TaxTMI 
TaxTMI 
2011 (5) TMI 50
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....e, the Tribunal was right in holding that in respect of sums totaling Rs.1,15,030/-, the assessee‟s liability had not ceased and these amounts were not taxable under Sections 41(1) of the Income Tax Act, 1961? (ii). Whether on the facts and in the circumstances of the case, the ITAT was correct in law in holding that the assessee was entitled for deduction of Rs.1,86,49,403/- in respect of capital expenditure on scientific research under Section 35(i)(iv) even though the capital assets were acquired in the previous year relevant to A.Y. 1981-82? (iii). Whether the ITAT was right in holding that expenditure incurred by the assessee on providing food and beverages to employees in a guest house was not expenditure in the nature cov....
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....o cessation of liability and hence, revenue was not justified in bringing the said amounts to tax. We find that neither has the revenue has not challenged the finding as perverse nor are details provided with respect to these items. In that view of the matter, we are of the opinion that this question will have to be answered in the affirmative and against the revenue. 2.1 At this stage, it may be noted that in respect of the amount which had been brought to tax, the assessee had sought a reference which is a subject matter of question no.2 in ITR No.27/1997 for the same assessment year. Mr. Monga, who appears for the assessee both in the captioned reference as well as in ITR No.27/1997 says that he does not wish to press the said questio....
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.... deduction could be claimed. This is what the assessee has done. We do not, therefore, see any difficulty in accepting the assessee‟s submissions. It is also eminently reasonable and safeguards the interest of Revenue. As pointed out by Shri Sharma, there may be cases, where the assessee acquires an asset ostensibly for scientific research, but never puts it to use for that purpose. As per the view of the ITO, deduction under section 35 would be admissible in such cases and the Department would be a loser. The method suggested and followed by the assessee safeguards the Revenue. We, therefore, have no hesitation in accepting the assessee‟s contention. However, as far as this additional ground is concerned, on the assessee‟....
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.... was incurred and not when the asset was used. It was Mr. Sahni‟s contention that the Tribunal should have decided the issue dehors its decision in the A.Y. 1981-82. 5.2 As against this, Mr. Monga said that the Tribunal while rendering its decision in A.Y. 1981-1982 had examined this very issue which could not be reopened at the behest of the revenue in the assessment year in issue i.e., A.Y. 1982-83. 6. Both counsels however did agree that in the orders of the authorities below there was a reference and discussion with regard to the provisions of section 35(2)(ia) of the Act. Based on the provisions of section 35(2)(ia), the Assessing Officer had disallowed expenses incurred prior to 01.01.1981. Consequently, apart from a sum of R....
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....t 50% of the expenditure incurred by the assessee was on in the nature of capital expenditure while the balance was on revenue account. In coming to this conclusion, the Tribunal in paragraphs 67 and 68 has made the following observations :- "67. That, however is not the position in the assessee‟s case. We have already extracted clause 1 of the agreement which states that Zimmer would provide the assessee the documents for erection of a plant. Item 1 is the list of equipments to be manufactured in India and the descriptions of materials for construction. Item 2 is the equipment drawings item 3 is the list of measures and control equipment, item 4 is utility requirements, item 5 is mechanical safeguard thereon, item 6 is general pla....