Tax Appeals: Deduction claims partly allowed under Section 35B; disallowances for various expenses confirmed. Interest levy issue remanded.

AERO ENGG. WORKS. Versus INCOME TAX OFFICER.

AERO ENGG. WORKS. Versus INCOME TAX OFFICER. - TTJ 014, 048, Issues Involved:
1. Weighted deduction under Section 35B
2. Disallowance of general expenses
3. Disallowance of driver's salary
4. Disallowance of Puja expenses
5. Disallowance of branch expenses
6. Disallowance of entertainment expenses
7. Disallowance of leave with wages
8. Disallowance of interest on deposits
9. Disallowance of travelling expenses
10. Levy of interest under Sections 139(8) and 217

Issue-Wise Detailed Analysis:

1. Weighted Deduction under Section 35B:
The assessee claimed weighted deductions under Section 35B for several items. The Income Tax Officer (ITO) and Commissioner of Income Tax (Appeals) [CIT(A)] had disallowed most of these claims. The Tribunal considered the Special Bench decisions in the cases of J. Hem Chand & Co., Eastman Industries, and others to adjudicate the claims.

- Commission paid in India: The Tribunal accepted the assessee's claim for Rs. 67,954.
- Export inspection fee: The claim was rejected, equating it to 'certificate charges' as per the Special Bench decision.
- Foreign postage: The claim for Rs. 10,957 was accepted.
- Telephone bills: The claim for Rs. 189 was rejected as it did not pertain to foreign telephones.
- Salaries of employees handling export business: The Tribunal allowed weighted deduction for 75% of Rs. 1,01,638.
- Export expenses: The claim for Rs. 1,260 was accepted due to lack of details provided by the assessee.
- Export procurement expenses: The claim for Rs. 2,907 was accepted based on the provided details.
- Export shipping expenses, exchange differences, export packing and forwarding, bank interest, bank commission, and export insurance: These claims were rejected in light of the Special Bench decision.
- Stationery and printing: The claim for Rs. 17,471 was accepted for 50% of the expenditure.
- Subscription to journals and associations: The claim for Rs. 3,292 was accepted for 100% of the expenditure.
- Export management and supervision charges: The claim for Rs. 12,000 was accepted for 75% of the expenditure.

2. Disallowance of General Expenses:
The Tribunal confirmed the disallowance of Rs. 13,979 out of partner's travelling expenses due to the lack of details provided by the assessee.

3. Disallowance of Driver's Salary:
The disallowance of Rs. 2,625 paid to the driver was confirmed because the assessee did not own a car, distinguishing it from the case of M/s. Jethu Mal Piare Lal.

4. Disallowance of Puja Expenses:
The disallowance of Rs. 2,558 for Puja expenses was confirmed due to the personal nature of these expenses.

5. Disallowance of Branch Expenses:
The disallowance of Rs. 1,212 for branch expenses of M/s Perfect Finance Corporation was confirmed due to the closure of the firm and the non-genuine nature of the claimed rent.

6. Disallowance of Entertainment Expenses:
For the assessment year 1975-76, the disallowance of Rs. 3,163 for entertainment expenses was confirmed as the assessee failed to substantiate the claim.

7. Disallowance of Leave with Wages:
The disallowance of Rs. 2,960 for leave with wages was confirmed due to the lack of evidence for a continued practice of granting leave with wages.

8. Disallowance of Interest on Deposits:
The disallowance of Rs. 7,200 for interest on deposits was not contested by the assessee and was confirmed.

9. Disallowance of Travelling Expenses:
The disallowance of Rs. 8,500 out of travelling expenses was reduced to Rs. 6,500, considering the personal nature of some expenses.

10. Levy of Interest under Sections 139(8) and 217:
The issue was restored to the CIT(A) for fresh adjudication in light of the Punjab and Haryana High Court decision in CIT v. Raghubir Singh and Sons.

Conclusion:
Both appeals of the assessee were partly allowed, with specific claims accepted or rejected based on detailed analysis and existing case law precedents.