TMI Blog1979 (1) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... re the ITO, was to the tune of ₹ 8,95,471 being 6 per cent of the net capital employed to the tune of ₹ 1,49,52,600 The ITO concerned allowed the said claim for the assessment year 1968-69. It appears, however, that for the assessment year 1969-70, which is under reference, three questions arose before the ITO. The first related to whether the relief granted under section 80J for the assessment year 1968-69 should be continued in the year under reference, i.e., 1968-69 or not. The second question related to deduction of an amount of ₹ 1,051 being the value of the cement bags donated by the assessee-company to a public charitable trust in Baroda under section 80-G of the Income-tax Act, 1961. The third question related to the claim of ₹ 88,701 being the amount spent for repairs to the guest house of the assessee-company occupied by the managing director of the Company at Ranavav whether it was in the nature of revenue expenses or capital expenditure. The ITO disallowed the assessee's claim as in his opinion the expansion of cement manufacturing unit did not amount to setting up a new industrial undertaking, inasmuch as the activities of the expanded part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, accepted the alternative contention urged on behalf of the assessee that the claim should be allowed as terminal allowance under section 32(1)(iii) since the condition for the allowance that the deficiency was written off in the books of account was fulfilled. He, therefore, upheld the claim of the assessee-company fully to the extent of ₹ 88,701. 4. At the instance of the ITO, the matter was carried in further appeal before the ITAT, which was rejected since in the opinion of the Tribunal unless the assessment for the assessment year 1968-69 was disturbed by withdrawal of the relief, there could be no substance or justification in the Revenue's attempt to withdraw the claim under section 80J of the Income-tax Act, 1961 for the subsequent year, i.e., assessment year 1969-70. The Tribunal also upheld the order of the AAC so far as the deduction on the amount of ₹ 1,051 being the value of the cement bags donated was concerned. The Tribunal did not find any justifying reasons to interfere with the order of the AAC because it would not make any difference merely because the assessee had made the donation in kind and the AAC was, therefore, justified, having r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned Advocate, appearing for the assessee-company, did not press Question No. 2 before us. 6. So far as Question No. 1 is concerned, we are of the opinion that the question is con cluded by a decision of this Court in Addl CIT v. Tarun Commercial Mills Ltd. [1978] 113 1TR 745. The question in the said decision before this very Division Bench was in the context of certain expenses incurred by the assessee-company, the Tarun Commercial Mills Ltd., on account of the use of cars by the managing directors and the telephones maintained at their respective residences as well as the remunerations paid to them at an agreed percentage on the net annual profits of the Company. The ITO in that case considered these expenses as perquisites and the amounts being in excess of one-fifth of the remuneration payable to them, since they were admittedly employees of the Company, and disallowed the aggregate amount of ₹ 13,530 comprising of different amounts on different heads since he was of the opinion that section 40( a)(v) applied and the case was not governed according to section 40(c) of the Income-tax Act, 1961. The order of the ITO, dated 1st February, 1979 was confirmed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39 of 1975 at the instance of the Revenue. We do not find any justifying reasons to interfere with the order of the Tribunal so far as both these questions are concerned. The Tribunal was perfectly justified in taking the view that if the relief of tax holiday was granted to the assessee-company for the assessment year 1968-69, the asseessee was, therefore, entitled to continuance of that relief for the subsequent four years and the ITO would not be justified in refusing to continue the allowance for the assessment year under reference, i.e., 1969-70 without disturbing the relief for the initial year. At this stage, it should be noted that for purposes of entitlement to the relief under section 80J which is corresponding to section 15(c ) of the 1922 Act, an industrial unit claiming such relief must be new, in the sense, that new plants and machineries are erected for producing either the same commodities or some distinct commodities- Textile Machinery Corporation Ltd. v. CIT [1977] 107 ITR 195 and CIT v. Indian Aluminium Co. Ltd [1977] 108 ITR 367 . It should be emphasised that it was common ground between the parties that the assessee-company has increased the capacity of its cem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it did and we answer Question No. 1 in the affirmative, that is against the Revenue and in favour of the assessee. 8. So far as Question No. 2 is concerned, we -. are of the opinion that the Tribunal was justified in agreeing with the AAC who allowed the deduction on ₹ 1,051 being the value of the cement bags donated by the assessee to a charitable institution recognised under section 80G of the Act. The contention of the Revenue is that having regard to the provisions contained in sub-section (2)(a)( iv) of section 80G the deduction in respect of donation to a charitable institution is made in cash. In submission of the learned Advocate for the Revenue, this is the only construction possible on the plain reading of the relevant clause under which the deduction is sought and granted. The Tribunal was not impressed with this contention since in its opinion it is too technical a contention to which it could accede. The High Court of Bombay in Associated Cement Co.'s case (supra) at page 485 took the same view in similar circumstances. The Associated Cement Company had at the request of the University of Bombay fabricated a small rotary experimental furnace for the depa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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