TaxTMI 
TaxTMI 
1994 (3) TMI 154
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....ground is hereby rejected. 4. The next ground in Revenue's appeal is as under: "2. On the facts and in the circumstances of the case, the learned CIT(A) has erred in allowing remuneration of Rs. 27,48,773 to sales/field organisers for sale of cement." 5. Having heard both the parties, we find that this issue came up for consideration before the Tribunal in assessee's own case for asst. yr. 1983-84 in ITA No. 493/Del/1987 and for asst. yr. 1984-85 in ITA No. 6136/Del/1987. The Tribunal after discussing this issue at length at paragraph 5 of its order dt.28th Feb., 1991in ITA No. 6136/87, allowed assessee's contention. Facts being the same, we do not find any substance in this ground. This ground is hereby rejected. 6. The next ground in Revenue's appeal is as under: "3. On the facts and in the circumstances of the case, the learned CIT(A) has erred in deleting the disallowance of Rs. 3,95,845 made under s. 40A(8) by holding that fixed deposits received from public were secured by virtue of a floating charge on the movable assets on the company." 7. Having heard both the parties, we find that this issue came-up for consideration before the Tribunal in assessee's own....
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....rred exclusively under the category of business, no deduction can be allowed under s. 37(1). Reliance was placed on the decision of Delhi High Court in the case of CIT vs. Chaman Lal & Bros. (1970) 77 ITR 383 (Del). As against this, the learned counsel for the assessee relied on the order of the Tribunal for asst. yr. 1984-85. 12. We have considered the rival submissions and have gone through the details given at pp. 15-16 of the order of the CIT(A). The CIT(A) has discussed each and every item of expenditure elaborately in his order and given a finding of fact that all the expenditure incurred by the company was measure of staff welfare to maintain cordial relationship with the staff to help the staff and workers in various aspects. This view was taken by the Tribunal in assessee's own case for asst. yr. 1984-85. There is no material available on record to take a different view in the matter. So far as the decision cited by the learned Departmental Representative is concerned, it is distinguishable on facts. In view of this, the ground is hereby rejected. 13. The next grievance of the Revenue is as under: "6. On the facts and in the circumstances of the case, the learned ....
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....cussed this issue at paragraph 58 of its order dt.28th Feb., 1991, we do not find any fresh material to take a different view in the matter. We, therefore, reject this ground. 19. The next grievance in Revenue's appeal is as under: "9. On the facts and in the circumstances of the case, the learned CIT(A) has erred in holding that the word 'motor car' in s. 37(3B) will not include 'jeep' and thereby reducing disallowance under s. 37(3A) of the IT Act." 20. The case of the Department is that the jeep is motor car within the meaning of s. 37(3A). Therefore expenditure incurred was rightly considered under this section. The learned Departmental Representative relied on the decision of Madras High Court in the case of Crompton Engg.Co.(Madras) Ltd. vs. CIT (1991) 92 CTR (Mad) 207 : (1992) 193 ITR 483 (Mad) and the decision of Kerala High Court in the case of Commr. of Agrl. IT vs. Good HopePlantation(1988) 69 CTR (Ker) 146 : (1988) 170 ITR 173 (Ker). As against this, the learned counsel for the assessee submitted that the word "jeep" cannot be taken as a motor car because the technical word assigned to jeep cannot be construed to motor car to bring the same within the purview o....
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....that entertainment expenses allowed at Rs. 50,000 could not be considered as sale promotion expenses disallowable under s. 37(3A) of the IT Act." 29. Having heard both the parties, we find that similar issue came up for consideration before the Tribunal in assessee's own case in asst. yr. 1984-85 in the above noted ITA No. Facts relating to this issue are similar to the facts involved in asst. yr. 1984-85. Therefore, for the reasons given in that order we do not find any substance in this ground. This ground is hereby rejected. 30. The next grievance in Revenue's appeal is as under: "13. On the facts and in the circumstances of the case, the learned CIT(A) has erred in deleting addition of Rs. 10,88,042 in respect of undervaluation of DBM Dust." 31. One of the products of the assessee's unit is dead burnt Magnesite (DBM). This was uniformly valued as a closing stock in all the earlier years. The method was the raw material cost plus packing charges. Prior to 1984-85 the assessee was producing magnesite by a particular method which involved heat in a very high degree. Later, they discontinued this method and adopted the one where there was lesser heat involved. This resu....
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....red in holding that basmati rice was not a primary agricultural commodity and the assessee was entitled for deduction under s. 80HHC of the IT Act." 38. The assessee-company claimed deduction under s. 80HHC on total turnover of Rs. 59,21,814. Deduction was claimed at 1% of the export turnover and 5% of the increase in the export turnover as compared to last year. The Assessing Officer came to the conclusion that deduction under s. 80HHC has been claimed in respect of export of basmati rice which is an agricultural produce. Therefore, he disallowed the claim. 39. When the matter came before the CIT(A), the CIT(A) deleted this addition holding that rice is a finished product which is obtained after processing which involved de-husking, shelling of paddy resulting in brown rice, milling for removal of bran from rice and polishing the resultant rice, seiving for separating/removing the brokens and then finally packing the product. He was of the view that the paddy is an agricultural produce but basmati rice is a finished product which is not an agricultural produce. 40. We have heard both the parties and have gone through the order of the CIT(A). We are in agreement with the v....
