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Issues:
- Interpretation of section 80J of the Income-tax Act for borrowed capital exclusion. - Calculation method for capital employed under section 80. - Depreciable assets valuation under section 80J. - Eligibility of expenses for development allowance under section 35B. Analysis: 1. The court addressed questions related to deductions under section 80J of the Income-tax Act. Referring to the decision in Lohia Machines Ltd. v. Union of India, the court concluded that borrowed capital should not be excluded in computing capital employed for section 80J purposes. The questions were answered against the assessee based on this precedent. 2. Regarding the calculation method for capital employed under section 80, the court clarified that the average capital employed during the entire accounting year should be considered, not just the capital employed on the first day of the relevant accounting year. This interpretation was aligned with the law. 3. The issue of depreciating assets valuation under section 80J was also discussed. The court ruled that depreciable assets should be valued at the written down value, not the original cost, for the computation of capital under section 80J. This decision was in accordance with the legal provisions. 4. The eligibility of expenses for development allowance under section 35B was a key issue. The court analyzed various expenses claimed by the assessee for export market development allowance. The Tribunal found that certain expenses were directly related to exports and covered by section 35B. The court cited precedents and held that such findings were questions of fact, not law, and upheld the Tribunal's decision to allow weighted deductions on these expenses. 5. Ultimately, the court ruled in favor of the Revenue for questions 1 to 3 related to section 80J deductions. However, for question 4 concerning expenses eligible for development allowance under section 35B, the court ruled in favor of the assessee. No costs were awarded in the judgment.
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