TMI Blog2002 (4) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... ment years 1990-91 and 1991-92 from its industrial undertakings (hereinafter referred to as "units") at Kottayam, Cochin, Kozhikode and Thiruvananthapuram. For the said assessment years, the appellant claimed benefit for its newly started industrial undertaking or unit at Thiruvananthapuram under section 80-I(1) read with the proviso thereto. In respect of new industrial undertaking company, deduction of an amount equal to 25 per cent. of its profits and gains shall be allowed in computing the total income of the assessee for a period of seven years from the year of commencement. For the assessment years 1990-91 and 1991-92, the appellant claimed deduction of Rs.15,03,130 and Rs.2,46,252, respectively, under section 80-I(1) of the Act in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire claim of Rs.2,46,252 on the ground that there was a loss of Rs.49,78,946 for the above year. The income by way of advertisement of the Trivandrum unit was apportioned at 19 per cent. for the assessment year 1990-91 and at 21 per cent. for the assessment year 1991-92. The circulation of publications as certified by the Audit Bureau of Circulation attributable to the Trivandrum unit for the assessment year 1990-91 out of the total circulation of publication of all the four units is 15 per cent. and for the assessment year 1991-92 it was 17 per cent. The said circulation certified by the Audit Bureau of Circulation is based on the actual sale of the number of copies. But for apportioning the common advertisement income 19 per cent. was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... true that certain "wanted" category of advertisements in the appellant's daily reaches every nook and corner of the globe because, as rightly claimed Keralites are spread over throughout the world but the benefit is derived by the advertiser only and not by the assessee. The assessee contended that it was totally impermissible for the assessing authority to interfere with the method of computation adopted according to and consistent with the principles of commercial accounting and followed by the assessee all along. Aggrieved by the said orders of assessment, the appellant preferred appeals before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) after considering all relevant materials and facts held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment accepting the reasoning of the assessing authority. Aggrieved the appeal. The question raised depends on the wording of section 80-I of the Income-tax Act, 1961, hereinafter referred to as ("the Act"). For convenience we will extract the section hereinbelow (after omitting that part of the statute not relevant). "80-I. (1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel or the business of repairs to ocean-going vessels or other powered craft, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be sustained. The advertiser primarily chooses the media in the light of the circulation it has. Reaching out to more readers is a material factor for an advertiser to choose any particular medium to advertise or propagate his commodity, A person chooses Hyde Park to speak out because the park exists and it attracts many people. Had it been a forlorn place with no attractions to visitors at all the soap-box orator would have chosen elsewhere to exhibit his histrionics. Therefore, the upkeep of the Hyde Park is a material circumstance that increases the attraction of the speaker to that place. Hence, the speaker chooses that place because it is well kept and attractive to the public. As such, the benefit rendered is mutual. The speaker ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well, the readership necessarily increases as the readers in the mofussil get a wider view of the news. The newspaper has to carry the information from NEWS, i.e., North, East, West and South to gain popularity. It would mean a mammoth infrastructure would be needed for the newspaper to increase its circulation. Had not the assessee established a new unit at Trivandrum, the readers that it would have covered would be proportionately less as it could not have given more coverage for the places in and around that city. As such, it did give a step up in the circulation of the paper as well. It means larger revenue would have been needed to keep the newspaper going catering to the needs of the reading public. Expending that revenue as stated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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