Delhi High Court
Sutlej Cotton Mills Ltd. vs Assistant Commissioner Of Income-Tax. ... on 31 October, 1997
Equivalent citations: (1998)60TTJ(DEL)1
ORDER
B. S. SALUJA, J.M. :
The assessee and the Department have filed cross-appeals for asst. yr. 1987-88 against the order of the CIT(A) Central-I, Calcutta dt. 21st March, 1991. The other appeal is filed by the Department against the order of CIT(A) Central-I, Calcutta dt. 21st January, 1992. Since these appeals were heard together the same are being disposed of by this consolidated order for the sake of convenience.ITA No. 2082/1991
2. Ground No. 1 raised by the assessee relates to disallowance made by the AO in respect of interest paid by the assessee to Customs Department, Excise Department and Rajasthan Electricity Board. The said ground was not pressed by the learned counsel. Hence this ground is rejected.
3. Ground No. 2 raised by the assessee relates to reduction of subsidy of Rs. 1,83,330 from the WDV of the fixed assets.
3.1. The AO observed that the assessee had received Rs. 1,63,280 as subsidy from J&K Govt. on installation of diesel generating set and has claimed that the same should not be reduced from the cost. The AO, however, did not accept the claim of the assessee and disallowed depreciation of Rs. 34,289.
3.2. On first appeal the learned CIT(A) observed that in the cases relied upon by the learned counsel for the assessee the subsidy had been received under the scheme of Central Govt. and that in the instant case subsidy had been received directly on diesel generating set and hence the judgment cited by the learned counsel were not applicable. He, therefore, confirmed the action of the AO in reducing the cost and disallowing depreciation of Rs. 34,289.
3.3. During the course of hearing the learned counsel for the assessee referred to the Special Bench Decision of the Tribunal in the case of Sutlej Cotton Mills Ltd. vs. Asstt. CIT (1993) 46 TTJ (Cal) (SB) 310 : (1993) 199 ITR 164 (AT), wherein the Tribunal confirmed the action of the AO in reducing the cost of the generator set by the amount of subsidy to arrive at the actual cost within the meaning of s. 43(1) of the IT Act. The learned Departmental Representative had nothing more to add in view of the said Special Bench decision of the Tribunal.
3.4. We have carefully considered the submissions made by both the parties on this issue in the light of the aforesaid decision of the Special Bench and in view of the said decision we see no reason to interfere with the orders of the learned CIT(A). This ground is, therefore, rejected.
4. Ground No. 3 raised by the assessee relates to deduction of Rs. 5 lakhs under s. 80G of the IT Act.
4.1. In this case the assessee had claimed deduction of an amount of Rs. 5 lakhs under s. 80G on account of donation paid to Vishwa Mangal Trust. On first appeal the said disallowance was confirmed.
4.2. During the course of hearing the learned counsel was fair enough to refer to the decision of the Special Bench in the case of the assessee reported in (1993) 46 TTJ (Cal) (SB) 310 : (1993) 199 ITR 164 (AT) (supra), wherein the Tribunal disallowed the claim of the assessee by relying on the decision of the Honble Calcutta High Court in the case of CIT vs. Upper Ganges Sugar Mills Ltd. (1985) 154 ITR 308 (Cal), whereby it was held that Vishwa Mangal Trust was not eligible for exemption under s. 80G. The learned Departmental Representative had nothing more to add in view of the aforesaid decision.
4.3. We have carefully considered the rival submissions on this issue in the light of the aforesaid decision and we see no reason to interfere with the order of the learned CIT(A) in confirming the disallowance. This ground is, therefore, rejected.
5. Ground No. 4 raised by the assessee relates to allowability of deduction under s. 80HH of the IT Act.
5.1. In this case the assessee claimed deduction of Rs. 27,38,700 under s. 80HH, which was reduced by the AO to Rs. 12,11,255. The AO reduced the claim of the assessee on the ground that for s. 80HH, unabsorbed investment allowance of Rs. 76,37,224 of earlier years which was set off against income of earlier years relating to other units had to be notionally carried forward and set off.
5.2. On first appeal the learned counsel for the assessee referred to the provisions of s. 80-I wherein there was specific provision for notional carry forward under sub-s. (6). He submitted that there was no corresponding provision in s. 80HH as in s. 80-I(6). He also referred to the fact that as per assessment order for 1984-85 and 1985-86 there was no carry forward of unabsorbed investment allowance and the AO should not have notionally carried forward such investment allowance before allowing deduction under s. 80HH. He relied on the judgment of the Supreme Court in the case of CIT vs. Canara Workshop (P) Ltd. (1986) 161 ITR 320 (SC). The learned CIT(A) considered the submissions and observed that the claim of the assessee amounted to giving benefit under s. 80HH of old units, which position was not acceptable and that the said point was not considered by the aforesaid judgment. He, therefore, confirmed the orders of the AO.
