9911796707
TMI Blog1982 (10) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... unconstitutional and violates Arts. 14, 19, 21 and 31, 265, 300A and 301 of the Constitution of India. 4. Learned CIT(A) erred in confirming the disallowance of Rs. 26,684 being expenditure incurred on a foreign tour to explore the possibility of development of manufacture of Soda Ash in Iran", 2. The assessee is a resident-company who derives income from manufacture and sale of Soda Ash and other connected by-products. The factory is at Mithapur in Gujarat. The assessee made payment of Rs. 1,26,028 under s. 40A (5) out of the total salary, commission and perquisites of Rs. 3,75,620 to its Directors. Before the ITO, it was claimed that the provisions of s. 40(c) do not apply to commission payment to Directors amounting to Rs. 1,05,450. On this ground before the CIT(A) the same submission was made by the assessee. But the CIT(A) relied on the orders of the Tribunal in ITA No. 3172/(Bom)/1977-78 passed by Bombay Bench "B' of the Tribunal in the case of Navketan International Films Pvt. Ltd. and decided the point against the assessee. Thus the assessee's claim for allowance of Rs. 1,05,450 being the commission paid to the Directors was not allowed by the CIT(A). 3. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is proof that the entire amount was actually spent for services which can be covered under the provisions of s. 35B. As the evidence on record proves that only 28 per cent of the commission paid was expended in respect of the services entitled to deduction under s. 35B, the assessee is entitled to deduction under s. 35B on a sum of Rs. 2,84,370. Thus, CIT(A) gave directions to the ITO. 5. The assessee claimed relief under s. 80J in respect of new industrial undertaking and manufacturing Soda Ash. It was contended before the ITO that it is a relief and should be granted on borrowed capital as a whole and reliance was placed on the case of Century Enka Ltd. (1981) 130 ITR 267 (Cal). However, that claim of the assessee was not accepted by the ITO. The ITO considered the amendment brought on the statute with retrospective effect. Before the CIT(A) it was contended that relief under s. 80J should be granted on borrowed capital by relying on the decision of the Calcutta High Court in the case of Century Enka Ltd.(1981) 130 ITR 267 (Cal). However, the CIT(A) held that since there is an amendment of s. 80J by Finance (No.2) Act, 1980 the assessee's contention was infructuous. He furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Palkhivala relied on the orders of the Tribunal in the case of TELCO for asst. yrs,1970-71, 1971-72,1972-73 and 1973-74 which are at pages 12 to 17 of the papers book filed by him. There are also Tribunal's decisions in the case of SISCO for asst. yr. 1976-77 at page 37 to 40 and that reference was sought for by the Department but it was rejected by the Tribunal which is at pages 41 to 48. Shri Palkhivala further drew our attention to the decisions of the Tribunal in the case of Voltas which are pages 49 to 61 and also the decision in TOMCO's case which are pages 62 to 65. Shri Palkhivala further pointed out that in asst. yr. 1975-76 on a similar issue the CIT(A) had allowed 100 per cent weighted deduction and in the appeal against the order of the CIT(A) the Department had preferred an appeal but no ground was raised against the allowance of 100 per cent weighted deduction by the department. It was further stated that the CIT(A) held similar view in the case of TISCO Ltd. for asst. yr. 1977-78 which are pages 9 to 11 of the paper book. There is no justification to reject the claim of the assessee for the year under consideration which is for asst. yr. 1976-77. It was further sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct orders for the assessee and it is wrong to say that it is a transaction between principal and principal. He further urged that the assessee is entitled to 100 per cent weighted deduction. 15. Regarding judgement relied on by the ld. Deptl. Rep. reported at (1981) 132 ITR 401 (Guj) Shri Palkhivala stated that the Gujarat High Court laid two principles—one the expenditure for new business and other for survey. Shri Palkhivala further stated that the Gujarat High Court has allowed expenses for expansion of the same business and as far as this assessee is concerned there was an idea to expand its business in Iran. 16. We have heard rival submissions and gone through the orders of the authorities below. Ground No. (1) is held against the assessee by the CIT(A) and there is also Tribunal's orders on the point. We uphold the order of the CIT(A). On this ground the assessee fails. 17. Regarding ground No. (2) we find that the issue has been discussed elaborately by Bombay Bench as mentioned earlier and they have consistently held that the assessee is entitled to 100 per cent weighted deduction and not 28 per cent. The assessee has brought to our notice cases before the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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