TaxTMI 
TaxTMI 
1993 (3) TMI 69
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....ontribution as made by the assessee-company in respect of the remuneration payable to its director, Gautam Sarabhai, was an allowable deduction in computing the business income of the assessee company ? (2) Whether the Income-tax Appellate Tribunal rightly came to the conclusion that since Gautam Sarabhai, a director, was an employee of the assessee-company, contribution of the company to the provident fund account of Gautam Sarabhai was an allowable deduction in computing the business income of the assessee ? (3) Whether, on the facts and in the circumstances of the case, the finding of the Appellate Tribunal that the assessee was entitled to include for purpose of computation of capital employed for the purpose of section 80J read w....
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....s employees are deductible. In this case, there is no dispute that the director concerned was an employee of the assessee-company. In that view of the matter, questions Nos. 1 and 2 will have to be answered in the affirmative, that is, against the Revenue and in favour of the assessee. The assessee-company, during the accounting period corresponding to the assessment year 1969-70, had incurred an expenditure of Rs. 1,77,753 on scientific research. The assessee had claimed deduction of that amount under section 35(1)(iv) read with section 35(2)(ia) of the Act, as they then stood, and the same was granted. The assessee also claimed deduction on Rs. 1,77,753 under section 80J on the ground that it was capital employed in the newly establish....
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....tion in regard to the same business outgoing, and, if it is intended, it will be clearly expressed. In other words, in the absence of clear statutory indication to the contrary, the statute should not be read so as to permit an assessee two deductions both under section 10(2)(vi) and section 10(2)(xiv) of the 1922 Act, or both under section 32(1)(ii) and section 35(1)(iv) of the 1961 Act. The Supreme Court, referring to the use of the phrase "in respect of the same previous year" in section 35(2)(iv), held that those words indicate that there is a basic scheme, unspoken but clearly underlying the Acts, that the two allowances cannot be and are not intended to be granted in respect of the same asset or expenditure. It has further held that (....
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.... made under the "scientific research clause". What is required to be noted is that the Supreme Court was not called upon to examine whether deduction if claimed in respect of expenditure incurred for acquiring a capital asset for scientific research relating to the assessee's business could also be claimed as a deduction under section 80J on the ground that such capital expenditure amounted to capital employed. The principle indicated by the Supreme Court would apply if it is found that the deductions which are claimed are basically of the same nature. If the deductions claimed are basically of the same nature, an assessee cannot be granted double deduction even though the two heads of deductions may be different and there is some differ....
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.... the capital asset depreciates in value as a result of its use. Such deduction is permitted while computing the total income of the assessee. Section 80J was enacted for the purpose of giving an incentive to entrepreneurs to establish new industrial undertakings and for certain other purposes. It provided for deduction, no doubt, while computing the total income of the assessee, but on a different basis. The deduction was provided to encourage establishment of new industrial undertakings and for that reason, the deduction was related to the capital employed in the new industrial undertakings. Whereas expenditure on scientific research is made deductible under section 35 on the ground that it is expenditure incurred for the purpose of scient....