5.3. The learned counsel for the assessee submitted before us that deduction under s. 80HH was claimed in respect of unit No. 2 at Bhawani Mandi at Rs. 27,38,700. He further submitted that the Departmental authorities have only allowed a deduction of Rs. 12,11,255 by notionally setting off investment allowance of Rs. 76,36,244 related to eligible unit, although the same had already been absorbed against the profits of other units in the earlier years. He referred to the decision of the Honble Calcutta High Court in the case of CIT vs. Balmer Lawrie & Co. Ltd. (1995) 215 ITR 249 (Cal), wherein it was held that "the relief under s. 80-I of the IT Act, 1961, has to be calculated as if the profits and gains of the industrial undertaking "were the only source of income of the assessee during the previous years". This legal fiction is not to be found in s. 80HH of the Act. Therefore, for calculating relief under s. 80HH it has to be seen whether the gross total income of the assessee includes any profits and gains derived from a newly established industrial undertaking in a backward area. If that be the case, then the assessee has to be given relief calculated on the profits and gains of an amount equal to twenty per cent thereof. Past losses which have already been set off against other income of earlier assessment years cannot be set off once again against the profits of the new industrial undertaking in the current accounting year.
Where the entire income of the new industrial undertaking has been included in the gross total income there is no reason why the entire amount should not form the basis for calculation of relief under s. 80HH of the IT Act". The learned counsel further referred to the decision of the Honble Delhi High Court in the case of Modi Spinning & Weaving Mills Co. Ltd. vs. CIT (1993) 200 ITR 544 (Del), wherein it is held that loss and depreciation of earlier year already set off cannot be considered while allowing relief under s. 80J and that the said relief has to be allowed before deduction of any unabsorbed depreciation or carry forward of loss. He further referred to the decision of the Honble Supreme Court in the case of CIT vs. Patiala Flour Mills Co. Ltd. CIT (1978) 115 ITR 640 (SC) and in the case of Rajapalayam Mills Ltd. vs. CIT (1 (1978) 115 ITR 777 (SC). In the case of Patiala Flour Mills Co. Ltd. (supra) the losses, depreciation and development rebate in respect of cold storage plant for asst. yrs. 1967-68 to 1969-70 were adjusted against the profits from the other businesses in computing the total income of the assessee for those years and no loss or part of depreciation or development rebate remained unabsorbed so as to be available for carry forward and set off in the asst. yr. 1970-71. In the asst. yr. 1970-71 a profit of Rs. 1,51,011 was derived from the new industrial undertaking and the Tribunal held that the respondent-company was entitled to deduction therefrom of the relevant amount of capital employed during the previous year relevant to asst. yr. 1970-71 and then the deficiency for earlier years under s. 80J. The view of the Tribunal was confirmed by the Honble Supreme Court. In the case of Rajapalayam Mills Ltd. (supra) it was held by the Honble Supreme Court that "s. 15C(3) does not enact any legal fiction providing that the profits and gains of the new industrial undertaking shall be computed as if the new industrial undertaking were only business of the assessee from the date of its establishment or as if the past years depreciation or development rebate had not been set off against other income of the assessee. The new industrial undertaking is not retrospectively quarantined or isolated from the other income producing activities of the assessee for determining its profits or gains for the purpose of applicability of sub-s. (1) of s. 15C". It was further held that "neither depreciation allowance nor development rebate in respect of the new industrial undertaking for the past assessment years can be allowed as a reduction in computing the profits or gains for the assessment year in question, except where and to the extent to which it has not been set off against the total income of the assessee for those assessment years and has remained unabsorbed". The learned counsel further pointed out that the learned CIT(A), in the assessees own case, for asst. yrs. 1991-92 to 1993-94 directed the AO not to set off notional brought forward losses of the eligible undertaking for the purpose of computing deduction under s. 80HH.
5.4. The learned Departmental Representative relied heavily on the orders of the Departmental authorities. He further submitted that the decision of the Honble Calcutta High Court reported in (1995) 215 ITR 249 (Cal) (supra) was with reference to carry forward of losses and not investment allowance. He also referred to the orders of the Departmental authorities on this issue in relation to asst. yr. 1986-87.