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....ic and Industrial Research." (b) "On the facts and in the circumstances of the case, the learned CIT(A) has erred in holding that donation of Rs. 50,00,000 paid by the assessee to M/s Dalmia Institute of Scientific and Industrial Research was an expenditure in the hands of the assessee." (c) "On the facts and in the circumstances of the case, the learned CIT(A) has erred in holding that the claim of assessee under s. 35(1)(ii) of the IT Act could not be taken as a colourable device for reducing the tax liability." The assessee-company paid an amount of Rs. 50 lakhs to M/s Dalmia Institute of Scientific and Industrial Research. The Assessing Officer disallowed the claim for the following reasons : (i) The appellant-company has not obtained any services from M/s DISIR related to the business of the appellant-company. (ii) The amount paid is not established to be an expenditure of the appellant-company. (iii) The amount paid is mere donation without any service being rendered. (iv) The Dalmia Institute of Scientific and Industrial Research has admitted that they did not carry out any research work specifically on behalf of the Dalmia Cement (Bharat) Ltd. and as su....
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....cation of the consolidated statement was given. These two statements were reconciled and there was no difference. However, the IAC (Asst.) did not agree with the assessee and disallowed this claim on the ground that these items were clubbed together in the statement of the account furnished to the bank. 53. When the matter came before the CIT(A), the CIT(A) discussed this matter in detail and found as a matter of fact that each and every stock under various heads shown in the balance-sheet and in the bank tally in respect of date and value. Therefore, he deleted the addition. 54. The learned Departmental Representative invited our attention to the discrepancy noted by the Assessing Officer in lime stone and pointed out that the CIT(A) has not discussed it at length. However, the learned counsel for the assessee pointed out from the paper book pages 133 and 642 of the paper book that these items are exactly the same and they are tallying with each other in terms of weight and value. This was taken note of by the CIT(A). Therefore, there is no difference. 55. We have considered the rival submissions and have gone through the material available on record as well as paper book....
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....e learned CIT(A) has erred in deleting addition of Rs. 96,682 in respect of foreign tour expenses of Shri Y.H. Dalmia." The assessee-company incurred an expenditure of Rs. 38,472 (wrongly mentioned as Rs. 96,682) on the tour of president of the company Shri Y.H. Dalmia. This was disallowed by the Assessing Officer on the basis that Shri Y.H. Dalmia has no prescribed academic qualification for taking the decision and he is also not a technical personal to select the plant & machinery. 61. When the matter came before the CIT(A), he deleted the addition holding that Shri Y.H. Dalmia has sufficient experience in the line of cement industry, having spent major portion of his career in this line of business. Therefore, tour expenses are relatable to the business of the assessee-company. 62. Having heard both the parties, we agree with the view taken by the CIT(A) on this issue. We do not find any material to take a different view in the matter. This ground is hereby rejected. 63. The next grievance in Revenue's appeal is as under: "22. On the facts and in the circumstances of the case, the learned CIT(A) has erred in holding that expenses of Rs. 2,35,200 on shifting of pow....
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.... of earth moving machinery. The claim was rejected by the Assessing Officer holding that the expenditure is capital in nature. 66. The CIT(A) deleted the addition after discussing the issue at length. 67. The learned Departmental Representative relied on the order of the Assessing Officer. As against this, the learned counsel for the assessee relied on the order of the CIT(A). 68. We have considered the rival submissions and have gone through the order passed by the CIT(A) in detail. We agree with the view taken by the CIT(A) and do not find any material to take a different view in the matter. Therefore, this ground is hereby rejected. 69. The next grievance in Revenue's appeal is as under: "24. On the facts and in the circumstances of the case, the learned CIT(A) has erred in holding that expenses on criminal proceedings at Rs. 23,750 were incurred wholly and exclusively for the purposes of the business." The assessee-company at its Salem Works had supplied magnesite powder to a customer M/s Industrial Mineral & Chemical Ltd. (IMCL) but the supply was rejected by the IMCL being not in accordance with the sample. The assessee-company agreed to refund the full sale....
