TMI Blog2004 (2) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... -2004 - Judge(s) : N. K. SUD., HEMANT GUPTA. JUDGMENT The judgment of the court was delivered by N.K. SUD J. - This order will dispose of I.T.Rs. Nos. 100 to 103 of 1984, under section 256(1) of the Income-tax Act, 1961 (for short "the Act"), relating to the assessment years 1976-77 and 1977-78. The assessee is a limited company engaged in the manufacture and sale of bicycles and accessories. It filed its return of income for the assessment year 1976-77 on June 30, 1976, declaring an income of Rs. 64,01,770. The return for the assessment year 1977-78 was filed on July 30,1977, declaring an income of Rs. 1,28,77,730. The assessment for the assessment year 1976-77 was completed vide order dated July 10, 1980, determining the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the value of the perquisites in respect of the free use of cars by Shri B.D. Kapur, and J.D. Kapur should be determined under rule 3 of the Income-tax Rules, 1962?" While examining the claim for deduction of expenditure on remuneration, etc., to two directors, namely, Sarvshri B.D. Kapur and J.D. Kapur, the Assessing Officer had estimated the expenditure on provision of cars to them at Rs. 30,000 and Rs. 20,000, respectively. The assessee's claim that for the purpose of section 40(c)(i) of the Act, the perquisite value as determined under rule 3 of the Income-tax Rules, 1962, and not the actual expenditure should have been taken into account, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 2 relates to disallowance of Rs. 53,998 and Rs. 57,489 for the assessment years 1976-77 and 1977-78, respectively, which represented loss arising on repayment of loan raised in foreign currency due to fluctuation of exchange rate. The Tribunal has upheld the disallowance by treating it as a capital expenditure. The order of the Tribunal is in conformity with the law laid down by this court in Beco Engineering Co. Ltd. v. CIT [1999] 236 ITR 344. Accordingly, this question is also answered in the affirmative, i.e., in favour of the Revenue and against the assessee. The assessee was to receive a royalty of Rs. 3,60,396 and Rs. 8,60,302 for the assessment years 1976-77 and 1977-78, respectively, from a Tanzanian party. The said party wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having been converted into convertible foreign exchange outside India, is brought into India, by or on behalf of the assessee in accordance with any law for the time being in force for regulating payments and dealings in foreign exchange, there shall be allowed, in accordance with and subject to the provisions of this section 2 deduction of an amount equal to- (i) forty per cent, for an assessment year beginning on the 1st day of April, 2001; (ii) thirty per cent, for an assessment year beginning on the 1st day of April, 2002; (iii) twenty per cent, for an assessment year beginning on the 1st day of April, 2003; (iv) ten per cent, for an assessment year beginning on the 1st day of April, 2004, of the income so received in, or brou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption is available only in respect of an amount which is actually received in convertible exchange in India. Similar view has been taken by the Bombay High Court in CIT v. Asian Cable Corporation Ltd. (No. 2) [2003] 262 ITR 537 and the Calcutta High Court in CIT v. M.N. Dastur and Co. (P.) Ltd. [2000] 243 ITR 10. Accordingly, question No. 3 is answered in the affirmative, i.e., against the assessee and in favour of the Revenue. Question No. 4 relates to the disallowance of claim of weighted deduction claimed under section 35B of the Act, on freight and transportation and packing expenses and in respect of part of salaries. The finding of the Tribunal is in conformity with the decision of this court in CIT v. Export House [2002] 256 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance was challenged before the Commissioner of Income-tax (Appeals) on the ground that since the entire amount had been incurred wholly and exclusively for the purpose of the assessee's business, the same was fully allowable under section 37 of the Act. The Commissioner of Income-tax (Appeals) did not accept this contention as according to him, even if the expenditure had been incurred wholly and exclusively for the purpose of business, the same had to be restricted in terms of the provisions of section 80VV of the Act to Rs. 5,000 only. This finding has been affirmed by the Tribunal. Section 80VV of the Act, as it existed at the relevant time, reads as under: "80VV. In computing the total income of an assessee, there shall be all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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