Law:

Section:

section 80J of the Income-tax Act, 1961 - Deductions - Profits and gains from newly established industrial undertakings - Whether amount payable but not paid for technical know-how, etc., to foreign company was includible as capital employed for purpose of deduction under section 807 - Held, no Facts An American company with whom the assessee-company was having a collaboration agreement, had provided the assessee with the know-how, patents and rights on use of trade marks relating to all catalysts excepting those mentioned in the agreement, and towards which the assessee had to pay certain amounts during the assessment years 1972-73 and 1973-74. The assesses claimed that since these amounts were not paid at the relevant time, they constituted debts owed by the assessee and consequently, the same was liable to be deducted from the aggregate of the amounts representing the value of the assets as on the first day of the computation period of the undertaking, while determining the capital employed by the assessee, for the purpose of deduction under section 80J. On reference : Held The matter was already concluded against the assessee by the decision of the Supreme Court in Lohia Machines Ltd. v. Union of India[1985] 152 ITR 308,The said dues were at par with moneys borrowed and hence could not be said to be capital employed in the industrial undertaking. Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessee supplied certain goods to firm C and had business connection with a company in US from which firm had imported certain catalysts - Since these catalysts were defective, firm 'C' decided to return them to American company and assessee-company offered to pay freight and customs duty in connection with return of these goods - Whether Tribunal justified in allowing deductions claimed - Held, on facts, yes Facts At the relevant time the assessee-company was having an order to supply its products, catalysts of a certain value to a certain firm 'C' That firm had imported catalysts of a particular specification from a US company with whom the assessee was having business connection as a collaborator. Since the imported goods were…

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