COMMISSIONER OF INCOME TAX Vs. POLYCHEM LIMITED

JUDGEMENT

(1.) THE assessee in this reference is M/s. Polychem Ltd., Bombay. The business of the assessee -company is the manufacture of polyester. We are concerned with the assessment years 1958 -59 and 1959 -60, the relevant previous years being the year ended on 31st March, 1958, and 31st March, 1959.

(2.) FOR the purpose of its business the assessee -company has procured necessary machinery abroad and after importing various items had them erected. In this reference we are not concerned with the cost of the machinery and the erection charges paid by the assessee -company to Messrs. Dodsal Private Ltd. and other companies which helped in the erection. Apart from these sums the assessee -company claimed a further amount of Rs. 3,97,561. Accordingly to the assessee -company, this amount was required to be treated as forming part of the actual cost of the plant and machinery so as to qualify for allowance of depreciation and development rebate allowable under section 10(2) of the Indian Income -tax Act, 1922. This claim was not accepted by the Income -tax Officer, whose disallowance was confirmed in appeal by the Appellate Assistant Commissioner. Being aggrieved by the said order, the assessee -company preferred an appeal to the Income -tax Appellate Tribunal.

(3.) IT may be mentioned that out of this amount the allowance of Rs. 69,354.27, being the salaries paid to engineers and technicians, and technical fees of Rs. 1,20,062.50 are, in this reference, not dispute only the balance amount of Rs. 84,180.37.