COMMISSIONER OF INCOME TAX Vs. RAMCO INDUSTRIES LTD

JUDGEMENT

(1.) THE revenue on appeal against the order of the Income Tax Appellate Tribunal, dated 07. 10. 2005 passed in ITA Nos. 950,951, 1044, 1128/mds/2000 in respect of the assessment years 1995-96 and 1996-97.

(2.) FOR the assessment years 1995-96 and 1996-97, the assessee filed its return of income. The Assessing Officer inter-alia disallowed the rent paid for guest house u/s 37 (4); expenditure on sieve cylnder and motor and templates as capital expenditure. The Assessing Officer also held that sales tax and excise duty elements are to be included in the total turnover for the purpose of calculation of deduction u/s 80hhc. On appeal, the Commissioner of Income Tax (Appeals) confirmed the disallowance on guest house expenditure, upheld the action of the Assessing Officer on the issue of inclusion of sales tax and excise duty in the total turnover for 80hhc, and decided the issue regarding replacement of machinery and templates in favour of the assessee. The Tribunal on appeal held all the above issues in favour of the assessee. The correctness of the same is now canvassed before this Court in these appeals by formulating the following questions of law:-"1. Whether in the facts and circumstances of the case, the Tribunal was right in holding that expenditure on renting and maintaining a guest house is allowable as a business expenditure? 2. Whether in the facts and circumstances of the case, the Tribunal was right in excluding sales tax and excise duty from the total turnover for the purpose of calculation of benefit u/s 80hhc?

(3.) WHETHER in the facts and circumstances of the case, the Tribunal was right in allowing a deduction of the amounts spent on replacement of machinery as revenue expenditure?