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TMI Blog1981 (11) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance under s.40(c)(iii) of the I.T. Act, 1961. In the appeal before the AAC, following his predecessor's order, he confirmed the action of the ITO. When the matter went up in appeal before the Tribunal, it was submitted on behalf of the assessee that the medical bills of the employees were reimbursed and were paid in cash. These could not be treated as benefit or amenity or perquisite falling within the meaning of s. 40(c)(iii) of the I.T. Act, 1961. The Tribunal accepted this contention following the decision of the Tribunal for the previous year. On the construction of the section we are of the opinion that the Tribunal was right. This view which we are taking is in consonance with the view expressed by this court in Income-tax Reference No, 254 of 1979 (Indian Leaf Tobacco Development Co. Ltd. v. CIT) (judgment delivered on 10th August, 1981) ([1982] 137 ITR 827). For the reasons aforesaid and on the construction of the section and in the facts and circumstances of this case, we are, therefore, of the opinion that the Tribunal came to the correct conclusion on this aspect of the matter and thereafter has referred this question at the instance of the Revenue to this court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order to decide the marketability of these goods. The parent company had disclosed the value of the two cranes which were gifted to the assessee at pounds 5,027 for the purpose of customs clearance. The assessee moved the Department for necessary import licence by showing the value of the two cranes at pounds 5,027 equal to Rs. 67,027. The assessee obtained no objection certificate from the Reserve Bank of India showing the value of the two cranes at pounds 5,027 and paid import duties on Rs. 67,027. The assessee incurred expenses amounting to Rs. 26,753 including the import duty of Rs. 19,178. The point for consideration before the ITO was the value of the two cranes for the purpose of allowing the depreciation and development rebate. The relevant section and the Explanation with which we are concerned may, in this connection, be referred to. The relevant section is s. 43(1), Expln. 2, which is as follows: " 43. Definitions of certain terms relevant to income from Profits and gains of business or Profession.-In sections 28 to 41 and this section, unless the context otherwise requires (1) 'actual cost' means the actual cost of the assets to the assessee, reduced by that por ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed himself as the engineering consultant and valuer (under Govt. of India Gazette) and held degree of M.I.M.E., M.M.G I. In his report dated 10th May, 1966, he has stated as follows : " I have inspected your 3 ton Butter's Tower Crane (travelling on rails)-Sl. No. 6881 at work at your Durgapur site. The machine is practically a stationary one with only a few moving parts, subject to wear and tear. The machine seems to be as good as new and is in a very good working condition. If such a machine has to be imported today it will cost round about Rs. 4,00,000 (rupees four lakhs only). If auctioned, it would probably fetch the same price but for valuation purpose, I would value it at Rs. 3,00,000 (rupees three lakhs only). I, therefore, value the 3 ton Butter's Tower Crane-Sl. No. 6881 at Rs. 3,00,000 (rupees three lakhs only)." In respect of the other crane the report in respect of which was also dated 10th May, 1966, the said valuer observed as follows: " I have inspected your MCK 304 Excavator Machine No. 1617SI. No. 1795. It seemed to be as good as new and was found to be in good working order. Such a machine, if imported today, will cost round about Rs. 2,00,000 (ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AAC and the AAC was of the view that the value as shown by the donor could not be taken to be the market value in India, and there was no evidence about the market value of the two cranes in India on the date of acquisition. According to him, in the next year, which was the year of installation, the market value was Rs. 4,50,000 as certified by the assessee's approved valuer. The AAC held that the written down value of the two cranes was the original cost of Rs. 2,06,668 to the donor as no depreciation had been allowed under the I.T. Act. It is appropriate in this connection to refer to the relevant portion of the order of the AAC upon which reliance was placed on behalf of the assessee. The AAC observed, inter alia, as follows: " In view of the above, the AIR contends that the value at the time and place of exportation could be taken for the purposes of the Customs Act and this is the value which was accepted by the customs authorities and what value should be quoted for the purposes of the Indian Customs Act was dictated by the principal company at U.K., who in their letter dated 31st July, 1964, suggested that for customs clearance the value of the cranes should be shown at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date the same were put to use as it did not agree with the assessee's valuer that the two cranes were as good as new. The Tribunal further observed that in its letter dated 31st July, 1964, the donor company gave the value of the two cranes at pounds 5,027 and it was on this basis of the valuation that the assessee obtained the necessary papers for importing the two cranes into India from the authorities of the Government of India and even paid the customs duty on the basis of that valuation. It further observed that for the purpose of customs duty the value of the goods to be imported was the price at which such goods were ordinarily sold or offered for sale and that in the absence of any other evidence it was to be inferred that the value stated by the donor was the value at which the cranes could ordinarily be sold in U.K. The Tribunal further observed that the W.D.V. in the donor's book was pounds 5,700 and there was no explanation why the value was shown at pounds 5,027. According to the Tribunal this supported the inference that the donor treated the market value of the two cranes in England at pounds 5,027 The Tribunal held that the market value of the two cranes in the han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revious decisions approved by the Supreme Court, and reliance was placed on the observations of the Supreme Court at p. 168 of the report. For the purpose of this reference, in our opinion, it is not necessary to go into this aspect of the matter. It is necessary primarily for us to determine whether the market value, whichever was the year, assuming that the assessee's contention is the date of acquisition was the actual date of utilisation and user to the assessee has been correctly determined. In this connection, the valuer's report was relied on by, the assessee. The valuer's report, as we have set out before, determined the procedure, in the opinion of the valuer, as to the market value. The valuer considered the condition of the cranes and considered the fact, which according to him, was if the machine was imported today it would have cost roundabout Rs. 4 lakhs and he had considered further that those would have probably fetched the same price and on that basis he had deduced the market value. But the fundamental question in this case is: were these two cranes marketable at all ? These two cranes were hedged in by the condition of the licence, that is to say, that these good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used by the importer himself. It is in respect of this type of goods which are not hedged in with any condition that the Tribunal, in our opinion, made the observation that the condition was not a very relevant factor in determining the market value. Therefore, this observation of the Tribunal cannot also be characterised or described as conjecture or irrelevant or erroneous or inconsistent with law. If that is the position, then, in out opinion, the Tribunal having had these two views, viz., the views of the valuer's report as well as the views of the assessee's assertion, upon which these goods were imported, preferred to accept the Revenue's assertion and, in view of the law, proceeded on this basis, it cannot be said that the Tribunal acted illegally or in any erroneous manner or breach of the principles enunciated in the Explanation. Our attention was also drawn to the fact that under s. 14(1) of the Customs Act, the value of these goods would be deemed to be the value for assessment. The Tribunal has referred to this fact. This, of course, is deemed to be the value of the goods for the purpose of payment of customs duty under the Customs Act. But this, in our opinion, is a r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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