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2008 (5) TMI 655 - HC - Income TaxClaim a deduction u/s 35(1)(iv) - Bank guarantee commission paid to relative of directors - Capital Expenditure incurred on R& D. Claim for deduction under section 35(1)(iv) - bank guarantee commission paid to relatives of the directors - In CIT vs. Ayurvedic Sevashram (P) Ltd. [1986] 54 CTR (Raj.) 119 : [1986] 159 ITR 112 (Raj.), wherein, on facts also, the assessee company had paid guarantee commission to the relatives of the directors, who had secured finances for the company, and it was found that the deduction had resulted in remuneration to the relatives of the directors of the company. The guarantee commission was paid for securing finances, and thus the deduction was upheld. In view of the matter, de hors the technicalities, even on merits, in view of the judgment of this Court in Ayurvedic Sevashram's case [1985 (7) TMI 45 - RAJASTHAN HIGH COURT], the finding on this question requires no interference by this Court. Claim deduction in respect of capital expenditure incurred on R & D of assessee's business - machines, acquired for the purpose of R&D - HELD THAT:- We find is, that the orders are based on the basis of orders passed in earlier years, and in the basic order, we find, that the AO himself had inspected the factory premises, and found, that the plant and machinery purchased, were being used by the assessee for the purposes of maintaining its quality control. Purchasing of plant and machinery is, thus, not in dispute, may be that appropriate accounting in this regard may not have been made, as some entries have been made later, but then, it has not been found by the AO, that the items claimed to have been purchased were not purchased, or were not available, or were purchased in some other financial year, than the one in which credit is claimed. This conclusion of the AO, arrived on the basis of personal inspection of the factory premises by the AO, has not been assailed by the Revenue to be not correct, or to be requiring any interference, for us there is no escape from the conclusion that the items are used for quality control in R&D. That being the position, in our view, it cannot be said that the deduction is allowable, without holding any enquiry, into the relevant question. It has been found by the learned CIT(A) that the assessee does hold recognition from the concerned Department of the Government, to which it is regularly furnishing tri-annual returns, and the recognition did subsist during all the relevant assessment years. Thus, Tribunal was correct in allowing the deduction. Obviously it is answered against the Revenue and in favour of assessee. The net result is, that we do not find any force in any of these appeals, the same are consequently dismissed.
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