1992 (3) TMI 132 - AT - Income Tax

Summary

Issues Involved:
1. Contribution to Welfare Trusts
2. Addition of Rs. 60,00,000 as additional income
3. Consequential depreciation and investment allowance
4. Consequential reliefs u/s 80HH and 80-I
5. Depreciation rates on factory and non-factory buildings

Summary:

1. Contribution to Welfare Trusts:
The assessee contributed Rs. 1,50,00,000 to M/s. Raasi Cements Employees Welfare Trust and Raasi Cement Executives Welfare Trust, debiting it to staff welfare expenses. The Assessing Officer treated this as a capital contribution and disallowed it as revenue expenditure, which was upheld on appeal. The Tribunal analyzed the case laws, particularly India Pistons Repco Ltd., and concluded that the contribution to the Employees Welfare Trust was genuine and set up under an agreement with the employees, thus qualifying for deduction. However, the contribution to the Executives Welfare Trust was not backed by any agreement and was deemed voluntary, similar to the Sree Saraswathi Mills Ltd. case, and thus disallowed.

2. Addition of Rs. 60,00,000 as Additional Income:
The appellate officer upheld the addition of Rs. 60,00,000 made by the Assessing Officer as additional income. However, this ground was not pressed for by the assessee.

3. Consequential Depreciation and Investment Allowance:
The assessee claimed eligibility for consequential depreciation and investment allowance. The Tribunal noted that no finding was given by the authorities below and restored this issue to the appellate officer for reconsideration.

4. Consequential Reliefs u/s 80HH and 80-I:
The assessee also claimed eligibility for consequential reliefs u/s 80HH and 80-I. Similar to the third ground, no reference or observation was made by the authorities below, and this issue was also restored to the appellate officer.

5. Depreciation Rates on Factory and Non-Factory Buildings:
The assessee claimed depreciation on factory buildings at 10% and non-factory buildings at 5%, whereas only 5% and 2.5% were allowed, respectively. The Tribunal noted that while the Assessing Officer did not provide a finding, the appellate officer addressed it in para 34 of the order. This issue was also restored to the appellate officer for reconsideration.

Conclusion:
The Tribunal upheld the assessee's claim regarding contributions to the Employees Welfare Trust but rejected the claim for the Executives Welfare Trust. The issues of additional income, consequential depreciation, investment allowance, and reliefs u/s 80HH and 80-I were restored to the appellate officer for further consideration.