2014 (9) TMI 752 - HC - Income Tax

Weighted deduction on agricultural demonstration park u/s 35C - Whether the Tribunal was justified in law in allowing assessee s claim to grant weighted deduction u/s 35C in respect of expenditure incurred on agricultural demonstration park at Bilaspur Held that - The expenses that is incurred in relation to the development agricultural park at Bilaspur is for dissemination of information or demonstration of modern techniques or methods of agriculture that the company uses in manufacture of its product as raw material and which is a product of agriculture it was entitled to the deduction that it claimed - the company was entitled to the weighted deduction as it satisfied the requirement both in clause (a) and (b) of subsection 1 of section 35C - The Tribunal was right in holding that dissemination of information or demonstration of modern techniques or methods of agriculture does not require any elaborate or detailed effort - The dissemination of information and by the method or modes utilized in this case fall within the clause - That is a way of dissemination of information and through the employed technicians - the expenses incurred so as to provide service of technicians and their salary and travelling expenses would definitely fall within the sub clause as they demonstrated modern techniques to the cultivators - the Tribunal did not commit any error of law apparent on the face of the record in upholding the order of the Commissioner Decided against revenue.

Summary

Issues:
Interpretation of section 35C of the Income Tax Act, 1961 regarding weighted deduction for expenditure on agricultural demonstration park at Bilaspur.

Detailed Analysis:

1. Issue: Interpretation of Section 35C for Weighted Deduction
The primary issue in this case was the interpretation of section 35C of the Income Tax Act, 1961, regarding the allowance of weighted deduction for expenditure incurred on an agricultural demonstration park at Bilaspur. The Assessing Officer disallowed the deduction, stating that the expenditure was not directly attributable to the supply of information as required by the provision. The Commissioner of Income Tax upheld this decision initially.

2. Challenge Before the Tribunal
The matter was then brought before the Income Tax Appellate Tribunal, where the Tribunal considered the company's claim for weighted deduction in relation to the agricultural demonstration park at Bilaspur. The Tribunal referred to a previous order in the assessee's case for assessment years 1970-71 and 1972-73, which supported the deduction claim. The Tribunal upheld the Commissioner's decision, dismissing the revenue's appeal.

3. Analysis of Tribunal's Decision
The Tribunal's decision was based on the interpretation of section 35C(1)(b) of the Income Tax Act, emphasizing the dissemination of information on modern techniques or methods of agriculture. The Tribunal found that the company's expenditure on employing technicians and distributing information materials qualified for the weighted deduction under the provision. The Tribunal's decision was in line with the language and intent of the section, as it did not require extensive research work but focused on providing information on modern agricultural techniques.

4. Conclusion and Disposition
The High Court, after reviewing the Tribunal's order and the provisions of section 35C, agreed with the Tribunal's interpretation. The Court held that the expenditure incurred on the agricultural demonstration park at Bilaspur fell within the statutory provision of section 35C, making the company eligible for the claimed deduction. The Court found no error of law in the Tribunal's decision and ruled in favor of the assessee, disposing of the reference without costs. The Court emphasized that the Tribunal's decision did not raise any significant legal question requiring further opinion.

In summary, the High Court upheld the Tribunal's decision regarding the weighted deduction under section 35C for the expenditure on the agricultural demonstration park at Bilaspur, ruling in favor of the assessee and rejecting the revenue's appeal.