M/S. J.K. Synthetics Ltd. vs Commissioner Of Income Tax
2011 Latest Caselaw 2704 Del

*                     THE HIGH COURT OF DELHI AT NEW DELHI

                                       Judgment delivered on: 19.05.2011

+                                    ITR No. 13/1993


M/S. J.K. SYNTHETICS LTD.                                   ...... APPELLANT


                                             Vs


COMMISSIONER OF INCOME TAX                                  ..... RESPONDENT

Advocates who appeared in this case:

For the Appellant : Mr. P.N. Monga & Mr. Manu Monga, Advocates For the Respondent : Mr. N.P. Sahni & Mr. Rakesh Sinha, Advocates

CORAM :-

HON'BLE MR JUSTICE SANJAY KISHAN KAUL HON'BLE MR JUSTICE RAJIV SHAKDHER

1. Whether the Reporters of local papers may be allowed to see the judgment ?

2. To be referred to Reporters or not ?

3. Whether the judgment should be reported in the Digest ?

SANJAY KISHAN KAUL, J (ORAL)

1. The captioned reference pertained to assessment year 1984-85. The reference is

at the behest of the assessee. We have been called upon to adjudicate the following

question of laws:

(i) Whether on the facts and in the circumstances of the case, the Ld. ITAT

was legally justified in holding that only 50% of the total expenses of Kamla

Retreat is admissible as revenue deduction?

(ii) Whether on the facts and in the circumstances of the case, the Ld.

Tribunal was right in law to hold that disallowance of depreciation on guest

house building amounting to Rs 1,10,606/- was warranted and that the

provisions of Section 37(4) have overriding effect over the provisions of

Section 32 of the Act?

(iii) Whether on the facts and in the circumstances of the case, the Ld.

Tribunal was legally justified in holding that the expenditure of Rs 21,950/-

(Rs. 15000/-, Rs. 6,590/-) on feasibility reports of the projects which was

finally abandoned was capital expenditure?

(iv) Whether on the facts and in the circumstances of the case, the Tribunal

was legally justified in disallowing the retainership fee paid to two

consultants amounting to Rs 1,52,000/- holding the same to be of capital

nature?

(v) Whether on the facts and in the circumstances of the case, the Ld.

Tribunal was legally justified in confirming the disallowance on travelling

expenses amounting to Rs 10,974/- on the ground that it relates to new

project and dos not relate to existing business?

(vi) Whether on the facts and in the circumstances of the case, the Ld.

Tribunal was legally justified in confirming the disallowance of foreign

travelling expenses amounting to Rs 94,560/- incurred in connection with the

mini Hydel plant and set up holding the same to be capital expenditure?

(vii) Whether on the facts and in the circumstances of the case, the Ld.

Tribunal was legally justified in holding that two amounts of Rs 22,238/- and

Rs 11,716/- out of foreign tour expenses to be capital nature?

(viii) Whether on the facts and in the circumstances of the case, the Ld.

Tribunal was legally justified in holding that tour expenses to Kenya

incurred on the employees of the company amounting to Rs 5,288/- do not

qualify for weighted deduction under Section 35B of the Act?

(ix) Whether on the facts and in the circumstances of the case, the Ld. ITAT

was legally justified in holding that interests of Rs 40,18,498/- payable on

the provisional retention price received as per the hon'ble Delhi High

Court's order is not admissible deduction?

(x) Whether on the facts and in the circumstances of the case, the Ld. ITAT

was legally justified in holding that expenditure on samples (Rs 1,40,376),

export market development expenses (Rs 23,081) and tour expenses to attend

seminars & trades (Rs 27,757) are hit by the provisions of Section 37(3A)?

2. In so far as question no. (i) is concerned, a similar question of law was returned

unanswered by this court while rendering its decision in ITR No. 138/1988. We are

informed that the question in ITR 138/1988 was returned unanswered because of the

amount being miniscule. We adopt the same methodology in the instant case as the

amount involved is Rs 88,588/-. The question is returned unanswered. The result in

effect is that the finding of the Tribunal will stand sustained. The question is answered

against the assessee.

3. In so far as question nos. (ii) to (viii) & (x) are concerned the learned counsel for

the assessee says that in view of the amount being miniscule, he does not wish to press

the said questions. Accordingly, these questions are returned unanswered.

4. In so far as question no. (ix) is concerned, we have answered a similar question in

ITR No. 368/1992. In the said ITR we have come to the conclusion that since the

liability had not crystalised in the assessment year in issue, no deduction could be

claimed by the assessee. Both parties agree that the same course of action be employed.

Accordingly, we direct this question is decided in favour of the revenue for the

assessment year in issue.

5. With the aforesaid observations the reference is disposed of.

SANJAY KISHAN KAUL,J

RAJIV SHAKDHER, J MAY 19, 2011 kk