Law:

Section:

JUDGMENT Ismail, J.—The Income-tax Appellate Tribunal, Madras Bench, has referred the following question for the opinion of this court under section 256(1) of the Income-tax Act, 1961: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the indirect expenses like interest and banking charges, managing agency remuneration, sitting fees, etc., should be considered as part of the actual cost of the assets for entitlement of depreciation and development rebate?" The assessee is a company engaged in the manufacture of meters. It commenced production in or about October, 1963. The previous year adopted for assessments is the year ended 31st March. During the previous years relevant to the assessment years 1962-63, 1963-64 and 1964-65, the assessee incurred expenses to the extent of Rs. 5,70,624 consisting mainly of interest and bank charges, advertisements audit fees, filing fees, managing agency remuneration, sitting fees, rent and lighting, cost of technical know-how, etc. The company capitalised this expenditure and added it to the cost of assets in its accounts. For the purpose of assessments, it claimed depreciation on such capitalised expenditure and also development rebate in respect of such expenditure allocated to plant and machinery for the assessment years 1964-65, 1965-66 and 1966-67. The Income-tax Officer allowed the assessee's claim only to the extent of Rs. 1,33,565 paid towards cost of the technical know-how to the foreign collaborators and negatived its claim in respect of the remaining part of the expenditure on the ground that they were not directly incurred for the erection or construction of plant and machinery or buildings, holding that though the actual cost was not defined in the Act, in normal parlance, it could only mean the sum actually spent for the acquisition of the assets and not the indirect expenses and that, therefore, depreciation and development rebate were not admissible on the sum so capitalised. The assessee preferred appeals against all the three assessments. The Appellate Assistant Commissioner in those three appeals held that the assessee's claim has to be…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492