1981 (7) TMI 247 - AT - Income Tax

Summary

Issues:
1. Interpretation of the definition of "book" for the purpose of claiming deduction under the IT Act.
2. Disagreement between the assessee and the tax authorities regarding the eligibility for deduction under the first proviso to s.32 (i) (ii) of the IT Act for the value of purchased books.
3. Evaluation of whether each volume of a multi-volume set of books can be considered a separate "book" for deduction purposes.

Analysis:
1. The judgment revolves around the interpretation of the term "book" under the IT Act for claiming deductions. The assessee, engaged in manufacturing Falmitolyl Chloride, purchased various scientific books and sought deductions under the first proviso to s.32 (i) (ii) of the IT Act.

2. Initially, the Income Tax Officer (ITO) aggregated the value of books with the same name but in different volumes, denying the deduction. The Appellate Authority Commissioner (AAC) partially agreed with the ITO, allowing some deductions but sustaining the disallowance for other books.

3. The assessee contended that each volume of the purchased books constituted a separate "book" based on the definition provided in the Law of Income-tax in India. The argument highlighted that each volume was self-sufficient, covering independent topics, and could be used individually without dependence on other volumes.

4. The judgment analyzed specific cases, such as the Encyclopaedia of Chemical Technology and Advances in Lipid Research, to determine the eligibility for deduction. It was emphasized that each volume was a complete source of knowledge, and the cost of each volume was below the threshold for deduction.

5. The judgment criticized the AAC's reasoning for rejecting the assessee's appeal, highlighting inconsistencies in defining a "book" and the lack of justification for disallowances. The Tribunal found merit in the assessee's arguments, concluding that each volume should be considered a separate entity eligible for full deduction.

6. Ultimately, the Tribunal allowed the assessee's appeal, emphasizing that each purchased book, even if part of a multi-volume set, qualified for full deduction under the first proviso to s.32 (1) (ii) of the IT Act. The judgment clarified that the assessee's purchases constituted separate "books" based on their self-sufficiency and individual cost criteria.

7. The judgment concluded with the agreement of the Judicial Member with the decision, affirming the allowance of the assessee's appeal and endorsing the interpretation that each volume of the purchased books could be treated as a distinct "book" for the purpose of claiming deductions under the IT Act.