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....duction of Rs. 1,55,954 in respect of arrears of salary, DA and other allowances for which the liability did not arise in the relevant previous year." "27. On the facts and in the circumstances of the case, the learned CIT(A) has erred in deleting addition of Rs. 10,050 on account of P.F. Contribution, Rs. 5,530 in respect of education allowance and Rs. 1,824 in respect of night shift allowance paid on arrears of salary for which the liability did not arise in the previous year." These grounds are interconnected, therefore, for the sake of convenience, they are disposed of together. The Assessing Officer made following disallowance: . Rs. "1. D.A. Arrears-Factory 61,963 2. D.A. Arrears-Quarry 18,197 3. Heat & Heavy equipment allowance. 10,518 4. Arrears out of arbitration award-factory. 1,15,841 5. Arrears out of arbitration award-quarry. 20,460 6. Educational allowance 3,960 7. Difference due to increment paid. 5,175 . 2,36,114 The Assessing Officer has given following reasons for making the disallowance: (i) D.A. Arrear-factory-According to the IAC (Asst.) the assessee's claim that it was required to pay the D.A. a....
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....any claimed depreciation in respect of asst. yr. 1984-85 @ 15% normal depreciation plus 15% E.S.A. plus 7 1/2% additional depreciation aggregating to Rs. 2,39,473 leaving a written down value of Rs. 3,99,121. The claim of the assessee was that this machinery is being used by the assessee-company for producing hot air to dry up the limestone which is ground into fines in the vertical roller mill in the cement plant of the company. The purpose of the machine is to keep the fine coal in suspension and in burning condition under continuous process which resulted in high temperature developed in the furnace. The air which is blown in the furnace from the motorised fan under high pressure gets heated up inside the furnance and through a conduit pipe into the vertical roller mill for drying up the ground limestone therein. During the year under consideration the company purchased two new motors costing Rs. 37,233 and has claimed 100% depreciation on the WDV. The IAC (Asst.) rejected the claim of the assessee on the following two grounds: (i) The addition is in respect of motor coal-fixed furnace and not on account of fludized bed boiler and (ii) 100% depreciation is not available re....
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....ation at the rates of plant and machinery even though it is to be taken as a part of building as per the depreciation schedule." 84. Having heard both the parties, we find that this issue came up for consideration before the Tribunal in assessee's own case for asst. yr. 1984-85 in the above noted ITA No. and the same is discussed at paragraph 101 of that order. The facts relating to this issue are similar. Therefore, for the reasons given in that order, we agree with the view taken by the CIT(A). This ground is rejected. 85. The next grievance in Revenue's appeal is as under: "31. On the facts and in the circumstances of the case, the learned CIT(A) has erred in holding that the telephone exchange installed by the assessee was not an office appliance and was entitled for ESA, additional depreciation and investment allowance." 86. Having heard both the parties, we find that similar issue came up for consideration before the Tribunal in assessee's own case in ITA No. 5363/Del/87 for asst. yr. 1981-82, which is placed at paper book page 124 and the Tribunal has discussed this matter at paragraphs 5 to 7 of its order dt.2nd Sept., 1987. The facts relating to this issue are ....
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....ed for which no evidence of their user was produced by the assessee." 93. In view of our finding to ground No. 17, the depreciation on new cars is allowable. Therefore, we agree with the view taken by the CIT(A). No interference is called for. This ground is also rejected. 94. The next ground in Revenue's appeal is as under: "35. On the facts and in the circumstances of the case, the learned CIT(A) has erred in holding that the assessee was entitled for depreciation and ESA on the alleged increase in the cost of machines due to exchange rate fluctuation." The assessee-company imported two diesel generating sets of (i) 5000 KVA and (ii) 2500 KVA from Wartsils of Finland during the year under consideration. The installation of the first one was completed and D.G. set commissioned in December, 1983. The installation of second set DG 2500 KVA was completed and it was commissioned in April, 1984. The cost of two D.G. sets was partly financed by indigenous resources and partly by foreign currency loans in Japanese Yen 27,09,04,566 (equivalent to Indian Rs. 1,19,69,244 average rate of exchange being Rs. 0.0441 per Japanese Yen and Swiss Franc 46,562 (equivalent to Indian Rs. 2....
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....nce is allowable. Regarding second set which was installed in April, 1985, he supported the action of the Assessing Officer. As against this, the learned counsel for the assessee supported the action of the CIT(A) and pointed out that there is clear bar for claiming development rebate in view of s. 43A(2). However, there is no such bar in respect of investment allowance. It was pointed out that sub-s. (2) provides that the provision of sub-s. (1) shall not be taken into account in computing the cost of an asset for the purpose of the deduction on account of development rebate under s. 33, which makes it clear that investment allowance is allowable. Reliance in this connection, was placed on the decision of the Hon'ble Supreme Court in the case of CIT vs. Arvind Mills Ltd. (1992) 101 CTR (SC) 91 : (1992) 193 ITR 255 (SC). 97. We have considered the rival submissions and have gone through the decision of the Hon'ble Supreme Court in the case of CIT vs. Arvind Mills Ltd. The Hon'ble Supreme Court observed as under: "Sec. 43A was specifically introduced in the IT Act, 1961, to provide for the treatment of the situation created by the devaluation of the rupee. It specifically enac....