TMI Blog1979 (2) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to the capital employed in the expansion of the plant and machinery. The claim, as originally made before the ITO, was to the tune of Rs. 8,95,471 being 6% of the net capital employed to the tune of Rs. 1,49,24,526. The ITO concerned allowed the said claim for the assessment year 1968-69. It appears, however, that for the assessment year 1969-70, which is under reference, three questions arose before the ITO. The first related to whether the relief granted under s. 80J for the assessment year 1968-69 should be continued in the year under reference, that is, 1969-70 or not. The second question related to deduction of an amount of Rs. 1,051 being the value of the cement bags donated by the assessee-company to a public charitable trust in Baroda under s. 80G of the I.T. Act, 1961. The third question related to the claim of Rs. 88,701 being the amount spent for repair to the guest house of the assessee-company occupied by the managing director of the company at Ranavav--whether it was in the nature of revenue expenses or capital expenditure. The ITO disallowed the assessee's claim as in his opinion the expansion of cement manufacturing unit did not amount to setting up a new indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as revenue expenditure. The AAC, however, accepted the alternative contention urged on behalf of the assessee that the claim should be allowed as a terminal allowance under s. 32(1)(iii) since the condition for the allowance that the deficiency was written off in the books of accounts was fulfilled. He, therefore, upheld the claim of the assessee company fully to the extent of Rs. 88,701. At the instance of the ITO, the matter was carried in further appeal before the Income-tax Appellate Tribunal, which was rejected since in the opinion of the Tribunal unless the assessment for the assessment year 1968-69 was disturbed by withdrawal of the relief, there could be no substance or justification in the revenue's attempt to withdraw the claim under s. 80J of the I.T. Act, 1961, for the subsequent year, i. e., assessment year 1969-70. The Tribunal also upheld the order of the AAC so far as the deduction on the amount of Rs. 1,051 being the value of the cement bags donated was concerned. The Tribunal did not find any justifying reasons to interfere with the order of the AAC because it would not make any difference merely because the assessee had made the donation in kind and the AAC was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned advocate, appearing, for the assessee-company, did not press question No. 2 before us. So far as question No. 1 is concerned, we are of the opinion that the question is concluded by a decision of this court in Addl. CIT v. Tarun Commercial Mills Ltd. [1978] 113 ITR 745. The question in the said decision before this very Division Bench was in the context of certain expenses incurred by the assessee-company the-- Tarun Commercial Mills Ltd.--on account of the use of cars by the managing directors and the telephones maintained at their respective residences as well as the remunerations paid to them at an agreed percentage on the net annual profits of the company. The ITO in that case considered these expenses as perquisites and the amounts being in excess of 1/5th of the remuneration payable to them, since they were admittedly employees of the company, disallowed the aggregate amount of Rs. 13,530 comprising of different amounts on different heads since he was of the opinion that s. 40(a)(v) applied and the case was not governed according to s. 40(c) of the I.T. Act, 1961. The order of the ITO was confirmed by the AAC. However, the Appellate Tribunal reversed that order and hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons to interfere with the order of the Tribunal so far as both these questions are concerned. The Tribunal was perfectly justified in taking the view that if the relief of tax holiday was granted to the assessee-company for the assessment year 1968-69, the assessee was entitled to continuance of that relief for the subsequent four years and the ITO would not be justified in refusing to, continue the allowance for the assessment year under reference, i.e., 1969-70, without disturbing the relief for the initial year. At this stage, it should be noted that for purposes of entitlement to the relief under s. 80J, which is corresponding to s. 15C of the 1922 Act, an industrial unit Claiming such relief must be new, in the sense, that new plants and machineries are erected for producing either the same commodities or some distinct commodities (vide Textile Machinery Corporation Ltd. v. CIT [1977] 107 ITR 195 (SC) and CIT v. Indian Aluminium Co. Ltd. [1977] 108 ITR 367 (SC). It should be emphasised that it was common ground between the parties that the assessee-company has increased the capacity of its cement manufacturing plant from 600 tonnes per day to 1,600 tonnes per day by setting up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he revenue and in favour of the assessee. So far as question No. 2 is concerned, we are of the opinion that the Tribunal was justified in agreeing with the AAC who allowed the deduction on Rs. 1,051 being the value of the cement bags donated by the assessee to a charitable institution recognised under s. 80G of the Act. The contention of the revenue is that having regard to the provisions contained in sub-s. (2)(a)(iv) of s.80G, the deduction in respect of donation to a charitable institution is admissible provided the donation is made in cash. In the submission of the learned advocate for the revenue, this is the only construction possible on the plain reading of the relevant clause under which the deduction is sought and granted. The Tribunal was not impressed with this contention since in its opinion it is too technical a contention to which it could accede. The High Court of Bombay in Associated Cement Co.'s case [1968] 68 ITR 478 (Bom), at page 485, took the same view in similar circumstances. The Associated Cement Companies had at the request of the University of Bombay fabricated a small rotary experimental furnace for the department of chemical engineering by spending an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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