TMI Blog1974 (12) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... e following amounts : (1) Rs. 3,28,591 as publicity and advertisement expenses, being the amount spent by it on the publication of a brochure which was brought out at the time of its golden jubilee : (2) Rs. 16,525 and Rs. 1,750, being the legal expenses incurred in effecting certain alterations in the memorandum and articles of association of the company ; and (3) Rs. 1,78,277 being the deficit in obsolete machinery on actual verification. Each of the three questions referred to us relates to these items. As far as the first item of Rs. 3,28,591 is concerned, in my opinion, the question as to whether the brochure published on the occasion of the golden jubilee of the company could be said to be in the nature of publicity or adver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, strenuously contended that the item of Rs. 16,525, which related to the legal expenses incurred for the purpose of altering the memorandum and articles of association of the assessee-company in regard to contributions, inter alia, to political institutions, cannot be allowed as a deduction. Mr. Joshi's contention was that, at any rate, as far as the memorandum is concerned, what is sought to be done is to affect the permanent structure of the company and, therefore, the expenditure is in the nature of capital expenditure, the deduction of which should not have been allowed. The nature of those amendments can be gauged from the case of Jayantilal Ranchhoddas Koticha v. Tata Iron Steel Co. Ltd. [1957] 27 Comp Cas 604 (Bom). The Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discarded plants. When the discarded plants were eventually sold, the profit on sale was duly brought to account, after making an adjustment in regard to the value of the discarded assets retained as stated above. Over a period of years the debit raised in respect of the 1% value of the discarded plants got accumulated and could not be directly connected with the sales thereof made from time to time. During the year of account the assessee-company had obtained a surplus on sale of discarded plants of Rs. 7,89,211, and after making adjustment referred to above, had brought to account the sum of Rs. 6,06,361 as profit liable to tax under section 10(2)(vii) of the Act. The assessee also made a simultaneous claim for a deduction of Rs. 1,78,277 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration, corresponding to the assessment year 1958-59, with which the court is concerned in the present case. I need not consider what should be the proper mode of accounting in this respect, for section 13 of the Indian Income-tax Act, 1922, lays down that income, profits and gains must be computed for the purposes of the Act in accordance with the method of accounting regularly employed by the assessee. Mr. Kolah has, therefore, contended that this is the way in which the assessee has, at all times, kept its accounts in regard to the item which I am now considering. Indeed, it would be difficult for a company which carries on business of the magnitude of the assessee-company to fix in which particular year a particular plant which was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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