Commissioner of Income Tax vs West Coast Paper Mills Ltd.

Three questions arise for consideration in this appeal.

In the assessment year in question, the assessee claimed deduction of Rs. 21,78,401 on account of dearness allowance paid pursuant to the interim order passed in a pending writ petition before this court. This was disallowed on the ground that the amount was not allowable either in the year of the award or in the year when the matter became final. However, the Tribunal rightly came to the conclusion that in the earlier years, the claim of the assessee on account of dearness allowance stood granted by the Assessing Officer. In the circumstances, there is no reason for the Assessing Officer, in the present case to take a different view and disallow the said amount of dearness allowance.

As regards the amount spent by the assessee on presentation articles is concerned, it may be mentioned that the Assessing Officer disallowed the expenditure of Rs. 2,45,000 under rule 6B of the Income Tax Rules, 1962, on the ground that requisite details of the amount spent on presentation of articles had not been furnished. However, on this point, the Tribunal has found that requisite details of the gift items purchased by the assessee were in fact placed before the Assessing Officer vide pages 33 to 38 of the paper book. The Tribunal also examined the nature of the articles consisting of sarees and dress materials, dry fruits, silver glass, etc. The assessee is a paper mill. In the circumstances, the Tribunal came to the conclusion that the above items could not have borne the assessee''s logo or name and, therefore, they cannot be disallowed as advertisement expenses. The Tribunal has also followed accordingly, the judgment of this court in the case of CIT v. Allana Sons Pvt. Ltd [1995] 216 1TR 690 . We may mention that the subsequent judgment of this court in the case of Indian Rayon Corporation Ltd. Vs. Commissioner of Income Tax, , has no application to the facts. In that judgment, it has been held that there was no material to show that the expenditure on purchase of articles for presentation did not advertise the assessee''s product whereas in the present matter, on facts, the Tribunal has found ample material to show that the assessee incurred expenditure but it did not incur such expenditure as and by way of advertising its product. The burden of proof, therefore, stands discharged by the assessee. In the circumstances, we do not see any reason to interfere with the finding of fact recorded by the Tribunal.

Lastly, it has been urged on behalf of the Department that the assessee was not entitled to deduction of additional contribution to the welfare fund amounting to Rs, 55,067 on the ground that it was not an approved welfare fund. The Tribunal has found that the said contribution was made pursuant to the settlement under the Industrial Disputes Act and accordingly, granted the said deduction.

Hence, no substantial question of law arises in this appeal. Appeal stands accordingly dismissed.