parts manufactured and sold by the assessee. This remuneration was for the technical assistance and information to be supplied under clauses 9, 10 and 11 of the agreement. Clauses 9 and 10 required M/s. AGROM to Supply to the assessee drawings, specifications and other technical information and under clause 11, M/s. AGROM was obliged to supply dimensional drawings. The agreement also required M/s. AGROM to train the assessee's technicians and to provide technical personnel to the assessee. The agreement with M/s. M.A.N. was on the same lines and provided for payment of remunerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms so culled out, objection was taken in the appeal filed by the assessee before the Appellate Assistant Commissioner to the amounts of Rs. 60,308 paid to certain hotels and clubs, Rs. 46,709 being the value of presentation articles given to foreign distributors and Rs. 11,000 incurred on the inland travel of foreign distributors. It was stated, on behalf of the assessee, that seminar had been arranged during the assessment year 1964-65 of the foreign and local distributors of the assessee with a view to boosting the assessee's sales, particularly in the foreign market. Since the assessee's guest-house was small, accommodation was arranged in hotels and clubs. The expenditure so incurred was not entertainment expenditure. The Appellate Assi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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