TMI Blog1973 (11) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... is reference we are not concerned with the cost of the machinery and the erection charges paid by the assessee-company to Messrs. Dodsal Private Ltd. and other companies which helped in the erection. Apart from these sums the assessee-company claimed a further amount of Rs. 3,97,561. According to the assessee-company, this amount was required to be treated as forming part of the actual cost of the plant and machinery so as to qualify for allowance of depredation and development rebate allowable under section 10(2) of the Indian Income-tax Act, 1922. This claim was not accepted by the Income-tax Officer whose disallowance was confirmed in appeal by the Appellate Assistant Commissioner. Being aggrieved by the said order, the assessee-company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and technicians, and technical fees of Rs. 1,20,062.50 are, in this reference, not disputed as allowable by the Commissioner, and the Commissioner has disputed only the balance amount of Rs. 84,180.37. As regards this amount, the following question was framed by the Tribunal as directed by the High Court in its order under section 66(2) of the Act: "Whether, on the facts and in the circumstances of the case, the assessee-company is entitled to include Rs. 84,181 (Rs. 2,73,597 minus salaries to engineers Rs. 69,354 and technical fees Rs. 1,20,062.50) in arriving at the original cost of machinery and plant for purposes of computing depreciation and development rebate admissible to it ?" The short question involved in this reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seems to us to be the actual cost to him of acquiring and installing that machinery. The term, therefore, guides one to the conclusion that all expenditure on the machinery by the assessee will be the actual cost to the assessee. The actual cost, therefore, to the assessee is what be in fact expends or lays out for acquiring and installing the asset, in this case the machinery. It is true that such an expenditure would vary from assets to assets and would depend upon its nature and availability. For example, in a case of cost of a cinema theatre, the said term would include the payment made to a third party for assistance in preparing plants for the construction and for securing permits, priorities, import licences and foreign exchange ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intimately on the machinery installed. I now propose to briefly deal with these items one by one. The first item is the amount of Rs. 3,031.09 claimed by the assessee-company as travelling expenses of its plant engineers and works manager in connection with their trips to Calcutta and were incurred, as the note at page 24 of the paper book (part of annexure "C") shows, in connection with inspection and placing orders for plant and machinery. It may be stated that the amount of Rs. 35,519-9-6 claimed by the assessee-company as travelling expenses for its directors' trip abroad was disallowed. In my opinion such expenses incurred, as the note suggests, by the technical personnel for the purpose mentioned in the note must be regarded as di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Tribunal is the sum of Rs. 2,238.97 for printing and stationery expenses. The details of these expenses are to be found at page 38 of the paper book. On going through these details it appears to me that almost all of these printing and stationery expenses have no connection with the acquisition and installation of the machinery; and, therefore, this is one item which could not be allowed to the assessee. In respect of this item, therefore, I am of the view that the contention of the revenue must be accepted in toto. The next item which the revenue has called in question is the amount of Rs. 36,405.19 allowed by the Tribunal as technical training expenses. It appears from annexure "C" at pages 26 and 27 of the paper book that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found at page 29 of the paper book (part of annexure "C"), and the further break-up at pages 31 to 34 of the paper book. Out of the aggregate amount of Rs. 78,897.60 claimed by the assessee, according to the Tribunal, the allowable expenses which would be part of the actual cost incurred by the assessee for erection and installation of the machinery would be Rs. 36,406. How this figure has been worked out has not been stated by the Tribunal in its order. But it may be mentioned that an amount of Rs. 46,675-12-6 has been shown by the assessee-company as salaries paid to its technical staff, viz., the works manager, engineers and others during these four months' period. Even this figure is more than the amount allowed by the Tribunal under th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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