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TMI Blog1989 (4) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... ulturists growers. The ITO had allowed agricultural development allowance under s. 35C on various expenses claimed by the assessee for the asst. yr. 1975-76 but, subsequently, however, the said order was revised by the CIT in his order passed under s. 263 of the IT Act, 1961, who set aside the assessment order with certain directions to the ITO to scrutinise as to whether the assessee was at all entitled to any allowance under s. 35C or not. If yes, then on what amount of expenses it was entitled to. Thereafter, the ITO re-framed the assessment order and allowed the agricultural development allowance under s. 35C only on a very small amount which was directly connected with the services and facilities and goods supplied by the assessee to the farmers/growers. In appeal, the CIT(A) allowed agricultural development allowance under s. 35C on majority of the expenses claimed by the assessee in all the years. The Revenue being aggrieved has come up in appeal for all the eight years in question and assessee, too, being aggrieved with certain findings of the CIT(A) has filed cross objection, in four appeals, as mentioned above. In the light of the above facts, we now take up the appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducer of such product in India and, thus, he argued that only an expenditure meted out in supplying of any goods or rendering any services or facilities to the grower or the farmer which were eligible for such weighted deduction. He stressed that, in this particular case, the assessee had not supplied any goods to the farmer and whatever little services regarding guidance and other facilities like inspection etc. were concerned, the assessee had charged for the same from the farmer and, thus, in fact, no expenditure could be said to have been meted out by the assessee which could qualify for weighted deduction under s. 35C. On the other hand, the learned counsel for the assessee relied on the order of the CIT(A). 6. After hearing the parties at length, we are of the opinion that the arguments advanced by the departmental representative could not be fully accepted. The assessee is entitled to weighted deduction under s. 35C on the services and facilities rendered to the farmer and also on any expenditure in providing goods to the farmer, if any. This means that the assessee can be said to be entitled to weighted deduction under s. 35C on an expenditure only when it establishes t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so includes inspection fees, supplied by the assessee. Thus, the cost of inspection fee, which is included in the cost of the foundation seed charged by the assessee, has to be excluded from the expenses which the assessee itself, while rendering the above facilities and services to the farmer, has incurred. 8. We have carefully perused the orders of the CIT(A) and nowhere, we find, that any attempt has been made to really scrutinise such expenses. The expenses which have been claimed for weighted deduction by the assessee include power and fuel, salaries, rent, rates and taxes, research expenditure, agricultural development expenditure, depreciation of assets. etc. which have absolutely no connection with the actual expenditure which can be said to be entitled to weighted deduction under s. 35C. No effort has been made at any level to scrutinise the expenses in all these details. Even the assessee, although has filed certain details here before us, has not furnished those details either before the ITO or even before the CIT(A), We, therefore, feel that weighted deduction under s. 35C can be allowed only when the expenses so claimed by the assessee are scrutinised in detail and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ising out of ITA 3782/BOM/85) 11. The first objection of the assessee concerns with not deleting the disallowance of Rs. 12,000 out of the managing director's remuneration. The CIT(A) had held that there was some confusion about the actual claim of the assessee company in connection with the remuneration paid to the managing director. It was stated before the CIT(A) that for the year under consideration, the net amount debited was only Rs. 1,954 and as a such there was no question of disallowing Rs. 12,000 made by the ITO. The ITO was directed to verify the facts again and make the necessary disallowance. In view of this finding of the CIT(A), we do not find that there remains anything for the assessee to agitate an appeal before the Tribunal. The ITO will verify the facts and the assessee will get an opportunity to explain its viewpoint and thereafter, if any order is passed by the ITO against the assessee, then it will be open to the assessee to come up before the Tribunal with any grievance. Therefore, we see no force in the first objection of the assessee at this stage and the same is, therefore, dismissed. 12. In the second objection, the assessee states that the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejected this ground on the plea that the statutory reserve had not been created by the assessee and it is only on that basis that such investment allowance on the cost of new machinery could be allowed and not otherwise. As the law is very specific on this point, we do not find any infirmity in the order of the CIT(A). The objection is, therefore, rejected. ITA 3785/BOM/85 17. In this appeal, the action of the CIT(A) has been contested concerning grant of weighted deduction under s. 35C on the amount of Rs. 3,93,022 and since this issue has already been decided by us while dealing with Revenues appeal 3781/BOM/85, for the detailed reasons mentioned by us herein above, we set aside the order of the CIT(A) and restore the case to the file of the ITO to reframe the assessment order in accordance with the directions given by us in the said appeal. This issue is, therefore, decided accordingly. C.O. 259/BOM/85 (arising out of ITA 3785/BOM/85) 18. The assessee has raised two objections. One is regarding s. 35C. In view of our finding on this ground in ITA 3781/Bom/85, however, it does not need any further discussion since the ITO has been directed by us to re-verify the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue is decided accordingly. ITA 6844/BOM/88 23. In the appeal, the Revenue has taken up only one ground that the CIT(A) has erred in directing the assessing officer to quantify the deduction allowable to the assessee under s. 35C. 24. In his order, the CIT(A) has directed the ITO to verify the correctness of the figures or expenditure in the light of the orders of the CIT(A) for the asst. yrs. 1975-76 to 1982-83 and thereby quantify the deductions in accordance with the directions given by the CIT(A). 25. As discussed above, all the orders of the CIT(A) on this issue have been set aside and the cases have been restored back to the file of the ITO to reframe the assessment orders of the respective year in view of the directions given by us while deciding this issue in ITA 3781/Bom/85 for the asst. yrs. 1975-76. Consequently, for the detailed reason given by us in the said appeal, we set aside the order the CIT(A) for this year as well as restore the issue back to the file of the ITO to reframe the assessment in accordance with the directions given by us in the appeal for the asst. yr. 1976-77. The issue, is, therefore, decided accordingly. 26. In the results: ..... X X X X Extracts X X X X X X X X Extracts X X X X
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