TMI Blog1992 (8) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... he records could not have insisted upon making ad hoc disallowances but should have relied upon the audited statement of accounts. He relied on the Delhi High Court decision in the case of Addl. CIT vs. Jay Engineering Works Ltd. 1978 CTR (Del) 156 : (1978) 113 ITR 389 (Del). Shri Vohra referring to the Delhi High Court decision submitted that in that case too various books of accounts were destroyed by fire and the question that was considered was whether the Tribunal was right in allowing deduction by relying upon mainly the auditor's report which did not contain any adverse remarks about expenses. Their Lordships considering the fact that the fire had destroyed the books of accounts came to the conclusion that the Tribunal was justified in placing reliance on the material such as audited accounts and auditor's report and thereby deleting the addition. He, therefore, pleaded that the various ad hoc disallowances as made by the Assessing Officer and confirmed by the CIT(A) should be deleted. 4. The Departmental Representative placed heavy reliance on the orders and only pointed out that the issue as raised by the assessee does not arise from out of the order of the CIT(A). He su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant that the disallowance should be restricted to Rs. 17,614 could not be said to be out of place. We accordingly restrict the disallowance to Rs. 17,614 as was made by the assessee at the time of filing of its original return. 7. The assessee has raised the issue of claim of weighted deduction in respect of various expenses incurred at Rai Bareli office andVaranasioffice. The expenses for which weighted deduction has been claimed are commission, clearing charges at Port, interest paid to bank of FOBP documents, bank commission on such documents, business promotion inIndia. Shri Vohra submitted that the claim regarding clearing charges, interest, etc., are invariably decided against the assessee by the Tribunal. He submitted that in regard to commission paid to Indian agents, they are entitled for weighted deduction in view of the decisions in CIT vs. GEC of India Ltd. (1991) 192 ITR 559 (Cal), CIT vs. Kerala Nut Food Co. (1991) 192 ITR 585 (Ker) and CIT vs. Steel Tubes of India Ltd. (1989) 78 CTR (MP) 130 : (1989) 44 Taxman 266 (MP). He also submitted that this claim is allowable in view of the Special Bench decision in the case of J. Hemchand Co. vs. ITO (1982) 1 SOT 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses amounting to Rs. 1,96,286 have been charged to the administration expenses. The perusal of the auditor's report did not indicate any adverse remarks in regard to the expenses. There is also an adverse remark in regard to profit and loss account not showing the true profit or loss. In these circumstances, the reliance placed on the Delhi High Court decision in Jay Engineering Works Ltd. could not be said to be out of place. Accordingly, we allow the claim of the assessee. 9. The assessee has also claimed deduction of Rs. 8,286 charged to repair expenses based on the Delhi High Court decision in Jay Engineering Works. For the reasons mentioned above, we allow deduction of the said expenditure. The assessee has claimed deduction in regard to excise duty liability of Rs. 12,02,000. Shri Vohra submitted that the excise authorities had demanded excise duty on the post-manufacturing expenses treating the same as part of the assessable value. The order as passed by the Asstt. Collector was set aside by the Collector (A) on29th Oct., 1979. The Asstt. Collector by means of his order dt.25th March, 1986has raised a revised demand of Rs. 9,47,000. The plea advanced by Shri Vohra was tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income under s. 41(1) of the Act subject to the fact that the excise authorities have not filed any appeal against the order of the Collector (A). ITA No. 731 Appeal by the Revenue 10. The Revenue has objected to the allowing of weighted deduction at 50 per cent on the inland tour expenses of the Export Manager and also the entertainment expenses as incurred by him, allowing weighted deduction on interest paid to bank for packing credit. The Departmental Representative submitted that expenses incurred inIndiaare not entitled to weighted deduction. In regard to interest payment to bank on packing credit, he submitted that they are in the nature of expenses that are normally chargeable to trading account indicating that they are part of the cost of production and, therefore, are not eligible for weighted deduction. Shri Vohra, however, submitted that the expenses incurred by the Export Manager and also on the entertainment was in relation to the Russian delegation and in the light of the Special Bench decision in J. Hemchand Co., the CIT(A) was justified in allowing the claim. He submitted that the CIT(A) had followed the Madhya Pradesh High Court decision in CIT vs. Vippy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on deferred payment scheme and that the machinery has already been set up, in view of the provisions contained in Expln. 8 to s. 43, such expenses as incurred after the machinery have been set up are clearly allowable as revenue expenditure. The order of the CIT(A) on this issue is accordingly upheld. 12. The Revenue has objected to the allowing of deduction of excise duty liability on carded gilled silver of Rs. 37,21,631 despite the fact that the assessee has disputed the demand and obtained a stay from the Delhi High Court. The Departmental Representative submitted that the excise authorities charged excise duty on carded gilled silver. He further submitted that by means of Finance Bill, 1982, retrospective amendment was made to the excise laws w.e.f. 1979 and included carded gilled silver as subject to central excise. He submitted that the assessee had challenged the Bill as such and also the retrospective amendment by filing a Writ in the High Court. He submitted that in these circumstances, it is not the case of disputing the very liability but it is a case of disputing the very enactment. It was accordingly pleaded that the assessee could not have been allowed deduction. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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