TMI Blog1986 (4) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee-company was running a Mentha Research Demonstration Centre at Bilaspur in Uttar Pradesh. The raw material for manufacture of 'Vicks' product was mentha oil. This is derived from grass like peppermint plant 'Mentha Arvensis'. The assessee-company had set up a farm in 'Terai' area of Uttar Pradesh with headquarters at Bilaspur to grow Mentha Arvensis. The assessee-company encouraged the cultivation of the said 'Mentha Arvensis' in the adjoining areas by other farmers. Before the ITO, the assessee claimed weighted deduction under section 35C of the Income-tax Act, 1961 ('the Act') as agricultural development allowance on expenditure of Rs. 8,92,246 as per revised claim. The ITO allowed the weighted deduction of expenditure of Rs. 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Commissioner (Appeals), however, vide paragraph 10 accepted the assessee's claim in toto. He noted the assessee's contention that the assessee-company was the pioneer in introducing in India in 1965 cultivation of medicinal peppermint plant from which mentha oil was extracted which was used in the manufacture of 'Vicks' and other medicinal products of the assessee-company and the assessee-company had an experiment farm at Bilaspur which had laboratory and other equipments in which technician were employed and information was disseminated to farmers by distribution of literature and demonstration were held at the assessee's research farm as also at the individual farms of the cultivators and technical advice was rendered to the cultiva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material was also used in the assessee's own farm and for the purpose of demonstration and experiments. The Tribunal held that the entire expenditure was entitled to weighted deduction because research was carried out with the object of finding out the feasibility of cultivating some of the oil-bearing plants for obtaining quality oil. 10. The Commissioner (Appeals) also accepted the assessee's contention that expenditure on distillation services was entitled to weighted deductions because the distillation plant was covered by the term 'tools or implements'. Support was taken from Kanan Devan Hills Produce Co. Ltd. v. CWT [1968] 67 ITR 823 (Cal.) where a tea manufacturing company was assessed to the wealth-tax and question was whether ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eans 'an investigation directed to the discovery of some fact by careful study of a subject; a course of critical or scientific enquiry.' 13. As per the Living Webster Encyclopedia Dictionary, 1977 edn., 'research' means 'deligent enquiry or examination of seeking facts or principles; am experimental investigation.' 14. Thus, research is an independent activity carried on to improve existing knowledge and is experimented investigation or scientific enquiry. We are not told what research was carried on and how it was essentially with the object of demonstration or dissemination of information. Research could be for improvement in crop cultivation as also for quality control and improving the end product. 15. Research may take years to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , enlarge the scope of the provisions of section 35C(1)(b)(ii) by including on expenditure on 'research' under the head 'Demonstration' or 'Dissemination of information.' 19. We, however, do not approve the ITO being meticulous in holding that the assessee's bifurcation of expenses between research and demonstration needs tinkering. The assessee had followed a rough and ready method of allocating expenses between research and demonstration and there is no need to examine the allocation with a fine comb. We, accordingly, accept the assessee's claim of demonstration expenses at Rs. 2,16,449 which, according to us, is entitled to weighted deduction. However, the research expenses of Rs. 1,96,480 are not entitled to weighted deduction. 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ller of milk being paid on basis of fact content of milk is not availing of fat testing facility of milk dairy. 21. Distillation plant cannot be called a 'tool or implement' for use by cultivator despite the wide meaning given by the Calcutta High Court in Kanan Devan Hills Produce Co. Ltd.'s case and CWT v. Anglo-American Direct Tea Trading Co. Ltd. [1968] 69 ITR 260. 'Tool' of a farmer cultivating a small piece of land is essentially an 'instrument employed in manual labour for facilitating mechanical operations or any implement used by a labourer at his work', while an 'implement' similarly is an 'article assisting in carrying on manual labours' as per the Living Webster Encyclopedia Dictionary. 22. As per the Shorter Oxford English ..... X X X X Extracts X X X X X X X X Extracts X X X X
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