1987 (8) TMI 52 - HC - Income Tax

Summary

Issues involved:
The judgment addresses eight questions referred under section 256(1) of the Income-tax Act, 1961, including issues related to surtax, technical fees, pre-paid expenses, depreciation, legal and consultation fees, fees paid to Registrar of Companies, and weighted deduction for export activities.

Question 1:
The issue was whether the term 'regular assessment' in section 214 of the Income-tax Act refers only to the original assessment or any subsequent order post-appeal. The court concluded against the assessee based on a previous decision, answering in favor of the Revenue.

Question 2:
Concerned whether surtax payable under the Companies (Profits) Surtax Act, 1964, is deductible in arriving at total income. The court ruled against the assessee, following a prior decision, in favor of the Revenue.

Question 3:
The query was if technical fees paid to a foreign company constituted revenue or capital expenditure. The court held it as capital expenditure, favoring the Revenue based on a previous case involving the same assessee.

Question 4:
Focused on whether pre-paid expenses and insurances are assets for calculating capital under rule 19A. Answered in favor of the assessee, aligning with a previous court decision.

Question 5:
Examined if depreciation under section 32(1) can be claimed on scientific research assets after full deduction under section 35 in a prior year. Ruled in favor of the Revenue due to a retrospective amendment.

Questions 6 and 7:
These questions involved deductibility of legal and consultation fees for issuing bonus shares and fees paid to increase authorized capital. The court favored the assessee in both cases, emphasizing the nature of the expenditure and relevant legal precedents.

Question 8:
Regarding weighted deduction for export activities, the Tribunal had not made a final decision, remitting the matter to the Income-tax Officer for verification. The court declined to answer this question, leaving it to the Income-tax Officer's discretion.

In conclusion, the judgment addressed various tax-related issues, providing detailed reasoning and aligning decisions with legal precedents and the specific circumstances of each case.