TMI Blog1994 (10) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... uated with reference to r. 3(c) of the IT Rules, 1962. The assessee submitted that this claim is supported by the decision of the Calcutta High Court in the case reported in CIT vs. Britannia Industries Co. Ltd. (1981) 20 CTR (Cal) 272 : (1982) 135 ITR 35 (Cal) and the decision of the Tribunal in its own case for asst. yr. 1980-81 in ITA No. 4787/Del/1983. He further submitted that in the light of the Hon'ble Delhi High Court decision reported in (1992) 197 ITR 403 (SC), when there is a combined usage for office and personal, than the only proper method would be to apply r. 3(c) of the IT Rules. 4. The counsel for the assessee submitted that the valuation of perquisite under s. 40A(5) of the Act and that hinted on s. 17 of the Act are not different but to proceed on similar lines. The Departmental Representative, on the other hand, placed reliance on CIT vs. Forbes, Ewart Figgis (P) Ltd. (1981) 24 CTR (Ker) 87 (FB) : (1982) 138 ITR 1 (Ker) (FB) which according to him was approved by the Supreme Court in the case reported in C.W.S. (India) Ltd. vs. CIT (1994) 118 CTR (SC) 118 : (1994) 208 ITR 649 (SC). 5. After hearing the rival submissions, the submissions of the assessee are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt. The assessee placed on our record copies of the orders of the Singapore Court, correspondence exchanged between the purchaser of the property and it also placed reliance on the decision reported in Bawa Shivcharan Singh vs. CIT (1985) 47 CTR (Del) 12 : (1984) 149 ITR 29 (Del), CIT vs. Shirinbai P. Pundole (1981) 129 ITR 448 (Bom), K. Ramaswami Gounder vs. CIT (1984) 41 CTR (Mad) 204 : (1987) 163 ITR 94 (Mad), CIT vs. Mangtu Ram Jaipuria (1991) 192 ITR 533 (Cal) and J. Raghothama Reddy vs. CIT (1992) 195 ITR 895 (AP). It was submitted that the amounts so received by the assessee were clearly in the nature of capital receipt because the right of tenancy was lost. The Departmental Representative, on the other hand, placed reliance on the decisions reported in CIT/CEPT vs. Shamsher Printing Press (1960) 39 ITR 90 (SC), CIT vs. Manna Ram Co. 1973 CTR (SC) 201 : (1972) 86 ITR 29 (SC), 11 ITD 995, 46 ITD 391 and Movies Distributors vs. CIT (1991) 93 CTR (Kar) 173 : (1991) 189 ITR 559 at page 562. He also placed reliance on Vol. I, Law of Income-tax by Chaturvedi Pithisaria page 272 which clearly states that the property has been used, anything that relates to that property would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ground No. 8, the special discount allowed to dealers as compensation for supplying knitting machines to the Govt. department at a price lower than the purchase price which in our view only represent subsidising the purchase cost of knitting machine could, therefore, not be classified as sales promotion. The inclusion is accordingly deleted. 12. In ground No. 7, the quantity discount allowed to dealers treating them as sales promotion which in our view, for the reasons mentioned earlier are not includible as sales promotion. The same is accordingly deleted. 13. In ground No. 9, the dealer who sold diesel engines to Govt. department or other institutions were compensated for sale at reduced price which cannot be classified in our view as sales promotion and, accordingly, the same is deleted. 14. In ground No. 10, awards was given to various dealers for maintaining prescribed need of sales for maintaining show room according to norm which in our view could not be classified as sales promotion but is purely with a view to maintain regular relationship with the dealers. Its inclusion is accordingly deleted. 15. In ground No. 11, the claim of the assessee is 1/3rd of the expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended the same. In our view, this claim of the assessee is quite reasonable. Considering the present situation in such convention since the company which had paid for the travel expenses of the wives of the executives realising the importance of the convention, realising that it is to boost the commercial expediency, in our view, the claim is fully justified and accordingly the travel expenses is fully justified. 21. In ground No. 16, the claim of the assessee relates to weighted deduction and foreign travelling which is only consequential and we direct the same to be allowed to the assessee. 22. In ground No. 17, the assessee is aggrieved by the treatment of hotel room rent, taxi hire, business gifts as in the nature of entertainment expenses. The Departmental Representative placed reliance on several authorities and submitted that the disallowance was proper. In our view, there is justification of the treatment given by the authorities below and we do not interfere with the same. 23. In ground No. 18, business gifts to foreign buyers treated as in the nature of entertainment is the issue. In the earlier years, the Tribunal had decided this issue in favour of the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance on the orders. In our view, the claim of the assessee that this additional salary is fully justified. The amount of incentive provided has not been uniform but varied from Division to Division which shows that it is based on performance. The disallowance on both counts are accordingly deleted. 29. In ground No. 25, the assessee is aggrieved by the amount paid to employees for increasing their working hours, which the authorities have treated as not so incurred for purposes of business. Mr. Vaish submitted that 223 employees of 8 Divisions were compensated for increase/uniform working hours. This was so done considering that in various Division offices where different office hours was in force. The plea was that since the assessee had to bring this working condition in line with the labour law requirement and the agreement was so reached in the year resulting an additional payment to the employee was clearly a revenue expenditure. The Departmental Representative only supported the orders. 30. In our view, there is considerable merit in the arguments advanced by the assessee for it does not bring in any asset of enduring advantage but is only to bring better relationship be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ewing machines, wooden accessories, etc. The assessee paid Rs. 1,68,97,010 towards purchase of sewing machines, wooden accessories from M/s General Sales Pvt. Ltd. of which the Assessing Officer disallowed Rs. 39,58,725 on the ground that it was excessive and unreasonable. The price according to the Assessing Officer was excessive and according to him, the reasonable price was that what was paid to other suppliers 0.5% margin. The CIT(A), however, reduced the disallowance to Rs. 11,45,760. 34. Mr. Vaish submitted that the sewing machines, wooden accessories were supplied by M/s Jay Engineering Works Ltd. and they have considerable complaints from various customers, and due to this the sales of the assessee were affected. The assessee, therefore, took steps to avoid such situation and approached to M/s General Sales Pvt. Ltd. who offered better quality wooden accessories at the same price at which rate M/s Jay Engineering Works Ltd. supplied the wooden accessories. The price that was offered by M/s General Sales Pvt. Ltd. for better quality wooden accessories, competitive and comparable and not at all in excess. The sewing machines that were sold by the assessee when the wooden ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in the nature of salary. Since the CIT(A) only applied the High Court decision in CIT vs. Sriram Refrigeration Industries Ltd. (1992) 110 CTR (Del) 60 : (1992) 197 ITR 431 (Del), we seen no reason to interfere with the same. 39. In ground No. 2, the plea raised by the Revenue is regarding commission, discount, order procuring commission, discount to dealers, commission to diesel engine agents, commission to district agents and 2/3rd of demonstration, delivery and service van expenses. 40. The rival submissions in regard to the above have been very carefully considered. Discounts have been allowed to the customers from the bills and, therefore, could not be classified as in the nature of advertisement and publicity. The order procuring commission is for services rendered and cannot be classified as in the nature of sales promotion which is supported by the decision of the Tribunal in ITO vs. Meera Co. (1986) 15 ITD 227 (Chd), 30 ITD 647 (sic), CIT vs. The Statesman Ltd. (1992) 198 ITR 582 (Cal), CIT vs. Hindusthan Motors Ltd. (1991) 192 ITR 619 (Cal). We uphold the order of the CIT(A) on this issue. Discount to dealers against services rendered, commission to diesel engine ..... 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