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TMI Blog1991 (8) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... he ground raised by the Department. 3. In the appeal for asst. yr. 1983-84 the first ground relates to royalty payment of Rs. 34,82,301. The facts relating to this ground are idential with the facts of the earlier year. For reasons given above, we reject this ground raised by the Department. 4. The second ground for asst. yr. 1983-84 is as follows: "The learned CIT(A), Baroda erred in law and on facts in allowing interest payment of Rs. 4,35,754 which was an expenditure incurred in connection with acquisition of new assets before installation." The ITO found that there were huge additions to the building, plant and machinery and the assessee had obtained loans to the extent of Rs. 42 lakhs for the purpose of business which included financing of the expansion of the business. He also found that the said project by way of expansion was commissioned in Oct., 1982. According to him, interest upto Oct., 1982 was not allowable as deduction. He, accordingly, calculated interest upto that period which came to Rs. 4,35,474 and disallowed the same. According to him, the said interest would form part of the capital cost and that the assessee would be entitled to depreciation and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the above mentioned decision. We, accordingly, reject the ground raised by the Department. 6. The third ground in the departmental appeal for the asst. yr. 1983-84 is that the learned CIT(A) had erred in allowing foreign tour expenses of Rs. 52,952 as revenue expenditure. This submission of the ld. Deptl. Representative was that the foreign tour was for acquiring plant and machinery for the business which was being expanded and as such foreign tour expenses were liable to be capitalised. The submission on behalf of the assessee, on the other hand, was that the foreign tour had been undertaken to obtain technical know-how to be used in the business to be expanded and as such the expenditure was allowable as deduction. The copy of the report regarding foreign tour is at page 10 of the paper book and it indicates that the tour had been undertaken to obtain technical know-how in connection with the production which was to be commenced after expansion of the business. As already stated it is not a case of commencement of new business. The business already existed and the same business had been expanded. Consequently, expenditure on foreign tour to obtain technical know-how would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an admitted fact that cls. (c) and (d) of the second proviso are not applicable. Cls. (a) and (b) of second proviso are as follows: "Provided further that no deduction shall be allowed under this section in respect of— (a) any machinery or plant installed in the office premises or any residential accommodation in the nature of a guest-house; (b) any office appliances or road transport vehicles." The ITO disallowed investment allowance on the computer in question on two grounds, the first of which was the computer itself had not been used for manufacture of any article and the second ground is that the computer in question came within the ambit of the expression "office appliances" in cl. (b) of the second proviso. We find that the computer in question would come within the ambit of expression "plant" in s. 43(3) of the Act. One of the items mentioned in the inclusive definition of 'plant' in s. 43(3) is "scientific apparatus". The word "apparatus" is a word of much wider important than the word "appliances" mentioned in cl. (b) of second proviso. A given appliance may be in the form of an apparatus but the converse would not always be true and every apparatus would n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are used for the purpose of this business would be eligible for investment allowance. Thus, the reasons given by the ITO for disallowing investment allowance were not valid. 11. The ld. Deptl. Representative has raised a new ground which is to the effect that the claim for investment allowance was inadmissible in view of provision in cl. (a) second proviso. As already stated the ITO has not made disallowance by resort to cl. (a) of second proviso. However, since the submission made by the ld. Deptl. Representative raises a legal question on the facts already on record, we proceed to consider the same. We find that under cl. (a) of second proviso to s. 32A(1), disallowance of investment allowance would be in respect of any machinery or plant installed in the office premises. This clause presupposes that office premises were distinct from the factory premises and that plant and machinery were wholly unconnected with the process of manufacture of article or thing in the factory. However, in the present case, the computer in question was admittedly being used for the purpose of maintaining production schedule. In the present case, there were no separate office premises. The IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he close of the accounting period but payments made within the time allowed by the respective provisions of the Act." The ITO scrutinising the balance sheet found that the following items were mentioned as current liabilities: (i) in respect of Gujarat Sales-tax payable Rs. 9,43,901 (ii) in respect of profit tax payable 1,470 (iii) in respect of C.S.T. payable 80,339 (iv) Employees contribution towards P.F. 33,024 (v) Employees contribution towards P.F. 5,272 (vi) Surcharge on sales-tax 770 Total 10,64,776 The ITO observed that since the said amounts had not been paid during the accounting year itself, the same would be required to be disallowed while computing the total income in view of provisions in s. 43B of the Act. He, accordingly, added back the amount of Rs. 10,64,776 in the income of the assessee. The CIT(A) held that those liabilities which had not become payable during the relevant accounting year but which became payable on dates falling in the next accounting year and which were actually paid in the next accounting year would be allowable as deduction and that no ..... 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