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TMI Blog2002 (12) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... that the deduction should be confined only to the cloth manufactured in appellant's factory. The ld. A/R of assessee has contended that the issue is directly covered in assessee's favour by a decision of this Bench rendered in the case of M/s Swastik Textiles in ITA No. 1018/JP/94 rendered on 28-5-2002, which was recently followed in ITA No. 2217/JP/95 in ACIT v. Swastik Textile decided on 31-7-2002 [Pg. 31, 32 of PB]. Still arguing on merits, the ld. A/R of assessee has contended that the Assessing Officer has already treated the assessee-firm as an industrial undertaking for the purpose of section 80I. He has contended that the only point in dispute is about the computation of the amount of deduction. He has contended that a part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88 ITR 196 (SC), Bajaj Tempo Ltd. v. CIT and 193 ITR 281 (SC) CIT v. Krishna Copper and Steel Rolling Mills. As against this, the ld. D.R of revenue has contended that the issue is not covered. He has contended that the assessee is doing part of process in assessee's factory and getting some part of process done at job work outside the factory. He has relied on the orders of authorities below. 4. We have considered the rival contentions, the relevant material on record as also the cited decisions. In 196 ITR 813 (supra) the fact-situation was that the assessee was getting machinery manufactured by somebody else under its direct supervision and control whereas all other activities were undertaken by assessee which included (1) canvass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne by third parties on job work basis; and so we delete the disallowance. 6. Ground No. 3 disputes the disallowance of Rs. 1,38,500 on account of the same having been incurred for enhancement of assessee's authorized capital. The ld. A.R of assessee has contended that during the year the assessee paid Rs. 1,38,500 as fees to the Registrar of Companies for increase in authorized share capital and claimed it as business expenditure under the head legal expenditure. He has contended that though there are two decisions of the Hon'ble Supreme Court in 225 ITR 792 (SC) and 225 ITR 798 (SC) wherein such expenditure have been held to be of capital nature but these decisions are distinguishable on facts in as much as the assessee raised t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(c)(iv). As such, considering all the facts and circumstances of the case, as also the aforesaid legal position of the Hon'ble jurisdictional High Court, we direct the Assessing Officer to quantify the amount of expenditure allowable by way of amortization under section 35D(2)(c)(iv) at 1/10th of the total expenditure claimed in this regard and to allow the same accordingly. 8. Ground No. 4 disputes the disallowance of Rs. 76,379 on the plea that no interest were charged from M/s. Sheetal Synthetics P. Ltd. allegedly sister concern. The ld. A/R of assessee has contended that this tantamounts to charging of notional interest but it has been legally settled position that Income-tax is a tax on real income and no tax can be levied on n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as paying job work charges to that company. As against this, the ld. D/R of revenue has relied on the orders of authorities below. 9. We have considered the rival contentions, the material on record as also the cited decisions. Considering all the facts and circumstances of the case, and in particular the fact that the assessee having not charged interest from M/s Sheetal Synthetics on commercial expediency, there was no real income of this amount of notional interest and that the assessee had its own enough interest free funds to cover those interest free advances, and also following the above mentioned judicial decisions, we find this disallowance to be not warranted and justified. We, therefore, delete the same. In the result, this ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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