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TMI Blog1981 (8) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Juggi Lal Kamlapat vs. CIT 73 ITR 29 that the assessing authority had the full power to look into the substance of the transaction by piercing the veil of secrecy concealing it. He reached a finding that the payment was not for genuine advertisement but was in fact a donation made to Indian National Congress, a political party on account of extra business consideration. Therefore, he caused the entire amount of Rs. 50,000 to be disallowed. The CIT, however, going into the nature of the advertisement which he as fully reproduced on page 3 of his order held that the entire payment could not considered as payment for the advertisement brought out in the Souvenir. According to him, the assessee could claim by way of expenditure a sum of Rs. 10,000 only. The amount paid in excess of this amount of Rs. 10,000 could not constitute any consideration for the advertisement brought out in the Souvenir. He, therefore, allowed the assessee a deduction of Rs. 10,000 upholding the disallowance of Rs. 40,000 which in his view, was not payment towards the advertisement. 3. It is against this finding of the CIT that Rs. 40,000 could not be considered as payment of advertisement charges that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account the total amount of expenditure incurred for the maintenance and running of vehicles, disallowance of Rs. 5,000 on estimate for personal user of the cars could not in our view be called excessive. We, therefore, uphold the finding of the CIT and dismiss the contention of the assessee in this respect. 6. Another ground of appeal relates to a disallowance of Rs. 300 out of general expenses. The assessee had omitted to raise the issue before the CIT. Therefore, the assessee cannot be justified in raising this issue in appeal before us. Therefore, his ground of appeal in respect of Rs. 3,000 is dismissed. 7. Next issue relates to disallowance of Rs. 4,527 out of sale promotion expenses. The disallowance was out of expenses totalling at Rs. 9,541-1/2. The I.A.C. disallowed the amount on the ground that the expenses represented entertainment expenditure. The I.A.C., however, found that the expenses included a sum of Rs. 1,203 on account of gifts made to various customers. Before the CIT it was represented that the amount should not have been disallowed as entertainment expenses. CIT, therefore, brought down the disallowance of Rs. 5,967 to Rs. 4,527. After perusing his ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total income. The contention of the assessee is that this payment was made to J.K. Berry on his personal account maintained with the firm. J.K. Berry was a partner in the representative capacity, for his joint Hindu family. He was not a partner in his own right. We find no merit in the contention of the assessee that payment of interest to Shri J.K. Berry was, therefore, saved from the attack of the provision contained in s. 40(b) of the Income Tax Act. In our view, the provision contained in s. 40(b) does not admit any such distinction to be noticed when the payment is made to a partner. Shri J.K. Berry being the partner of the firm had been made the payment of interest of Rs. 913. It is not necessary that in deciding whether the payment is to be allowed as a business out going or not, one should see, in what capacity Mr. J.K. Berry was a partner and in what capacity he was made the payment of interest. It is enough for the assessing officer to know that the payment of interest has been made to the person who happened to be the partner of the firm. We, therefore, uphold the finding of the CIT and dismiss the contention of the assessee on this issue. 13. Another issue raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther from the original ore or from scrap was entitled to development rebate at the rate of 35 per cent because he was engaged in the manufacture of iron and steel. It did not matter from what source material was derived which was converted into iron and steel. On the basis of these two decisions the assessee claimed that although he was not making iron and steel he was undoubtedly engaged in the manufacture of iron and steel goods and machinery and as such he was entitled to be considered as a manufacturer of iron and steel. In our view the contentions of the assessee are misconceived. Neither case entitled the assessee to claim that where he was making iron and steel goods he could claim he was manufacturing iron and steel. In the first case which was decided by Kerala High Court was about the treatment to be accorded to a manufacturer who was making steel rods sections from ingots. The decision is based on the view of Supreme Court as brought out in State of Madhya Bharat vs. Hira Lal (1966) 17 STC 313 (SC) that bars flats and plates are iron and steel. Acting on this, their Lordships of Kerala High Court held that M.S. Rods and Steel Sections manufactured by the assessee were ir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision, we do not find any support for his claim that he may be considered a manufacturer of iron and steel and, therefore, be allowed to claim initial depreciation on plant and machinery acquired during the assessment year in appeal. His appeal on this issue is dismissed and finding of the CIT is upheld. 15. We now take up the appeal filed by the Revenue. 16. Revenue has raised the first issue regarding the allowance of Rs. 10,000 on account of advertisement incurred in connection with the Souvenir brought out by the Indian National Congress on 75th Plenary Session. We have already dealt with this issue while disposing of the issue regarding advertisement raised by the assessee. We held that the assessee was entitled to claim full allowance for the total expenditure of Rs. 50,000 paid in connection with the advertisement in the aforesaid Souvenir. Accordingly, we do not find any merit in the contention of the Revenue that CIT was misdirected in law in allowing a sum of Rs. 10,000 from advertisement. Accordingly, we uphold the finding of the CIT and dismiss the contention of revenue and, its appeal on this issue. 17. Another ground relates to a reduction of Rs. 5,000 f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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