5.5. The learned counsel in his rejoinder submitted that the matter in relation to asst. yr. 1986-87 had been restored to the learned CIT(A) which was not controverted by the learned Departmental Representative.
5.6. We have carefully considered the rival submissions on this issue and have also perused the orders of the Departmental authorities. We have also seen the case law relied upon by the learned counsel. We feel that the contentions of the learned counsel have force and are duly supported by the ratio of the decision of the Honble Supreme Court in the case reported in (1978) 115 ITR 777 (SC) (supra) and the decision of the Honble Calcutta High Court reported in (1995) 215 ITR 249 (Cal) (supra). In this connection the observations made by the Honble Calcutta High Court at pp. 252-253 and at p. 257 are relevant. Accordingly the AO is directed to allow the claim of the assessee without notionally bringing forward the investment allowance which has already been set off in the earlier years against profits of other units.
6. Ground No. 5 raised by the assessee relates to revaluation of investment held as capital assets. The said ground was not pressed by the learned counsel. Hence the same is rejected.
7. Ground No. 6 raised by the assessee is general in nature and needs no comments.
ITA No. 1775/19918. Ground No. 1 raised by the Department relates to directions issued by the learned CIT(A) to the AO to allow Rs. 6,43,808 being amount paid to Rajasthan State Electricity Board for laying additional lines as revenue expenditure.
8.1. In this case the AO treated the said amount paid to Rajasthan State Electricity Board for laying additional lines, to the assessees factory as capital expenditure.
8.2. On first appeal the learned CIT(A), however, for the reasons recorded in the order allowed the said expenditure as revenue expenditure. He observed in the process that the property in the additional lines vested in the Rajasthan State Electricity Board and not the assessee. He accordingly directed the AO to allow the said expenditure. The Department is aggrieved.
8.3. The learned Departmental Representative relied heavily on the orders of the AO. He submitted that the additional lines had been laid down in connection with the business of the assessee and that the assessee derived benefit of enduring nature, as the additional lines could not have been used by any other person and that the assessee had exclusive user of the said lines. He, therefore, urged that the AO rightly treated the said expenditure as capital in nature.
8.4. The learned counsel for the assessee, however, relied heavily on the orders of the learned CIT(A). He further referred to the decision of the Honble Bombay High Court in the case of CIT vs. Excel Industries Ltd. (198 (1980) 122 ITR 995 (Bom), wherein it was held that the payment made for overhead service lines which were to remain the property of the State Electricity Board was an expenditure in the nature of revenue expenditure. The learned counsel pointed out that SLP filed against the said decision has been dismissed by the Honble Supreme Court. He further referred to the decision of the Honble Supreme Court in the case of Empire Jute Co. Ltd. vs. CIT (1980) 124 ITR 1 (SC), wherein it was observed that "there may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, may, nonetheless, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid down in this test. What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test". The learned counsel pointed out that in the case of the assessee the advantage is not in the capital field. The learned counsel further referred to the decision of the Honble Delhi High Court in the case of Hindustan Times Ltd. vs. CIT (1980) 122 ITR 977 (Del), wherein it was held that amounts paid to municipality to lay new cables which were to belong to municipality with reference to change over to alternating current were not capital expenses but were allowable as business expenses. He further referred to the decision of the Honble Gujarat High Court in the case of CIT vs. Karamchand Premchand (P) Ltd. (1993) 200 ITR 281 (Guj), wherein it was held that amount paid to secure or augment electric power was revenue expenditure. In view of the foregoing decisions the learned counsel urged that the orders of the learned CIT(A) ought to be upheld.
8.5. We have carefully considered the rival submissions on this issue and have also perused the orders of the Departmental authorities. We have also seen the case law relied upon by the learned counsel. We feel that the contentions of the learned counsel have force in view of various decisions cited above. Accordingly we see no reason to interfere with the orders of the learned CIT(A) in this behalf. This ground is, therefore, rejected.
9. Ground No. 2 raised by the Department relates to directions issued to the AO to allow Rs. 16,220 paid to Rajasthan State Electricity Board for shifting of KV lines as revenue expenditure.
9.1. The AO treated the expenditure of Rs. 16,220 paid to Rajasthan State Electricity Board for shifting 11 KV lines installed at the assessees factory as capital expenditure.
9.2. On first appeal the learned CIT(A) treated the said expenditure as of revenue in nature. He relied on the decision of the Tribunal, Calcutta Benches in the cases of Andaman Timber India Ltd. dt. 11th September, 1985 in ITA Nos. 744-747 (Cal) 84.
