9911796707
TMI Blog1980 (8) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... l & Grindlays Bank Employees Union. 3. The assessee claimed the above expenditure by way of subscription paid to the Employees'Unionof the said Bank. The assessee firm had dealings with the above Bank. The ITO disallowed the assessee's claim on the ground that the said expenditure had not been incurred in connection with the business. This finding was upheld by the AAC. 4. Before us, the ld. counsel of the assessee submitted that since the assessee firm is having banking transactions with the said Bank, the said subscription paid to the Employees Union was in the interest of commercial expediency and to maintain good relations with the employees of the said Bank. In our opinion, there is force in the contention of the ld. counsel. During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricity 300.00 (f) Stationery 863.90 . . 20,479.27 Sales of Rs. 18,00,380.37 and Rs. 1,39,839.50 in respect of export and others respectively. So the ratio is 90 : 7 . 19,001.27 . Rs. 81,911.22 Although the ITO accepted the basis on which the assessee allocated the expenditure for export purposes, he held that out of the total expenses of Rs. 81,911 only item No. (iii) (Legal expenses (was covered by the provisions of s. 35B, and, accordingly, he allowed the weighted deduction of Rs. 1,520 i.e. 1/3rd of Rs. 4,561. 6. Against the findings of the ITO, the assessee went in appeal and submitted that the ITO was not justified in rejecting the claim since all the expenses were covered under the various provisions of s. 35B of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording to the AAC, the loss due to currency fluctuations was not covered by any of the sub-cl. (i) to (viii) of s. 35(i)(b) of the IT Act. He, therefore, upheld the disallowance made by the ITO. Against the decision of the AAC, on this point, the assessee, as well as the Department, has come up in the present appeals. 8. According to the ld. counsel of the assessee, a sum of Rs. 4,561 paid on account to legal expenses has been fully allowed by the ITO as being eligible for weighted deduction under s. 35B, and, hence, the AAC should not have restricted the claim by taking only 4/5th of the amount in para 7 of his order. In our opinion, there is force in the contention of the ld. counsel. The ITO has clearly held that legal expenses which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al sales. After deducting the legal expenses of Rs. 4,561, the remaining expenses (excluding coin conversion losses) are reducted to Rs. 27,320. Considering the ratio of export sales to the local sales, we direct that 9/10th of the above expenses should be allowed under s. 35B of the IT Act. In other words, an expenditure of Rs. 24,588 would be entitled for weighted deduction under s. 35B of the IT Act, 1961. 10. As regards the claim of Coin Conversion Loss of Rs. 50,000, the ld. counsel of the assessee submitted that the said loss could not be deducted out of the sale proceeds as held by the AAC, but is an item of direct expenditure debitable to the P&L Account. In this connection, our attention was drawn to the definition of "Saleprice" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the ld. counsel that the said loss is debitable to the P&L account and not to the sales account, in our opinion is not very relevant so far as the allowance of the said claim under s. 35 B is concerned for the simple reason that a loss or expenditure due to currency fluctuations is not covered by way of the sub-cl. of s. 35B(1)(b) of the IT Act. 11. In the appeal filed by the Department, the ground taken is that none of the expenditure allowed by the AAC is entitled to weighted deduction under s. 35B(1) of the IT Act. We are unable to accept this contention, for the reasons discussed while dealing with the appeal filed by the assessee. 12. The cross objection filed by the assessee against the appeal filed by the Department, is al ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
