Law:

Section:

Section 35C of the Income-tax Act, 1961 - Agricultural development allowance - Assessment year 1983-84 - Assessee-company, engaged in manufacture of sugar, claimed weighted deduction on certain expenses under section 35C - Assessing Officer disallowed 50 per cent of expenditure on maintenance of motor vehicles and 60 per cent of travelling expenditure on ground that they did not qualify for weighted deduction - He also disallowed entire expenditure incurred on transport of fertilizers from godown to agricultural land - Whether in absence of any material placed on record to substantiate that entire expenditure incurred for maintenance of motor vehicles as well as travelling expenditure incurred would come within qualifying expenditure as mentioned in section 35C(b), Assessing Officer was justified in apportioning expenditure and disallowing a portion thereof - Held, yes - Whether, however, entire expenditure incurred on transport of fertilizers would qualify for weighted deduction as it was a service within meaning of section 35C(b)(i) - Held, yes FACTS The assessee-company, engaged in manufacture of sugar using sugar cane as raw material, claimed weighted deduction on certain expenses under section 35C. However, the Assessing Officer disallowed 50 per cent of expenditure incurred on maintenance of motor vehicles in the cane department, 60 per cent of travelling expenses of the cane department and entire expenditure on transport of fertilizers on ground that amounts, so disallowed, did not qualify for weighted deduction in terms of section 35C(b). On appeals, the Commissioner (Appeals) as well as the Tribunal upheld the order of the Assessing Officer. On reference : HELD Insofar as the expenditure on maintenance of motor vehicles and travelling expenses incurred in the cane department were concern, it was found that the Assessing Officer disallowed 50 per cent of the expenditure on maintenance of motor vehicles and 60 per cent of the travelling expenditure in the cane department following the order of the Commissioner (Appeals) for the earlier assessment year 1982-83 and that the order had been accepted by the assessee. The Tribunal had the opportunity to look…

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