TMI Blog1983 (12) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... ali and New Year s Day. The ITO disallowed the said expenditure as treating the same as in the nature of entertainment expenditure. 3. In appeal the Commissioner (Appeals) following his decision for the assessment year 1977-78 deleted the said addition. 4. Being aggrieved the revenue has come up in appeal before us. Our attention was drawn to the decision of the Tribunal in the assessee s own case for the assessment year 1977-78 in IT Appeal Nos. 1824 and 1916 (Ahd.) of 1972-73 in which similar claim was allowed by the Tribunal. We do not see any reason to depart from the view taken by the Tribunal in the said case and, therefore, we decline to interfere with the decision of the Commissioner (Appeals). We may add that the expenditure incurred for distribution of dry fruits on Diwali days to the customers and constituents is essentially an expenditure incurred for the purpose of business and has no element of entertainment as held by the ITO. 5. The next contention relates to allowance of expenditure of ₹ 2,57,705 as sales promotion expenditure. The revenue has challenged the decision of the Commissioner (Appeals) on the ground that the said expenditure was not of rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( the Act ), had also deleted the disallowance proposed by the ITO. 9. The next contention relates to deletion of an addition of ₹ 14,938 being popja expenses. The ITO disallowed the said amount on the ground that the said expenditure had nothing to do with the promotion of the sale or production. The Commissioner (Appeals) disagreed with the view, in appeal and held that the said expenditure was allowable in light of the decision of the Tribunal, Bombay Bench. 10. Before us it was contended on behalf of the revenue that in view of the decision of the Bombay High Court in the case of Kolhapur Sugar Mills Ltd. v. CIT [1979] 119 ITR 387 the claim was not allowable. The learned departmental representative relied on the said decision of the Bombay High Court to support the disallowance as made by the ITO. Shri Shah on the other hand pointed out that the said expenditure was in nature of staff welfare expenditure and was clearly allowable. He also relied on the fact that in the subsequent year the IAC acting under section 144B had directed deletion of disallowance proposed in respect of the said expenditure by the ITO in his draft order. 11. We have perused the decision r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll Bench was rendered at a later date it has not overruled the decision in Travancore Tea Estates Co. Ltd. s case (supra). Therefore, in absence of any material to show that the expenditure incurred towards maintenance was of a special type in order to suit the convenience of the employee we see no reason to interfere with the decision of the Commissioner (Appeals). 16. The last contention raised in the appeal filed by the revenue relates to the deletion of a sum of ₹ 35,898 being expenditure incurred on amalgamation. The ITO found that T. Maneklal Mfg. Co. Ltd. amalgamated with the assessee-company pursuant to the order of the Hon ble High Court of Gujarat at Ahmedabad and the Hon ble Supreme Court at Bombay. In course of amalgamation proceedings the assessee-company had incurred an expenditure to the extent of ₹ 35,899. The ITO was of the view that the said expenditure was. of capital in nature and rejected the contention that placed by the assessee that the main purpose of amalgamation was to carry on the business more efficiently and economically under a single control. It was also pointed out that the said expenditure was incurred in order to effect internal eco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the assessee-company on 1-7-1970. It had made a claim for relief under section 80J for the assessment year 1978-79 before the ITO. The initial assessment year for claim under section 80J was 1975-76. Thus, T. Maneklal was granted relief under section 80J for the assessment year 1978-79 for the third succeeding assessment year on the basis of the claim made by it for the assessment year 1978-79. After the amalgamation the assessee, the amalgamated company also made a claim for relief under section 80J in respect of the said undertaking. The ITO refused to entertain the claim for the assessment year 1978-79 on the ground that the said claim was already considered in the hands of T. Maneklal in its assessment. 21. Being aggrieved the assessee carried the matter in appeal before the Commissioner (Appeals) and claimed that relief was due to it in view of the Calcutta High Court decision in the case of Century Ehka Ltd. v. ITO [1977] 107 ITR 123 as also the CBDT Circular F. No. 15/5/63-IT(A-1), dated 13-12-1963. The Commissioner (Appeals) observed that the assessee s claim founded on decision in Century Enka Ltd. s case (supra) was clearly misplaced. The said decision had no ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... representative on the other hand relying on the orders of the authorities below contended that the relief under section 80J has to be calculated with reference to initial year and four successive years. On this basis relief due for the assessment year 1978-79 was already granted in the hands of T. Maneklal Co. The next relief due would be of course in the hands of the assessee-company but the relevant assessment year would be 1979-80 and no further relief was due for the assessment year 1978-79 in the hands of the assessee. Otherwise for assessment year 1978-79 relief would be allowed to both the companies which was not contemplated under section 80J. 23. We have considered the rival submissions. It may be stated at the outset that the unit in question is an industrial undertaking which is exigible to relief under section 80J. In fact such relief was granted in the hands of T. Maneklal which owned the unit for the assessment year 1975-76 on the basis of the initial year and such relief was allowed in the hands of the said company for the assessment year 1978-79. The difficulty has arisen due to different financial years which are followed by the respective companies. T. Manekl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ombay Bench in case of Tyresole Concessionaries ( P.) Ltd. v. ITO [1982] 1 SOT 119 to which one of us (the Accountant Member) was a party. In that case also both the companies followed different previous years and the question arose for consideration was whether the amalgamated company on amalgamation was entitled to benefit of unabsorbed development rebate which was carried forward in the hands of the amalgamated company. The reasons set out in the said decision would in our opinion apply with equal force to the controversy before us. There is yet one more aspect of the matter. The amalgamation of companies is intended to grant certain benefits to both the companies. For example, section 47(vi) of the Act excludes any transfer in a scheme of amalgamation of a capital asset by the amalgamating company to the amalgamated company if the amalgamated company is an Indian company. Thus, the levy of capital gains, which would have otherwise been chargeable has been specifically excluded under the scheme of amalgamation. The provisions therefore have to be so construed as to make available the benefits if they are so available rather than denying the same. The construction sought to be pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal No. 59 of 1978-79 dated 16-6-1980. Shri Shah also referred to another decision in Gwalior Cloth Agencies v. ITO (1982] 13 M 340 (Delhi). He also relied on the decision of Ahmedabad Bench in IT Appeal No. 496 (Ahd.) of 1981 dated 16-11-1981. On merits Shri Shah submitted that levy of interest under section 215 was not justified as the assessee had paid advance tax in excess of 75 per cent of the tax payable. So far as levy of interest under section 139(8) was concerned, the ITO had granted time up to 31-10-1978 for filing the return and thereafter the assessee had moved an application for extension of time up to 30-11-1978 to which there was no reply and the assessee had filed the return on 30-11-1978. The learned departmental representative on the other hand supported the orders of the authorities below and submitted that the ITO was justified in levying interest when he was satisfied that such levy was called for. 26. We have considered the rival submissions. Two issues fulfil for our consideration. Firstly, levy of interest under section 215. It is clear that on basis of the tax payable on basis of the relief granted by the Commissioner (Appeals) the advance tax paid work ..... X X X X Extracts X X X X X X X X Extracts X X X X
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