TMI Blog1994 (9) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... ials including processed tobacco are supplied to the company by M/s ITC Ltd. The entire process of the conversion is being done as per the specification given by the ITC Ltd. The assessee is entitled to only conversion charges including the slides charges. For the asst. yr. 1986-87 (relevant accounting period ended on 31st Dec., 1985) the assessee filed return showing loss of Rs. 56,904 on 31st March, 1987. A revised return was subsequently filed on 29th Nov., 1988 declaring loss of Rs. 7,05,905. The reason for the revised return was stated to be that in the original return the assessee did not claim investment allowance under s. 32A. In the revised return the assessee claimed investment allowance. The claim of investment allowance of the assessee on filter attachment machine valued at Rs. 8,74,060 has been negatived by the Assessing Officer with the following observations: "Even the investment allowance claimed on filter attachment machine valued at Rs. 8,71,060 which was installed in the month of May, 1985 is also not allowable as the same should have been first put to use in the immediately succeeding previous year from the year of acquisition of the machinery, i.e., asst. yr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the investment allowance is admissible in the previous year in which the machinery or plant was installed or in the immediately succeeding previous year if the machinery or plant is first put to use. On the basis of the evidence on record to the effect that the filtration unit started production of filter cigarettes w.e.f. May, 1985 which falls in the previous year relevant to the asst. yr. 1986-87, he argued that the claim of the assessee for investment allowance is admissible in the asst. yr. 1986-87 under the law. 5. The learned Departmental Representative, on the other hand, submitted that in the original return filed on 31st March, 1987, the assessee-company did not make any claim of investment allowance on the machinery in question and the claim subsequently made by the assessee in the revised return filed on 29th Nov., 1988 cannot be entertained in view of the decision of the Kerala High Court in the case of CIT vs. A. Yunus Kunju (1994) 117 CTR (Ker) 27 : (1994) 206 ITR 704 (Ker). In his counter-arguments the learned counsel for the assessee submitted that the assessee's claim cannot be negatived if it is lawfully admissible. In support, reliance was placed on the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same was not used for the purposes of business of that firm. This version of the assessee could not be controverted by the Revenue by bringing on record any material. In the absence of any adverse material brought on record by the Revenue, we see no reason to disbelieve the assessee's version. There is no dispute that the machinery in question has been first put to use in the previous year relevant to the asst. yr. 1986-87. On appreciation of evidence brought on record by the assessee, the learned CIT(A) has himself observed in para 10.1 of his order that the production of filter cigarettes commenced from May, 1985. If that be so, the assessee's claim of investment allowance in respect of the machinery in question is admissible in the asst. yr. 1986-87 as in the previous year relevant to this assessment year the machinery is first put to use. 7. We have perused the decision of the Kerala High Court in CIT vs. A. Yunus Kunju relied on by the learned Departmental Representative. In that case the assessee failed to furnish a return under s. 139(1) of the IT Act, 1961, for the accounting year 1977-78. Notice dt. 10th Jan., 1979 under s. 139(2) calling upon the assessee to file th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to allow the assessee's claim of investment allowance"on the cost of filter plant at the rate admissible, provided other prescribed conditions are found to have been fulfilled. 9. Ground No. 2 relates to 1/5th disallowance out of motor car expenses and depreciation for personal use of the vehicles by the directors. A similar issue came up for consideration before this Bench in the case of M/s. D H Secheron Electrodes Pvt. Ltd., Indore, in ITA No. 323/I/93 decided on March, 1994 for the asst. yr. 1983-84 and the Tribunal held that no such disallowance can be made in the hands of the company. If the vehicles are used by the directors, the same can be treated as perquisites in the hands of the respective directors. Following the order, the disallowances are deleted. 10. Ground No. 3 has not been pressed. Ground No. 4.1 has also been withdrawn for the reason that while giving appeal effect to the learned CIT(A)'s order the Assessing Officer has allowed relief to the assessee. Ground Nos. 4.2 and 4.3 have also not been pressed. 11. In the result, the assessee's appeal is partly allowed. 12. ITA No. 199/Ind/90 Ground No. 1 relates to 1/5th disallowance out of motor car expenses a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nied the original return. He, therefore, submitted that the Assessing Officer was correct in rejecting the assessee's claim and the learned CIT(A) erred in allowing the claim to the extent of Rs. 10,000 under s. 32AB. The learned counsel for the assessee in his counter arguments submitted that the claim was made in the revised return which was also accompanied by the audit report. The claim was made before completion of the assessment and, therefore, the assessee was entitled to benefit of deduction. 17. We have considered the rival contentions. Under s. 32AB an assessee is entitled to a deduction of an amount upto 20% of the profits of 'business or profession', if the said amount is either deposited with the development bank within the period upto six months from the end of the previous year or before furnishing the return, whichever is earlier, or utilised any amount during the previous year for the purchase of a new ship, new aircraft or new machinery or plant. The language of sub-s. (1) of s. 32AB is clear and unambiguous. It provides for deduction of any amount which has been utilised during the previous year for the purchase of new plant or machinery, etc. It is not in disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h person in good position and serves the assessee's business interests. The payment of diners club fee is, therefore, held to be an allowable expenditure following the decision in the case of Otis Elevators (India) vs. CIT (1991) 96 CTR (Bom) 14 : (1992) 195 ITR 682 (Bom). 21. Ground Nos. 4 and 5 are not pressed. 22. In the result, the appeal is partly allowed. 23. Now, we take up the Revenue's appeals. 24. ITA No. 288/Ind/90 The first grievance of the Revenue is that the learned CIT(A) has erred in directing the Assessing Officer to work out the disallowance under rule 6D by excluding taxi hire, culie hire and telephone expenses and restrict the disallowance to only expenses of stay. We have heard both the sides at length. We notice that in giving the above direction, the learned CIT(A) has followed the decision of the Tribunal, Special Bench, in the case of Sundaram Finance Ltd. vs. IAC (1984) 18 TTJ (Mad) 348 (SB) : (1984) 7 ITD 845 (Mad)(SB). Since the decision of the CIT(A) is based on the Special Bench decision of the Tribunal, we find no infirmity in his order and uphold the same. Accordingly, we reject this ground of the Revenue. 25. Ground No. 2 relates to the de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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