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1987 (10) TMI 89

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..... The assessee appealed to the CIT(A) who has stated in his impugned order on the basis of the statement made before him on behalf of the assessee that Shri and Smt. Birla and Shri and Smt. B.P. Singhi went to Kenya at the invitation of the Kenyan Authorities at the time of inauguration of the expansion programme of Pan African Paper Mills (EA) Ltd., to which the assessee company has been rendering technical know how services for more than a decade. The inauguration of the expansion programme was done by the President of Kenya and all Ministers and high officials of the Kenyan Government were present on the occasion. Shri G.P. Birla and Shri B.P. Singhi being the Chairman and President respectively of the assessee company and also being Directors of Pan African Paper Mills (E.A.) Ltd., were, according to local customs and protocols, expected to be present with their wives at the inauguration ceremony. It was also stated before the CIT(A) on behalf of the assessee that the two ladies went to Kenya under these circumstances. It was submitted that the expenditure incurred should have been allowed as a business expenditure. The CIT(A), however, did not accept the submissions made on beha .....

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..... company accompanied the husband because of business consideration. It is noticeable that in that case the assessee company had filed a copy of the application made by the assessee company to the Reserve Bank of India for release of foreign exchange for the Chairman and his wife which indicated that they were proceeding abroad for business purposes. The evidence further indicated that the Chairman and Chief Executive of Glaxo Holding and extended invitation to the Chairman of the assessee company and his wife and that the wife was accompanying her husband as a number of social engagements were included in the programme. No such evidence is forthcoming in the case in hand. On the basis of the decision in the case of Glaxo Laboratories (India) Ltd., it cannot be said that the foreign travelling expenses of the two ladies should be allowed as business expenditure. 7. In the case of J.K. Synthetics Ltd. the Tribunal records the finding that the foreign tours of the two Directors of the assessee company became a necessity for the purpose of the company's business and it also became necessary for their wives to accompany them. On the facts of the case it was held by the Tribunal that .....

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..... . 37. The order of the CIT(A) on the point is accordingly confirmed. 9. The next ground states that the CIT(A) erred on the facts of the case and in law in confirming the disallowance of Rs. 48,221 being the interest paid to the IT Department. 10. The assessee paid interest of Rs. 40,221 to the IT Department under s. 221 of the IT Act, 1961 for the asst. yr. 1976-77. The ITO was of the view that this expenditure was not allowable in view of the decision of the Calcutta High Court in the case of National Engineering Industries Ltd. vs. CIT (1978) 113 ITR 252 (Cal). This disallowance was confirmed in appeal by the CIT(A). 11. We have heard learned authorised representative of the parties. In the case of National Engineering Industries Ltd., the Calcutta High Court has held that the amount of interest paid by the assessee under s. 220(2) for delayed payment of taxes was not an allowable deduction in computation of the total income of the assessee. This decision which is binding on us thus concludes the issue against the assessee. We, therefore, decline to interfere with the order of the CIT(A) on this point. 12. The assessee sought leave to raise the following two addition .....

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..... as been allowed by the Tribunal against which the Department has filed reference applications to the High court which was pending. The ITO was of the view that in view of the provision as it stood at present the gratuity on provisional basis has been allowed in the said two years and the same gratuity on actual payment basis cannot be allowed against. The ITO's order on the point was substituted in appeal by the CIT(A). 17. We have heard learned authorised representatives for the parties. Similar issue cane up for consideration before the Tribunal for the asst. yr. 1979-80. The Tribunal held that the disallowance made by the ITO and sustained in appeal by the CIT(A) in quite proper, because the same deduction cannot be allowed twice Respectfully following the order of the Tribunal for the asst. yr. 19790-80, we reject the additional ground No. 2. 18. We now take up the appeal filed by the Department. The first ground stated that on the facts and in the circumstances of the case the CIT(A) was not justified in directing the ITO to allow under s. 35(1)(iv)(v) the capital expenses of Rs. 17,90,692 incurred by the assessee on neration cum exidation plant for affluent treatment. B .....

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..... oss fees receivable of 7664120 Ksh. (Rs. 83,42,353) the net amount of 7378479 Ksh (s. 80,31,434) as remitted to India by the foreign company after deduction of Kenyan tax of Ksh 285641 (Rs. 3,10,919) Has been shown by the assessee as its income. The ITO was of the view that the assessee should have shown in its accounts the gross fees and then claimed appropriate admissible relief. If any, in terms of s. 80-O/91. Following his order of the immediately preceding assessment year the ITO added Rs. 3,10,919 in the computation of the assessee's income from business. He was further of the vie that no deduction was allowable thereon under s. 80-O as the amount was neither received nor brought into India by and on behalf of the assessee. The ITO, therefore, declined to allow deduction under s. 80-O on the amount of Rs. 3,10,919. The CIT(A) following his order for the earlier assessment years directed the ITO to allow similar relief for the asst. yr. 1980-81 also. 21. We have heard learned authorities representative for the parties. Similar issue was considered by the Tribunal in its order for the asst. yrs. 1978-79 in paras 11 12 of its order. The Tribunal in that case, following its .....

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..... as considered by the Tribunal for the asst. yr. 1979-80 in the assessee's case and the Tribunal upheld the order of the CIT(A) excluding the reimbursement of medical expenses while computing the disallowance to be made under s. 40A(5). Respectfully following the decision of the Tribunal for the asst. yr. 1979-80, we uphold the order of the CIT(A) on the point. 26. The next ground states that on the facts and in the circumstances of the case the CIT(A) was not justified in deleting the addition of Rs. 20,000 made under s. 40A(5) being the estimated amount of disallowable perquisites on account of municipal tax and repair charges incurred by the assessee on the premises occupied by Shri B.P. Singhi. The assessee did not take into account the perquisite value in respect of proportionate municipal taxes and repair charges incurred by the assessee for the portion of the premises occupied by Shri B.P. Singhi. The ITO disallowed Rs. 20,000 under s. 40A(5) being the estimated value of perquisites in respect of proportionate municipal taxes and repair charges incurred for the portion of the premises occupied by Shri B.P. Singhi. The disallowance was deleted by he CIT(A) in appeal. 27. .....

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