9.3. The learned Departmental Representative relied on the orders of the AO.
9.4. The learned counsel relied heavily on the orders of the learned CIT(A) and he advanced the same arguments as in the case of ground No. 1 relating to payments made to Rajasthan State Electricity Board for laying additional lines.
9.5. We have carefully considered the rival submissions on this issue and for the reasons given in relation to ground No. 1 taken by the Department, we see no reason to interfere with the orders of the learned CIT(A) on this issue.
10. Ground No. 3 raised by the Department relates to deletion of the addition of Rs. 4,970 paid for traffic violations.
10.1. During the course of hearing the learned counsel was fair enough to mention that this issue has to be concluded against the assessee in view of the decision of the Tribunal, Delhi Benches on this issue. The learned Departmental Representative relied on the orders of the AO.
10.2. We have carefully considered the rival submissions on this issue and in view of the position stated by the learned counsel we set aside the orders of the learned CIT(A) on this issue and restore the addition of Rs. 4,970 on account of amounts paid for traffic violation.
11. Ground No. 4 raised by the Department relates to deletion of the addition of Rs. 9,146 given by the assessee to employees at the time of marriage.
11.1. In this case the assessee gave help to various employees at the time of marriage of their daughters. The AO, however, disallowed the said amount and made the addition.
11.2. On first appeal the learned CIT(A) observed that it was a normal welfare activity carried on by the assessee and such help was a regular feature in the case of the assessee. He, therefore, treated the said expenditure as normal business expenditure. He relied on the cases reported in Sassoon J. David & Co. (P) Ltd. vs. CIT (1979) 118 ITR 261 (SC) and the decision of the Tribunal in the case of Jiyajeerao Cotton Mills Ltd. dt. 17th May, 1990, in ITA No. 924 (Cal) 85.
11.3. While the learned Departmental Representative relied on the orders of the AO, the learned counsel relied on the orders of the learned CIT(A). The learned counsel further submitted that the Tribunal, Delhi Benches, in the asst. yr. 1985-86 upheld the order of the learned CIT(A) allowing deduction for sums given to the employees on the occasion of marriages, vide their order dt. 31st December, 1996 in ITA Nos. 2080 and 2205 (Del) 91.
11.4. We have carefully considered this issue in the light of the submissions made by both the parties and the aforesaid order of the Tribunal. Respectfully following the aforesaid order of the Tribunal, we decline to interfere with the order of the learned CIT(A) in this behalf.
12. Ground No. 5 raised by the Department relates to deletion of addition of Rs. 3090 on account of disallowance made under s. 40A(12) of the IT Act.
12.1. The AO observed that the assessee had paid total charges of Rs. 13,090 to Ketan & Co., M. L. Sharma & Co. and D. M. Harish & Co. as legal charges. He referred to the provisions of s. 40A(12) and held that only Rs. 10,000 were allowable. He, therefore, disallowed the balance amount of Rs. 3,090.
12.2. On first appeal the learned counsel for the assessee submitted that under s. 40A(12) the amount of Rs. 10,000 was allowable for each assessment year. In this connection he relied on the order of the CIT(A) Central-I, Calcutta in the case of Birla Buildings Ltd. in appeal No. 530/CIT(A)-CI/88-89 dt. 28th April, 1989. The learned CIT(A) accepted the contentions of the learned counsel and deleted the addition.
12.3. While the learned Departmental Representative relied on the orders of the AO, the learned counsel relied on the orders of the learned CIT(A). He further referred to the decision of the Tribunal, Calcutta Benches in the case of Asstt. CIT vs. Birla Building Ltd. reported in (1992) 43 ITD 586 (Cal), whereby it was held that the limit of Rs. 10,000 referred to in s. 40A(12) applied to proceedings of each assessment year. He further referred to the decision of the Tribunal dt. 28th July, 1997 in ITA No. 2081 and 2206 (Del) 91 in the case of the assessee for asst. yr. 1986-87, wherein the Tribunal considered its decision in the case of Birla Building Ltd. (supra) and noted that the limit of Rs. 10,000 prescribed under s. 40A(12) was in respect of expenditure incurred in each assessment year to which proceedings relate. The Tribunal had restored the matter back to the file of the AO for verification and decide the assessees claim in the light of the aforesaid decision.
