P.I. Mohan Singh, Judicial Member - (1.)THESE appeals filed by the assessee and the revenue relate to the asessment years 1978-79 to 1981-82 and arise out of the separate orders of the C.I.T. (Appeals). The aforesaid appeals of the assessee and the revenue involve common issues and are, therefore, heard together and disposed of by a common consolidated order for the sake of convenience.
(2.)The following grounds are raised by the assessee in its appeals: -
(i) Bank guarantee commission of Rs. 51,833 disallowed by the Income-tax Officer and confirmed by the C.I.T. (Appeals). This ground is raised only for the assessment year 1978-79.

(ii) Commission paid to M/s. Tara Agencies claimed by the assessee @ 5%. The I.T.O. allowed the same @ 2% for the assessment year 1978-79 and @ 1% for the assessment year 1979-80. The order of the I.T.O. for the assessment year 1978-79 was confirmed by the C.I.T. (A) and allowed the same rate of 2% for the assessment year 1979-80. This point is involved for the assessment years 1978-79 and 1979-80.

(iii) Maintenance of buildings and cars provided to managers of Tea Estates and cash allowances paid to them disallowed by the C.I.T. (A) Under Section 40A(5) at Rs. 46,792 for the assessment year 1978-79 and Rs. 87,474 for the assessment year 1979-80.

(iv) Disallowance Under Section 35B. This ground is raised for all the assessment years under consideration.

(v) Cash compensatory support claimed by the assessee. This ground is raised by the assessee for all the assessment years.

(vi) Commission paid to M/s Bhansali Brothers disallowed by the I.T.O. and confirmed by the C.I.T. (Appeals) for the assessment year 1979-80.

(vii) Replanting expenses and upkeep of the new clearings disallowed by the C.I.T. (A) for the assessment year 1979-80.

(viii) Maintenance of bungalow at Prospect Estate disallowed by the I.T.O. and confirmed by the C.I.T. (A) for the assessment year 1981-82.

The following grounds are raised by the revenue in its appeals, namely, on the facts and in the circumstances of the case, the C.I.T. (Appeals) erred in -

(i) allowing payment of consultancy fees to M/s Nonsuch Tea Estates for all the assessment years;

(ii) in. allowing payment of commission to M/s Tara Agencies @ 2% for the assessment years 1978-79 and 1979-80;

(iii) in allowing the claim Under Section 40A(5) for the assessment year 1980-81;

(iv) in allowing weighted deduction Under Section 35B in respect of E.C.G.C. premium for the assessment years 1978-79 to 1980-81.

(v) in allowing Deepawali expenses for the assessment years 1978-79 to 1980-81;

(vi) in deleting the disallowance of bonus paid in excess of the limits specified Under Section 36(1)(ii) of the I.T. Act for the assessment years 1980-81 and 1981-82;

(vii) in deleting the disallowance made by the I.T.O. on account of the excess salary paid to the directors for the assessment years 1980-81 and 1981-82;

(viii) in treating the company as an industrial company for the assessment years 1980-81 and 1981-82;

(ix) In allowing expenditure on replanting and upkeep of new clearings for the assessment year 1980-81;

(x) in granting investment allowance to the tea packing machine installed by the assessee in Cochin office for the assessment year 1981-82;

(xi) in allowing the bonus claim of Rs. 5,05,808 for the assessment year 1980-81;

(xii) in allowing the assessee's claim with regard to additional depreciation for the assessment year 1981-82;

(xiii) in granting interest claim of Rs. 2,30,000 for the assessment year 1981-82.

(3.)1. Regarding the first ground taken by the assessee the facts in brief are as under: The assessee is a plantation company and the company was incorporated on 9-7-1976. The assessee company purchased four estates, namely, Bonaccord estate, Prospect estate, Liddellsdale estate and Seaforth estate on 24-9-1976 for Rs. 165 lakhs which includes cost of unused stocks and stores of estate requisites amounting to Rs. 10 lakhs and stamp duty registration charges etc. amounting to Rs. 10 lakhs. Out of the sale consideration, a balance of Rs. 55 lakhs was due to be paid by the assessee in instalments for which Bank of India and Union Bank of India stood as guarantors and guarantee commission of Rs. 51,833 was paid to Bank of India and Union Bank of India. The Income-tax Officer disallowed the guarantee commission paid to the bankers following the decisions in CIT v. Fort Gloster Industries Ltd. [1971] 79 ITR 48 (Cal.) and Ballarpur Papers Straw Board Mills Ltd. v. CIT [1979] 118 ITR 613 (Bom.). On appeal before the C.I.T. (Appeals) the learned counsel for the assessee contended that this is an allowable deduction in view of the decision of the Supreme Court in India Cements Ltd. v. CIT [1966] 60 ITR 52. The C.I.T. (Appeals) disallowed the contention of the assessee on the ground that this expenditure is not for raising capital and it has been incurred only for guaranteeing compliance of the terms of contract relating to the purchase of the estate by making the payments due under the contract. He, therefore, confirmed the order of the Income-tax Officer.
4.2 Before us, the learned counsel for the assessee relied upon the decision of the Andhra Pradesh High Court in Addl. CIT v. Akkamba Textiles Ltd. [1979] 117 ITR 294. He contended that since the ratio laid down in the aforesaid case is squarely applicable to the facts of this case, the bank guarantee commission paid by the assessee is an allowable deduction.

4.3 The learned departmental representative, on the other hand, relied upon the decision of the Bombay High Court in Ballarpur Paper & Straw Board Mills' case (supra) and the Calcutta High Court decision in Fort Gloster Industries Ltd.'s case (supra).

4.4 We have carefully considered the rival contentions. In the case relied upon by the assessee mentioned supra, their Lordships of the Andhra Pradesh High Court have held that a transaction of acquisition of assets can be said to be closely related to the commencement and carrying on of the business by an assessee. Hence any expenditure incurred by the assessee, which is a running concern, for ensuring use of money for a certain period or enabling the assessee to make deferred payment of cost of assets acquired constitutes revenue expenditure and, therefore, the same is admissible as revenue expenditure. Therefore, the commission paid by the assessee to the guarantor for enabling it, the assessee, to make deferred payment of the purchase consideration constitutes revenue expenditure and not capital expenditure and, therefore, is admissible as deduction from the income. We have carefully gone through the decision of the Bombay High Court in Ballarpur Paper & Straw Board Mills Ltd. 's case (supra) the ratio of which is not exactly on the point at issue. Since the facts of the case on which the decision is rendered by the Andhra Pradesh High Court are identical to the facts of this case, we respectfully following the decision of the Andhra Pradesh High Court, hold that the guarantee commission paid by the assessee is a revenue expenditure and is an allowable deduction. This view is also supported by the decision of the Madras High Court in Sivakami Mills Ltd. v. CIT [1979] 120 ITR 211. The appeal filed by the assessee on this count is allowed.