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TMI Blog1991 (4) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... ing year 1979-80 when a provision of Rs. 1,65,330 was made against which a payment of Rs. 3,67,343 was claimed as made during the accounting period. The difference of the two was disallowed on the above basis and also on the ground that it does not pertain to the year under appeal. 4. When the matter came up before the ld. CIT(A), he relied upon various decisions of the Tribunal and also considered that bonus in the earlier years was being paid by the appellant at the same rate and was being allowed by the Department by way of deduction. He pointed out that there was an obligation upon the assessee not to pay the bonus below 10 per cent and the payment made by the assessee if it was in excess of 8.33 per cent, it did not disentitle the assessee from claiming a deduction in respect thereof. Whereas the Revenue emphasised the reasons given by the assessing authority for the disallowance, the ld. Counsel for the assessee, on the other hand, submitted that the written submissions appearing at page 22 made before the ld. Commissioner might be considered. It was also submitted that it was customary to pay bonus on festivals and was admissible under s. 37(1). Reliance was placed on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the capital expenditure for bringing into existence capital assets of enduring nature. He drew support from the provisions of s. 35D where the expenditure on the preparation of feasibility report had been included in "preliminary expenses" even after the commencement of business. 7. When the matter came up in appeal before the ld. Commissioner, he held that the factual position had not been appreciated property by the assessing authority. On hearing the party and on perusal of the order of the assessing authority, he found that the consultancy report relating to the further expansion was got prepared separately and the expenses thereon had been capitalised. The feasibility report was only meant for utilising furnaces which were turning out the mild steel into alloy steel. He has, therefore, held that the expenditure was admissible as revenue expenditure. The contention of the Revenue is that the ld. Commissioner erred in deleting the addition. It was, on the other hand, submitted that no capital expenditure was incurred and no capital asset of enduring nature as such for new business came into existence. On the basis of this report it was clarified that no new unit was set up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 52 paid to the Managing Director. This figure of Rs. 20,591 itself is not clear as out of the total payments mentioned at Rs. 91,991, if Rs. 72,000 is deducted under s. 4(c)as admissible, the balance comes to Rs. 18,991. We however, find that the ld. Commissioner has discussed about the contribution to provident fund amounting to Rs. 4,867 and about Rs. 13,677 as commission paid to the Managing Director. Taking into consideration the judgment of the Hon'ble Punjab and Haryana High Court in the case of CIT vs., Patiala Flour Mills Co. Ltd (1980) 14 CTR (P H) 102: (1981) 123 ITR 7 (P H) and in the case of same assessee reported in CIT vs. Patiala Flour Mills Co. Pvt. Ltd. (1989) 180 ITR 75 (P H) we hold that payment for disallowance under s. 40(c) would take in payment of commission of Rs. 13,677. This amount included in the disallowance will stay and the deletion by the ld. Commissioner in its entirety would not be justified. His observation that this amount be excluded while computing the disallowance under s.40(c) is, therefore, reversed. So far as the amount of Rs. 4,867 is concerned, the ld. Commissioner has observed that for the asst. yrs. 1977-78 and 1980-81, the ld. CIT(A) de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of a decision of the CIT(A). In terms of the judgment of the Bombay High Court in the case of Tata Oil Mills Co. Ltd. and the judgement of Andhra Pradesh High Court in the case of CIT vs. Coromandel Fertilisers Ltd. (1985) 156 ITR 283 (AP) we are of the opinion that the ld. Commissioner was fully justified in directing that depreciation in accordance with the provisions of law and rules be allowed on the roads and also in the light of previous history of this case, this ground is rejected. 12. Coming to ground No. 6, we find that this relates to extra shift depreciation allowance on electric installations, transformers, electric sub-stations and weighing scales. The ld. CIT(A) has pointed out in para 20 of his impugned order that in the earlier years, similar action by the assessing authority in not granting extra shift allowance on these items was reversed by the CIT(A) after considering the merits of the case on the ground that these items formed part and parcel of plant and machinery. That view was expressed by the ld. CIT(A) in the asst. yr. 1980-81. The ld. CIT(A) in his impugned order has followed that view. 13. We have heard the rival submissions on these issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he books of account from year to year on the actual cost, i.e., the face value of the shares and the assessee does not take into account the market value of the shares for valuing them at the end of each accounting year, and (d) that the right to subscribe 3,67,198 shares was sold on a profit of Rs. 23,68,779 and it is not disputed that this profit represents the capital gain on the sale of these rights. According to the assessing authority, for the purpose of assessing capital gains, the sale consideration of an asset, after deducting the original cost thereof is to be taken into consideration. According to the assessing authority, the decision of Supreme Court in the case of Miss Dhun Dadabhoy Kapadia vs. CIT (1967) 63 ITR 651 (SC), was rendered under the IT Act, 1922 and the provisions relating to charging of capital gain have undergone considerable change thereafter. For computation of capital gains, a definite procedure had been laid down in part E of Chapter IV of IT Act, 1961 and the concept of commercial sense, though not completely alien to this procedure, is quite in conformity therewith. Moreover, in that case, the Hon'ble Supreme Court had recorded a finding of fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in this regard, the assessing authority should give an opportunity to the assessee and the correct figure of loss should be worked out. 20. Ground No. 9 is that the ld. CIT(A) erred in allowing carry forward of relief under s. 80J of the previous years amounting to Rs. 22,242. We have heard the parties and we find that deficiency under s. 80J is to be carried forward for set off but quantum has to be properly determined. We have not been shown that the quantum of Rs. 22,242 is in any manner incorrect or erroneously stated by the ld. Commissioner. This ground is, therefore, rejected. 21. Ground No. 10 is regarding the allowance of relief under s. 80J on the head office balances in the rolling division without taking into account the borrowing forming part of the funds transferred from the head office to the rolling Unit. In so far as this issue is concerned, a careful perusal of para 29 of the impugned order of the ld. Commissioner shows the basis on which he issued the directions to the assessing authority to allow deduction under s. 80J and these basis are as under: (a) That the rolling mill division is maintaining separate books of accounts and the capital employed i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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