Law: Income Tax Act, 1961

Section: 37,80,80J

(a) Income-tax--Business expenditure---Travel---Expenditure on foreign tour of Director to attend meeting of International Chamber of Commerce ---Deductible--­Indian Income Tax Act, 1961, S..37. The provisions of section 80J of the Income Tax Act, 1961, which are intended to encourage the setting up of new industrial enterprises have to be construed liberally. The deduction under that section has to be allowed in full without reducing the same in proportion to the part of the year during which the undertaking was not in productive operation. The Central Board of Direct Taxes has accepted the interpretation placed on the phrase "per annum" by the Madras and Karnataka High Courts and vide its Circular No. F No.178/227/83-IT(Al), dated March 3, 1984, has issued instructions that deduction under section 80J should not be reduced proportionately with reference to the period for which the business of the undertaking was not carried on during the relevant previous year. CIT v. Simpson & Co. (1980) 122 ITR 283 (Mad.); CIT v. Mysore Petro-Chemical Ltd. (1984) 145 ITR 416 (Kar.) and CIT v. Sanghi Beverages (Pvt.) Ltd. (1982) 134 ITR 623 (MP) for. Held, (i) that the expenditure incurred by the assessee on the foreign tour of Dr. B to attend the meetings of the International Chamber of Commerce was deductible in computing its business income for the assessment year 1970-71. Delhi Cloth and General Mills Co. Ltd. v. CIT (1986) 158 ITR 64 (Delhi) fol. (ii) that the expenditure incurred by the assessee for running the D.C.M. Football tournament was an admissible deduction for arriving at its profits from business. Delhi Cloth and General Mills Co. Ltd. v. CIT (1992) 198 ITR 500 (Delhi) fol. (b) Income-tax----Business expenditure---Expenditure on running football tournament--­Deductible--- Indian Income Tax Act, 1961, S.37. (c) Income-tax--- ----New industrial undertaking---Special deduction---Special deduction allowable for entire accounting year although undertaking worked only for part of the year---Indian Income Tax Act, 1961, S.80J. THIS JUDGMENT DELIVERED BY: ARUN KUMAR, J.---In respect of the assessment year 1970-71, the Income-tax Appellate Tribunal has referred…

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