TMI Blog2012 (12) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... COURT] & Super Spg. Mills. Ltd. Versus Commissioner of Income-Tax.[2002 (7) TMI 8 - MADRAS HIGH COURT] fixed deposits secured by a floating charge on specific assets of the company amounts to secured fixed deposits and therefore the interest paid on them cannot be disallowed to the extent of 15% under Section 40A(8) - They are therefore, secured loans and interest paid on them is allowable in full under Section 36(1)(iii) without being regulated by Section 40A(8) read with Explanation (b)(i) - in favour of the assessee. Puja expenses - ITAT allowed the expenditure as business expenditure - Held that:- The Tribunal has taken the correct view having regard to the inclusive nature of the expression “for the purpose of the business” appearing in Section 37(1) and as explained by the Supreme Court in the case of CIT v. Malayalam Plantations Ltd. (1964 (4) TMI 9 - SUPREME COURT) - in favour of the assessee. Retainership paid to tax consultant - whether covered u/s 80VV - Held that:- The retairnership paid to Advocate was not in connection with income tax proceedings but for general advice relating to other laws, thus the provisions of Section 80VV are not attracted. The Section as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-clause (1) of clause (b) of the Explanation to section 40A(8) of the Income Tax Act, 1961? (3) Whether on facts and in circumstances of the case the Tribunal was correct in law in holding that the expenses of Rs. 1,80,399/- incurred by the assessee company on account of Pooja were meant for business purpose? (4) Whether on facts and in circumstances of the case the Tribunal was correct in law in holding that the retainership of Rs. 45,000/- paid to tax consultant was not covered u/s 80VV of the Income Tax Act, 1961? (5) Whether on facts and in circumstances of the case the Tribunal was correct in law in confirming the order of CIT (Appeals) by holding that the water distribution system was entitled for depreciation at the rate of plant and machinery even though it is to be taken as a part of the building as per the depreciation schedule? (6) Whether on facts and in circumstances of the case the Tribunal was correct in law in holding that the telephone exchange system installed by the assessee was not an office appliance and was entitled for Extra Shift Allowance, additional depreciation and investment allowance? 3. We shall proceed to answer the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cement was decontrolled. The assessing officer has neither doubted the genuineness of the payments nor held that the field organizers did not render any services as per the agreements. If these facts are not disputed, it follows that the expenditure was rightly allowed by the CIT (Appeals) as business expenditure and his decision was rightly affirmed by the Tribunal. The sales/field organizers were many in number and were appointed from all over the country as the details given in the order of the CIT (Appeals) would show. They were spread over Madras, Tiruchi, Salem and Tuticorin in Tamilnadu, Bangalore and Maharashtra. They cannot be called sole-selling agents within the meaning of Section 294 of the Companies Act, 1956. Moreover, a letter dated 10.11.1989 was issued by the Department of Company Affairs, Government of India to the assessee which is as follows: Gentlemen, I am directed to refer to your letter No.HD/8Y/3303 dated 18.10.1989 on the subject mentioned above and to say that having regard to the subject mentioned above and to say that having regard to the submissions made by you this Board agrees to the view that the Sales Organisers appointed by the Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation (b)(i). We are in agreement with the view taken by the Tribunal, which is supported by two judgments of the Madras High Court. Accordingly, we answer the question of law in the affirmative in favour of the assessee and against the revenue. 8. So far as the third question is concerned, it is seen from the order of the CIT (Appeals) that the expenses were incurred on the maintenance and puja of the colony temple at Dalmiapuram, Salem and the Hospet works. It appears from para 6.1 of the order of the CIT(Appeals) that he visited the factory at Dalmiapuram to verify the fact that the temple was located inside the factory of the assessee company. He found that it was a small village where the factory was located and predominantly the local people were employed, whose sentiments were respected by building a temple so that they can offer worship which was one of the important aspects of their lives. This, according to the CIT(Appeals), kept the workers happy and contented, which is very important for the smooth functioning of the company. On these findings, the CIT(Appeals) allowed the expenditure as business expenditure and his decision was affirmed by the Tribunal. 9. In our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates. In this view of the matter we answer the question of law in the affirmative, in favour of the assessee and against the revenue. 12. Questions No.5 and 6 can be taken together since they relate to the claim for depreciation on water distribution system and the claim for extra shift allowance, additional depreciation and investment allowance on telephone exchange system. We notice that the assessment year involved is 1985-86. The matter is thus more than 25 years old. In the case of the water distribution system, the controversy is whether it is entitled for depreciation at the rate of plant and machinery or it is to be taken as part of the building for the purpose of depreciation. In the case of the telephone exchange system the controversy is whether it is an office appliance which was entitled to investment allowance, additional depreciation and extra shift depreciation allowance. The controversy is only about the rates of depreciation allowable in respect of the assets in question. It was rightly pointed out on behalf of the assessee that even if a lesser rate of depreciation is allowable on the assets, having regard to the long period of time that has elapsed the assets ..... X X X X Extracts X X X X X X X X Extracts X X X X
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