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2019 (9) TMI 479 - HC - Income TaxEntitlement to weighed deduction u/s 36 (1) (iia) - income of employees chargeable under the head ‘salaries’ before allowance of standard deduction under Section 16 to be considered - HELD THAT:- If you compare the language employed in Section 36(1)(iia) proviso, it uses the expression “chargeable under the head salaries” while qualifying salary. Section 16 provides for certain deductions to be made to arrive at the salary “chargeable under the head salaries”. It is quite plain that the legislature intended to use the phrase “chargeable under the head salaries” for computation of income under Section 36 (1) (iia) in the same way as under Section 16. Therefore, the first question is answered in the negative in favour of the assessee and against the revenue. Depreciation of building machinery plant or furniture sold, discarded etc, in the previous year, not being the year in which it is bought - Loss under Section 32 (1) (iii) of the Act was allowable not in the year in which fixed assets were discarded but only in the year in which they were sold? - HELD THAT:- Words sold and discarded are disjunctive and denote separate dealing with the above items. Therefore, the tribunal made an error of law in coming to the conclusion that “there was no evidence to prove that the items claimed to have been discarded and scrapped were actually sold by the assessee.” Therefore, this question is also answered in the negative in favour of the assessee and against the revenue. Addition u/s 40A (5) - expenditure on motor cars were provided the senior employees both for official and personal use - HELD THAT:- Expenditure incurred on motor cars for the use of employees for business purposes may be apportioned out of the total expenditure incurred for that purpose and deduction claimed of the apportioned amount in accordance with the section. As relying on FORBES, EWART AND FIGGIS PVT. LIMITED [1981 (6) TMI 14 - KERALA HIGH COURT] appellant was entitled to deduction of the amount spent by them for business purpose subject to the ceiling, if any applicable under the said section. Decided in favour of the assessee and against the revenue. Deduction u/s 35B(1) (iv) in respect of commission payable outside India - whether the expenditure claimed was incurred wholly or exclusively on the maintenance outside India of a branch or agency for the promotion of sale of the subject goods, service or facilities? - HELD THAT:- As decided in ARAVINDA PARAMILA WORKS VERSUS COMMISSIONER OF INCOME-TAX [1999 (3) TMI 14 - SUPREME COURT] expenditure that is referred to therein has to be incurred on the maintenance outside India of a branch, officer or agency for the promotion of sales outside India of the assessee’s goods, services or facilities. Therefore, what is requisite is that the assessee should have maintained the branch, officer or agency outside India - While we think that there is some merit in the observation of the Karnataka High Court that the words “branch, officer or agency” in the clause draw colour from each other and that the word “agency” should, therefore, be interpreted in the light of the words “branch” and “office”, it is, in any event, very clear that even if the agency is an agency established not by the assessee but by a third party, the agency must be maintained by the assessee. - Decided in favour of assessee. Depreciation on moulds used for manufacture of glass was rightly - @10% OR 30% - HELD THAT:- indings of the tribunal were made on the question of fact, whether the moulds in question were used in glass manufacturing concerns except direct fire glass melting furnaces. The impugned order of the tribunal does not determine whether the appellant was a “glass manufacturing concern” and/or whether the manufacturing process involved “direct fire glass melting in furnaces.” This determination of fact was essential to come to a finding whether the appellant was entitled to a higher rate of depreciation of 30% on moulds. The reasons given by the tribunal are inadequate. More analysis of the facts and reasons were required. This is a kind of perversity. Therefore, the question is also answered in favour of the assessee and against the revenue.
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