TaxTMI 
TaxTMI 
1976 (10) TMI 46
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....the manufacturing activity of the assessee falls in the Sixth Schedule, and further that the assessee does not manufacture anything else. Reading the provisions of s. 80-I and 80B(7) it would mean that if the gross total income includes "any profits and gains attributable to any business of manufacturing articles or things specified in the list in the Sixth Schedule" then the assessee would get a reduction equal to 80 per cent of such profits and gains. The following items credited to the Profit & Loss Account, according to the ITO and according to the Revenue, cannot be termed as "profits and gains from the activity of manufacturing:— Nature of the item Assessment year Assessment year . 1970-71 1971-72 1. Interest income. Rs. ———— * Rs. ———— * 2. Misc, Receipts Rs. ———— Rs. ———— 3. Insurance & Other claims Rs. ———— Rs. ———— 4. Rent from staff Rs. ———— Rs. ———— 5. Export Incentives Rs. ———— Rs. ———— 6. Surplus on sale Rs. ———— Rs. ———— 7. Sales-tax refund Rs. ———— Rs. ———— . Rs. —....
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.... ———— is surplus from the sale of business asset, and Rs. ———— is receipt from the Sales-tax Department being excess amount of Sales-tax paid. 5. According to the Revenue all these items have a remote connection with the manufacturing activity and cannot, therefore, be said to be profits and gains attributable to the manufacturing activity. In other words, the claim is that the profits and gains which arose directly from the sale of manufactured articles are alone eligible for deduction under s. 80-I but not other items. The AAC has, however, not agreed with this view and has held that all these items have a direct bearing with the business manufacturing nuts and bolts and cannot, therefore, be excluded for the purpose of s. 80-J. 6. We do not think that the Revenue's case is justified. The Revenue is trying to make a distinction between "income" and "profits and gains". In our opinion, such distinction is not well founded. As per s.28, income from business is not restricted merely to :"profits and gains" of business but includes also other items like compensation, income of a trade, profession or similar association, value of benefit or perquisite arising fro....
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....ental Representative conceded that the word "attributable" would mean "with reference to". The question, therefore, boils down to this : whether the impugned items can be said to be profits and gains attributable to the business of manufacturing articles or things? It is to be noted that the section does not say that the profits and gains should be directly derived from manufacturing, and the very use of the expression "attributable" indicates that the profits and gains in the context should be understood in wider sense. Any receipts which are derived from the business of manufacturing and which go to increase the profits and gains, would, therefore, come under the purview of s. 80I(1). Considering the question from this angle, we do not think that any of the impugned items can be segregated, from the business of manufacturing. If such business were not there, these items would not have surely come into existence. The two items of interest either from B.S.E.S. Ltd. or Hindustan Steel Limited have been received because the assessee conducts this manufacturing activity and they have a close nexus to the business. Similarly the other items, like sale of empty drums etc., export ....
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.... for Asst. yr. 1971-72.The first of these relates to the direction given by the AAC to allow weighed deduction under s. 35B of the Act on Rs. ———. There is no dispute that the payment was made to the Director of Exhibitions, Ministry of Foreign Trade, New Delhi, for display of exhibits at trade fairs at the Barcelona International Samples Fair Djakarta Fair(Indonesia) at Suva(Fiji Islands) and in Sweden. The assessee had claim weighted deduction in respect of this item which claim was not accepted by the ITO. The AAC held that the item was eligible for weighted deduction as it fell within s. 35B(1)(b)(i) which refers to advertisement or publicity in respect of the assessee's goods was outside India. 11. The only contention of the learned Departmental Representative was that inasmuch as the payment was made in India, the assessee was not eligible for the relief. 12. This question has been considered by now by different Benches of the Tribunal at Bombay, and these Benches are uniformly of the opinion that only such item which falls under s. 35B(1)(b)of the(iii) will not be eligible for the deduction if the expenditure is incurred in India and not outside India-and further....
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....the effect that Appellate Asstt. Commissioner erred in vacating disallowance of Rs. —————by holding that the provisions s.40(A)(v) were not applicable thereto. The company's Chairman and the company's Managing Director had been provided rent-free quarters and the value of such perquisite amounts to Rs. —————, in the former case and Rs. ————— in the latter case. As the salary payable to the former amounted to Rs. —————And to the latter Rs. —————, the ITO held that the value of perquisite to be allowed could not exceed 20 per cent of the salary and he therefore, disallowed Rs. ————— in the case of the Chairman and Rs. ————— in the case of Managing Director, making a total of Rs. —————. There is no dispute that s. 40(A)(v) applies to only that expenditure which is incurred by the employer for providing benefit, amenity or perquisite to an "employee". The Appellate Asstt. Commissioner held that both the persons were not employees of the company as such, and consequently s. 40(A)(v) could not be invoked. He also observed incidentally that the ITO had not applied either the provisions of s. 40a or s. 40(c) in....