12.4. We have carefully considered the rival submissions on this issue and have also perused the orders of the Departmental authorities. We have also seen the decision of the Tribunal on this issue. It is observed that the AO has not indicated clearly as to whether the total expenditure of Rs. 13,090 related to one assessment year or it has covered more than one assessment year. This position is also not clear from the order of the learned CIT(A). In the circumstances we feel that it will be just and fair to restore this issue to the file of the AO who may reconsider the issue in the light of the aforesaid decisions of the Tribunal and allow appropriate relief to the assessee as per law.
13. Ground No. 6 raised by the Department relates to directions issued to the AO to allow depreciation on assessees flat in Bombay for which there was no conveyance deed.
13.1. The AO noted that during the asst. yr. 1985-86 the assessee had purchased a flat at Mittal Court, Nariman Point, Bombay for Rs. 15,73,000. He further noted that an agreement for sale on a stamp paper for Rs. 5 between Shree Traders (P) Ltd. and the assessee was made on 26th August, 1984, and that no registered deed of conveyance had been made till the date of assessment. In view of the said facts the AO reduced the claim of depreciation made by the assessee.
13.2. On first appeal the learned CIT(A) noted that Mittal Court Premises Co-operative Society, transferred 5 shares of Rs. 50 each in favour of the assessee and also handed over possession of the premises. He further noted that the AO had relied on the decisions reported in CIT vs. South India Rubber Products (1987) 166 ITR 687 (Ker), 169 ITR 339 (sic), 165 ITR 65 (sic) and 103 ITR 403 (sic). The learned CIT(A) further observed that the learned counsel relied on the circular of the Board dt. 25th March, 1969 and the order of the CIT, Central-I in the case of Hindustan Motors Ltd. for asst. yr. 1985-86.
He agreed with the contentions of the learned counsel and directed the AO to allow depreciation as claimed by the assessee.
13.3. The learned Departmental Representative relied heavily on the orders of the AO and submitted that depreciation cannot be allowed unless the property is registered in the name of the assessee.
13.4. The learned counsel for the assessee relied on the orders of the learned CIT(A) and also referred to the recent judgment of the Honble Supreme Court in the case of CIT vs. Podar Cement (P) Ltd. (1997) 226 ITR 625 (SC), wherein it was held in the context of s. 22 that "owner is a person who is entitled to receive income in his own right and for purposes of that section, registration of sale deed is not necessary condition to constitute ownership. It was further held that the amendment to s. 27 by the Finance Act, 1987, was clarificatory in nature so far as the amendment related cls. (iii), (iiia) & (iiib). He also mentioned that the Honble Supreme Court have approved the decision of the Honble Allahabad High Court in the case of Addl. CIT vs. U.P. State Agro Industrial Corpn. (1981) 127 ITR 97 (All). The learned counsel urged that in view of the aforesaid decision the assessee should be treated as owner of the aforesaid flat and depreciation under s. 32 of the IT Act should be allowed. The learned counsel also pointed out that this issue has been restored in asst. yr. 1985-86 by the Tribunal to the file of the AO for verification and taking a decision in the light of evidence which the assessee may produce before him with reference to the plea that no registration is made in Bombay in respect of flats as is in the possession of the assessee and that question of registration does not arise. Similarly this issue has been restored by the Tribunal to the AO for asst. yr. 1986-87. He, therefore, submitted in the alternative that the matter could also be restored to the AO as he has yet to give a decision for asst. yr. 1985-86.
13.5. The learned Departmental Representative in his rejoinder submitted that the aforesaid decision of the Honble Supreme Court was strictly in the context of provision of s. 22 of the IT Act and that the same cannot be relied upon for allowing relief to the assessee by construing it as owner for purposes of s. 32.
13.6. We have carefully considered the submissions made by both the parties on this issue and have also perused the orders of the Departmental authorities. We have also seen the case law relied upon by the AO in his orders as also by the learned counsel. It is observed that the Tribunal had restored similar issues to the file of the AO for examination afresh. The Tribunal noted in the order dt. 28th July, 1997, that the AO has not rendered any decision on this issue so far. The Tribunal, therefore, concluded that it would be fair to restore the matter back to the file of the AO in the light of the directions given by the Tribunal in asst. yr. 1985-86. The Tribunal also directed the AO to take into consideration the decision of the Honble Supreme Court in the case of Podar Cement (P) Ltd. (supra). In view of the said factual position we feel that it will be proper to restore this issue to the file of the AO for adjudication afresh in the light of the aforesaid decision of the Honble Supreme Court.
