Commissioner of Income Tax vs H.M.T. Limited (No. 2)

S.P. Bharucha, C.J.—In this reference under the Income Tax Act, 1961, we are concerned with assessment for the assessment year 1979-80. Three questions are referred. The first question reads thus :

"Whether, on the facts and in the circumstances of the case, the expenditure incurred in respect of the Dairy Machinery Unit is deductible as a expenditure laid out for the purposes of business of the assessee ?"

Counsel are agreed that the question must be answered in the affirmative and in favour of the assessee in view of the judgment of this court in the assessee''s own case Commissioner of Income Tax Vs. Hindustan Machine Tools (No. 2), The question is so answered.

The second question we are called upon to answer reads thus :

"Whether, on the facts and in the circumstances of the case, the assessee is entitled to extra shift allowance in computing depreciation for the water system and sanitation and technical documentation ?"

In so far as depreciation for water system and sanitation is concerned, the question is covered by the decision of the court in the case of Commissioner of Income Tax Vs. Motor Industries Co. Ltd., . In so far as the question relates to depreciation for technical documentation is concerned, it is covered by the judgment of the Supreme Court in Scientific Engineering House (P) Ltd. Vs. Commissioner of Income Tax, Andhra Pradesh, . Having regards to these judgments, the second question, as it is agreed, it to be answered in the affirmative and in favour of the assessee and it is so answered.

The third question to be answered reads thus :

"Whether, on the facts and in the circumstances of the case, the assessee was entitled to depreciation on the extra expenditure incurred on account of fluctuation in foreign exchange rate which was capitalised ?"

This question, it is agreed, is covered by the judgment of this court in the assessee''s own case, Hindustan Machine Tools Ltd. Vs. Commissioner of Income Tax, Karnataka-II, , and following that judgment, it has to be answered in the affirmative and in favour of the assessee. It is so answered.