B. Bhattacharya, J. - (1.) This appeal under Sec. 260A of the Income -tax Act, 1961 is at the instance of the revenue and is directed against an order dated 28 -7 -2000, passed by the Income -tax Appellate Tribunal, E Bench, Kolkata, in ITA No. 1760 (Cal) of 1999 for the Assessment Year 1996 -97.
(2.) Although a Division Bench of this Court while admitting the present appeal, formulated nine different questions, Mr. Nizamuddin, the learned Advocate appearing on behalf of the revenue, after taking instruction from his client, has fairly restricted his submission to the following three questions of law: 1. Whether on the facts and in the circumstances of the case the Ld. Tribunal has erred in law in confirming the deletion of disallowance of Rs. 1,54,875 on account of gifts when the tax audit report of the Assessee has stated that the same is disallowable under Rule 6B of the I.T. Rules and that it is clearly covered by Sec. 37(2) of the I.T. Act, 1961. 2. Whether on the facts and in the circumstances of the case the Ld. Tribunal has erred in law in confirming the deletion of disallowance of Rs. 3,04,89,602 on account of depreciation of new aircraft when it was not put to use in contravention to provisions of Sec. 32 of the I.T. Act, 1961.
(3.) Whether on the facts and in the circumstances of the case the Ld. Tribunal has erred in law by erroneously re -computing deduction under Sec. 80HHD of the I.T. Act, 1961, at Rs. 77,62,17,303 in contravention to provisions laid down in Sec. 80HHD of the I.T. Act, 1961, by not including receivables in its computation although receipt includes receivable as per mercantile system of accounting. 3. The facts giving rise to filing of this appeal may be summed up thus: (a) In the return submitted by the Assessee, an amount of Rs. 1,54,875 was claimed as deduction under Rule 6B as per Tax Audit Report. The aforesaid amount represented the cost of gift/presentation items to various patrons of the Assessee -company which was engaged in hotel business. According to the Assessee, it was customary for it to make such presentation to the guests of the hotel on festive occasions and that the articles meant for presentation did not contain the name or logo of the company and as such, those presentations did not amount to advertisement of the name or products of the Assessee -company for the purpose of Sec. 37(3) of the Act. Such claim was, however, disallowed by the Assessee. On an appeal being preferred, the CIT (A), however, deleted the said addition and granted benefit of Rule 6B of the Act. (b) Being dissatisfied, the revenue preferred appeal before the Tribunal and the learned Tribunal upheld the order of the CIT (A) thereby holding that the cost of presentation of the article should be deleted as business expenditure in terms of Sec. 37 of the Act. (c) It further appears from the return submitted by the Assessee that it claimed a sum of Rs. 3,04,89,602 as depreciation on the imported new aircraft acquired by it during the year under consideration. The aircraft was purchased by the Assessee from M/s. Jet Sales Ltd., U.K. and the physical possession of the aircraft was taken by the representative of the Assessee on 11 -3 -1996 at the Essendon Airport, Victoria, Australia. Copies of the relevant documents were filed on the record of the Assessing Officer. The Assessing Officer, however, stated that in absence of documentary evidence as to when the impugned aircraft was brought to India from Australia and put to business use, the claim of depreciation could not be allowed. (d) On an appeal being preferred, the CIT (A) accepted the contention of the Assessee that the aircraft had actually been flown to India from Australia on 12 -3 -1996 immediately after taking delivery of the aircraft. Copy of the bill of entry for home consumption in respect of the said aircraft expressly provided that the aircraft was received by the New Delhi International Airport on 12th March, 1996. The CIT (A) also took into consideration the insurance certificate dated 11th March, 1996 issued by the Insurer Company, namely, M/s. Willis Faber & Durns Ltd. The CIT (A) after taking into consideration various decisions on the question of depreciation held that depreciation @ 50% of the rate prescribed should be allowed on the aircraft. On an appeal by revenue, the Tribunal accepted the aforesaid finding of the CIT (A). (e) The Assessee also claimed benefit of Sec. 80HHD of the Act according to which an Indian company engaged in the business of hotel should be allowed in computing the total income, a deduction of a sum equal to two components, the first of which is 50% of the profits derived by the Assessee from services provided to foreign tourists. According to Sub -section (3) of the said Sec. , profits derived from services provided to foreign tourists should be the amount which bears to the profit of the business as computed under the head profits and gains of business or profession. The same proportion as the receipts specified in Sub -section (2) as reduced by any payment referred to in Sub -section (2A) made by the Assessee bears to the total receipts of the business carried on by the Assessee. While computing the amount of deduction under this Sec. , the Assessing Officer took into consideration the figure of date turnover of the Assessees business as per the audited final account being Rs. 3,95,62,34,559/ - in the denominator in place of the total receipts of business carried on by the Assessee. The amount of deduction under this Sec. had come out to Rs. 77,53,50,473/ -. (f) On an appeal being preferred, the CIT (A) held that the Auditor had certified that total amount of Rs. 3,90,93,27,318/ - was the total receipts of the business and by relying upon such figure, it had arrived at the amount of deduction available to the Assessee under Sec. 80HHD at Rs. 77,62,17,303/ - and directed the Assessing Officer to correct that amount of deduction. (g) Being dissatisfied, the revenue has come up with the present appeal. Therefore, the first question that falls for determination before us is whether the learned Tribunal below committed substantial error of law in confirming the deletion of disallowance of Rs. 1,54,875/ - on account of gifts when the tax audit report of the Assessee itself stated that the same is disallowable under Rule 6B of the I.T. Rule and whether the same is covered by Sec. 37(2) of the Act.;