TMI Blog1981 (8) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... in the circumstances of the case, the sum of Rs. 10,000 out of Rs. 19,083, being foreign travelling expenses, has been rightly treated as capital expenditure not allowable as a deduction in the computation of the assessee's total income ? " As para. 6 of the statement of the case indicates, question No. (1) was referred as arising out of the application by the Commissioner. Question No. (2), according to the statement of the case, arose out of the reply filed by the assessee to the Commissioner's application. It would appear that the view of the Supreme Court as disclosed in CIT v. V. Damodharan [1980] 121 ITR 572, seems to be that unless the two questions are interconnected, such a reference on a reply will be incompetent. It is clear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of rayon yarn, tyre cord and chemicals. The assessee proposed to set up a plant at Nanjangud in Mysore State for the manufacture of pulp from bamboo. According to the ITO, although pulp is admittedly the principal raw material for the manufacture of viscose rayon, the bamboo pulp project contemplated by the assessee was new and altogether different from the business carried on by the assessee during the instant year. The ITO accordingly was of the opinion that the expenditure was not related to the business within the meaning of s. 35(1)(i) of the I.T. Act, 1961. Accordingly he disallowed the claim. The assessee being aggrieved by the disallowance carried the matter before the AAC, who has in paras. 8, 9 and 10 of his order dealt with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elated to the business of the assessee-company. He also contended, in the alternative, that the claim be allowed under s. 37. On behalf of the Revenue it was urged that the expenditure was not allowable because, (i) the research was not carried on by the assessee-company itself, (ii) the scientific research had no relation with the business of the assessee-company. It was further submitted that the claim was not allowable even under s. 37 of the I.T. Act because it was not incurred wholly and exclusively for the purpose of the assessee-company's business, which was clearly the manufacture of rayon yarn, tyre cord and chemicals. The Tribunal rejected the contention advanced on behalf of the Department, that the research was required to be ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch must have been carried on by the assessee-company itself, is not borne out by the phraseology of the statutory provision. In CIT v. CBI of India Ltd. [1968] 69 ITR 692, where the Supreme Court was, inter alia, considering s. 10(2)(xv) of the Indian I.T. Act, 1922, it has been made clear that an assessee can claim the amount as a permissible deduction although the research was carried on by some other persons, provided the research was carried on for or on behalf of the assessee. It does not appear to have been urged before the Tribunal that the International Paper Company, or more accurately its Mobile Research Laboratory at Alabama, had not carried on the said research for or on behalf of the assessee-company. The bald argument that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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