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TMI Blog2006 (12) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhan for the assessee. JUDGMENT The following questions of law have been referred for opinion of this court arising out of the order passed by the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short, "the Tribunal"), in I. T. A. No. 1049/Chandi/95 dated July 26, 1996, in respect of the assessment year 1992-93: "1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in deleting the addition of Rs. 4,81,000 made by the Assessing Officer on account of research and development expenditure for multi-speed freewheel, holding as business expenditure, while the payee does not manufacture the multi-speed freewheel ? 2. Whether, on the facts and in the circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of section 80HHC(3), by ignoring the loss computed under clauses (a) and (b) of the said section ? 5. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding to exclude ST, CST, trade discount, miscellaneous income and insurance claims from total turnover for computation of deduction under section 80HHC ? 6. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in not following the decision of the hon'ble Supreme Court in the case of Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542, holding that the turnover is different from trading receipts, when trading receipts only make turn-over ? 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year in question, the expense being not related to its business should not be allowed as revenue expenditure. Whereas on the other hand, counsel for the assessee submitted that the assessee is engaged in the business of manufacture and export of cycles and multi-speed freewheels. Freewheel is one of the parts of the cycle and if any amount is spent by the assessee on the research and development of the part of the cycle, the same cannot in any manner be said to be not related with the business of the assessee. 5. We find the contentions raised by counsel for the assessee to be convincing. A kind of expenditure which is on tools and improvement and modification of production machines was rightly treated to be revenue in nature by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plot of 450 square yards and for the reason that the assessee had advanced specific sum to Shri Pahwa, a small rent of Rs. 2,500 per month was fixed. Accordingly, the transaction was actuated by the business and commercial consideration. Besides this, the Tribunal while accepting the plea of the assessee also relied upon the nexus theory between the amount borrowed and the funds advanced. 7. Learned counsel for the Revenue relying upon the judgment of this court in CIT v. Abhishek Industries Ltd. [2006] 286 ITR 1 and submitted that a similar question has already been answered in favour of the Revenue wherein this court has disapproved the nexus theory relied upon by the Tribunal to allow the interest as an expense on the interest-fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue and in favour of the assessee. As far as expenses of Rs. 92,609 spent through credit card are concerned, only 25 per cent. therefrom has been allowed as permissible expenses. The authorities below having taken a view on estimation basis even if a second view is possible, this court will not substitute its own opinion unless the view taken by the authority below is not possible. Accordingly, we concur with the view taken by the Tribunal on this issue as well. Question No. 4 : 9. It is not disputed before us that an identical question has been gone into by the hon'ble Supreme Court in IPCA Laboratory Ltd. v. Deputy CIT [2004] 266 ITR 521 wherein it has been held that for working out the incentives under section 80HHC ..... X X X X Extracts X X X X X X X X Extracts X X X X
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