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2012 (12) TMI 869 - HC - Income TaxAppointment of field organizers - revenue treated it as establishment of sole selling agency system - whether a business expenditure? - Held that:- The assessee created a network of field/sales organizers, who rendered specific services under agreements entered into with them. This was after the sale of cement was decontrolled. As AO has neither doubted the genuineness of the payments nor held that the field organizers did not render any services as per the agreements it follows that the expenditure was rightly allowed by the CIT (Appeals) as business expenditure and his decision was rightly affirmed by the Tribunal. They cannot be called sole-selling agents within the meaning of Section 294 of the Companies Act, 1956 also confirmed by a letter dated 10.11.1989 issued by the Department of Company Affairs, Government of India to the assessee - in favour of the assessee. Deposits received to be treated as secured loans within the meaning of section 40A(8)(b)(1) - Held that:- As decided in L.G.Balakrishnan & Bros. Ltd. Vs. CIT [1998 (4) TMI 16 - MADRAS HIGH COURT] & Super Spg. Mills. Ltd. Versus Commissioner of Income-Tax.[2002 (7) TMI 8 - MADRAS HIGH COURT] fixed deposits secured by a floating charge on specific assets of the company amounts to secured fixed deposits and therefore the interest paid on them cannot be disallowed to the extent of 15% under Section 40A(8) - They are therefore, secured loans and interest paid on them is allowable in full under Section 36(1)(iii) without being regulated by Section 40A(8) read with Explanation (b)(i) - in favour of the assessee. Puja expenses - ITAT allowed the expenditure as business expenditure - Held that:- The Tribunal has taken the correct view having regard to the inclusive nature of the expression “for the purpose of the business” appearing in Section 37(1) and as explained by the Supreme Court in the case of CIT v. Malayalam Plantations Ltd. (1964 (4) TMI 9 - SUPREME COURT) - in favour of the assessee. Retainership paid to tax consultant - whether covered u/s 80VV - Held that:- The retairnership paid to Advocate was not in connection with income tax proceedings but for general advice relating to other laws, thus the provisions of Section 80VV are not attracted. The Section as it stood at the relevant time was applicable only in respect of the expenditure incurred in pursuing income tax assessment proceedings or proceedings before the authorities under the Act. It did not apply to retainership fees paid to consultants or advocates - in favour of the assessee. Depreciation on water distribution system - whether is entitled for depreciation at the rate of plant and machinery or it is to be taken as part of the building for the purpose of depreciation - telephone exchange system - whether it is an office appliance which was entitled to investment allowance, additional depreciation and extra shift depreciation allowance - Held that:- The assessment year involved is 1985-86 thus the matter is more than 25 years old & after such a long lapse of time even if lesser rate of depreciation is allowable on the assets as claimed by the revenue, the whole exercise would only be academic, therefore, return the reference of these two questions unanswered.
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