14. Ground No. 7 raised by the Department is general in nature and needs no comments.
ITA No. 1086/199115. Ground No. 1 raised by the Department in this appeal relates to directions issued to the AO to allow interest of Rs. 1 lakh, being interest paid by the assessee on borrowed funds advanced as loans at 4 per cent to its subsidiary companies.
15.1. In this case the AO noted that the assessee-company had advanced unsecured loans to its subsidiary companies at the end of the accounting year. The said advance aggregated to Rs. 1,46,50,000 in the case of SCM Investment & Trading Co. Ltd. Similarly, the advance made to RTM Investment & Trading Co. Ltd. amounted to Rs. 1,59,00,000. The AO further observed that the payments had been made by the assessee from current account with Punjab National Bank, Calcutta and Bombay. For the reasons given in his orders the AO disallowed an amount of Rs. 1 lakh paid by the assessee to the bank on over drawls made from cash credit account. He held that the expenditure on interest was not for the purposes of assessees own business and that he was not eligible for deduction under s. 36(1)(iii) of the IT Act.
15.2. On first appeal the learned counsel for the assessee submitted that the amounts were advanced from the current account and that in the said account, funds were transferred from cash credit account maintained at Bhewani Mandi factory also. He also pointed out that the sale proceeds and other proceeds were deposited in the cash credit account and, therefore, the assessee was having a mixed fund and the loans were advanced out of such mixed funds. He also submitted that the loans were advanced out of surplus funds and the retained proceeds in the year including depreciation were for more than the loans advanced to the subsidiaries. The learned CIT(A) considered the submissions and observed that the loans were advanced to subsidiary companies for the purpose of strengthening their financial position and thereby improving their business prospects, with which the business prospects of the assessee-company are inseparably linked. He also referred to the decision reported in CIT vs. United Supply Agency (P) Ltd. (1986) 155 ITR 262 (Cal), at p. 268 and observed that unless it could be proved that the borrowings were completely unrelated to the purpose of business, the interest paid on such borrowings cannot be disallowed. He, therefore, deleted the disallowance of interest of Rs. 1 lakh.
15.3. The learned Departmental Representative relied heavily on the orders of the AO and submitted that the AO has been rather lenient in disallowing only Rs. 1 lakh. He relied on the decisions reported in Triveni Engg. Works Ltd. vs. CIT (1987) 167 ITR 742 (All) and Phaltan Sugar Works Ltd. vs. CWT (1994) 208 ITR 989 (Bom).
15.4. The learned counsel, on the other hand, relied on the orders of the learned CIT(A) and submitted that the AO has not shown that funds have been given out of borrowed funds. He submitted that the assessee had its own funds as far in excess of the advances given to the two subsidiary companies and that the AO has not proved any nexus of such advances with the borrowed funds. In this connection the learned counsel referred to the balance-sheet as on 31st March, 1988 and the P&L a/c for the year ending 31st March, 1988 (pp. 102 and 103 of the paper-book). He submitted that the profit before depreciation and tax amounted to Rs. 6,16,04,554. He further referred to p. 105 of the paper-book and submitted that the capital reserves and other reserves amounted to more than Rs. 61,18,15,175. He further pointed out that the revenue reserve and surplus alone amounted to more than Rs. 13 crores. In the circumstances he submitted that the assessee-company had surplus funds and that there is no reason to interfere with the orders of the learned CIT(A).
15.5. We have carefully considered the submissions made by both the parties and have also perused the orders of the Departmental authorities and other documents placed in the paper-book to which our attention was invited during the course of hearing. We feel that in view of the overwhelming evidence placed before us we agree with the line of reasoning of the learned CIT(A) in deleting the disallowance of Rs. 1 lakh. This ground is, therefore, rejected.
16. Ground No. 2 raised by the Department relates to deletion of disallowance of Rs. 21,582 being the amount given to employees at the time of marriages.
16.1. The learned Departmental Representative and the learned counsel advanced the same arguments before us as in the case of similar ground for asst. yr. 1987-88.
16.2. Keeping in view our decision on the aforesaid ground in the appeal for asst. yr. 1987-88, we decline to interfere with the orders of the learned CIT(A) on this issue.
17. Ground No. 3 raised by the Department relates to deletion of disallowance of Rs. 11,458 on account of payment of fines for traffic violations.
17.1. The learned Departmental Representative and the learned counsel advanced the same arguments as were advanced in relation to similar ground for asst. yr. 1987-88.
17.2. Keeping in view our decision on similar ground for asst. yr. 1987-88 we restore the orders of the AO in relation to this addition.
18. In the result, all the three appeals are allowed in part.