TaxTMI 
TaxTMI 
2005 (1) TMI 30
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....35C of the Income-tax Act, in respect of the entirety of the expenditure incurred by way of motor vehicle maintenance of the cane department, transport of fertilisers and travel expenses of the cane department?" The assessment year involved is 1983-84. The assessee is a public limited company and its main business is the manufacture of sugar. The assessee claimed, in its assessment proceedings, weighted deduction on certain expenses under section 35C of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), but the Assessing Officer disallowed the following expenses: Rs. 1. 50 per cent, of motor vehicle maintenance of the cane department 2,55,112 2. Transport of fertiliser 42,155 3. 60 per cent, of cane tra....
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....hkumar, learned junior standing counsel for the Revenue, on the other hand, submitted that the Tribunal was justified in upholding the disallowance as no material was placed before the Assessing Officer of the Commissioner (Appeals) or the Appellate Tribunal by the assessee to establish that the expenditure disallowed would fall within the qualifying clause under section 35C of the Act. We have carefully considered the submissions of Mr. P.P.S. Janarthana Raja, learned counsel for the assessee, and Mr. J. Nareshkumar, learned junior standing counsel for the Revenue. We are of the view, to appreciate the point that arises in the reference, it is necessary to refer to section 35C of the Act which reads as under: "35C. Agricultural developme....
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....allowed as deduction under this section, the amount, if any, received by the company or co-operative society in consideration of, or as compensation for, such goods, services or facilities shall be deducted. (2) Where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure of the nature specified in sub-section (1), deduction shall not be allowed in respect of such expenditure under any other provision of this Act for the same or any other assessment year." Section 35C was introduced by the Finance Act, 1968, with effect from April 1, 1968, and was deleted by the Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1989. There is no dispute, on the facts of the case, that the....
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....rtment was for the purposes mentioned in clause (b) of section 35C of the Act. We hold that in the absence of such material produced by the assessee to establish that the entire expenditure on the maintenance of motor vehicles in the cane department was incurred for any of the purposes mentioned in clause (b) of section 35C of the Act, the Appellate Tribunal was justified in holding that only 50 per cent. of the expenditure incurred qualified for weighted deduction. In so far as travelling expenditure incurred in the cane department is concerned, the Assessing Officer disallowed 60 per cent, of the amount claimed on the ground that the amount so disallowed did not qualify for weighted deduction. The view of the Assessing Officer was confir....
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....ter hearing learned counsel for the assessee and the Revenue, we are of the view that the transport of fertiliser would be a service rendered by the assessee to the cultivator as it is stated that the fertiliser has to be carried from the godown to the agricultural land to be used by the cultivator. Hence, we are of the view, the expenditure incurred on transport of fertilizer would qualify for deduction as it is a service within the meaning of section 35C(b)(i) of the Act and unless the fertiliser is transported, it is not possible to use fertiliser for cultivation of sugarcane. We find that the Appellate Tribunal has not gone into the details of the expenditure. Normally, we would have remitted the matter to the Appellate Tribunal to cons....