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TMI Blog1976 (10) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee falls in the Sixth Schedule, and further that the assessee does not manufacture anything else. Reading the provisions of s. 80-I and 80B(7) it would mean that if the gross total income includes "any profits and gains attributable to any business of manufacturing articles or things specified in the list in the Sixth Schedule" then the assessee would get a reduction equal to 80 per cent of such profits and gains. The following items credited to the Profit & Loss Account, according to the ITO and according to the Revenue, cannot be termed as "profits and gains from the activity of manufacturing:— Nature of the item Assessment year Assessment year . 1970-71 1971-72 1. Interest income. Rs. ———— * Rs. ———— * 2. Misc, Receipts Rs. ———— Rs. ———— 3. Insurance & Other claims Rs. ———— Rs. ———— 4. Rent from staff Rs. ———— Rs. ———— 5. Export Incentives Rs. ———— Rs. ———— 6. Surplus on sale Rs. ———— Rs. ———— 7. Sales-tax refund Rs. ———— Rs. ———— . Rs. ———— Rs. ———— The names and figures have been omitted under instruction from Shri B.A.Palkhiwala. Interest income includes for the first year an amount of Rs. ———— and for the second year an amount of Rs. ———— ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factured articles are alone eligible for deduction under s. 80-I but not other items. The AAC has, however, not agreed with this view and has held that all these items have a direct bearing with the business manufacturing nuts and bolts and cannot, therefore, be excluded for the purpose of s. 80-J. 6. We do not think that the Revenue's case is justified. The Revenue is trying to make a distinction between "income" and "profits and gains". In our opinion, such distinction is not well founded. As per s.28, income from business is not restricted merely to :"profits and gains" of business but includes also other items like compensation, income of a trade, profession or similar association, value of benefit or perquisite arising from business etc., but all the same profits and gains of business are income from business. It is well established principle that there is no distinction between the two expressions and they mean the same thing. What is really required to be considered is whether the impugned items can or cannot be termed as "profits and gains attributable to the business of manufacturing articles or things specified in the Sixth Schedule". 7. Section 80-I appears in Chapte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gains in the context should be understood in wider sense. Any receipts which are derived from the business of manufacturing and which go to increase the profits and gains, would, therefore, come under the purview of s. 80I(1). Considering the question from this angle, we do not think that any of the impugned items can be segregated, from the business of manufacturing. If such business were not there, these items would not have surely come into existence. The two items of interest either from B.S.E.S. Ltd. or Hindustan Steel Limited have been received because the assessee conducts this manufacturing activity and they have a close nexus to the business. Similarly the other items, like sale of empty drums etc., export cash assistance sale of material becoming useless like used oil, grinding wheels, platforms, export incentives rent from staff quarters, etc., are all connected with the business of manufacturing, and arise because of conducting that business. Insurance claims for shortages received by Steamers etc. have also a close connection with the business, because the cost of these raw materials cost to the debit of the manufacturing account and as a result of receiving the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich claim was not accepted by the ITO. The AAC held that the item was eligible for weighted deduction as it fell within s. 35B(1)(b)(i) which refers to advertisement or publicity in respect of the assessee's goods was outside India. 11. The only contention of the learned Departmental Representative was that inasmuch as the payment was made in India, the assessee was not eligible for the relief. 12. This question has been considered by now by different Benches of the Tribunal at Bombay, and these Benches are uniformly of the opinion that only such item which falls under s. 35B(1)(b)of the(iii) will not be eligible for the deduction if the expenditure is incurred in India and not outside India-and further that this condition of payment to be made outside India does not apply to the other eight items listed under s. 35B(1)(b) of the Act under s. 35B(1)(b)(i) what is necessary is that the advertisement or publicity should be outside India, and it is immaterial where the payment is made. As such the point was decided rightly by the AAC and requires no interference. 13. The next ground for Asst. yr. 1971-72 is to the effect that the AAC erred in vacating disallowance of the enterta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... —— in the case of Managing Director, making a total of Rs. —————. There is no dispute that s. 40(A)(v) applies to only that expenditure which is incurred by the employer for providing benefit, amenity or perquisite to an "employee". The Appellate Asstt. Commissioner held that both the persons were not employees of the company as such, and consequently s. 40(A)(v) could not be invoked. He also observed incidentally that the ITO had not applied either the provisions of s. 40a or s. 40(c) in, making the disallowance. 15. At the time of hearing the learned counsel for the assessee informed us that in an earlier order of the Tribunal, it was held that the Chairman was not an employee of the company, but the Managing Director was an employee, and he, therefore, conceded that the disallowance under s. 40(A)(v) in the case of the Managing Director was justified but not in the case of the Chairman. We accordingly restore the disallowance of Rs. 2975, as we also agree, on the facts of the case, that the Chairman is not an employee of the company. 16. The learned Departmental Representative urged that we should consider at this stage as to whether the disallowance can be sustained either ..... X X X X Extracts X X X X X X X X Extracts X X X X
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