PROCTOR and GAMBLE INDIA LTD. vs. THE C.I.T.B.C-V.

ITR/517/1997HC Bombay18 March 2009Bench: HON'BLE SHRI JUSTICE F.I. REBELLO, HON'BLE SHRI JUSTICE R.S. MOHITE4 pages

AI SummaryPartly Allowed

What did the High Court hold?

The High Court addressed each question of law. For questions 1(a) and 1(d) concerning expenses on demonstration of agricultural techniques and distillation services, the Court referred to its previous judgment in a similar case involving the same assessee and answered these questions in the affirmative and against the assessee. Similarly, for question 1(b) regarding transportation services to farmers and question 1(c) concerning scientific farming and related depreciation, the Court, by referring to its prior judgment in another reference with the same assessee, answered these questions in the affirmative and against the assessee. For question 1(e) concerning depreciation on assets for the Mentha Research Centre, the Court also referred to a prior judgment and answered it in the affirmative and against the assessee. Regarding question 2, raised by the revenue, the Court found that the jeeps were used for disseminating information to farmers, which was an integral part of services contemplated under Section 35C(b)(ii). Therefore, the Court held that weighted deduction under Section 35C was allowable for depreciation on these jeeps, answering the question in the affirmative and in favour of the assessee.

What were the facts?

This case involves an Income Tax Reference filed by M/s. Procter & Gamble India Ltd. (formerly Richardson Hindustan Ltd.) against the Commissioner of Income-tax, Bombay City-V. The reference concerns assessment year(s) not explicitly stated but relates to a period prior to 1997. The core of the dispute revolves around the assessee's claim for weighted deduction under Section 35C of the Income Tax Act for various expenses. The Tribunal had previously rejected the assessee's claim for deductions related to agricultural techniques, transportation services to farmers, scientific farming, distillation services, and depreciation on assets used for a Mentha Research Centre. The revenue also had a question regarding depreciation on jeeps used for disseminating information.

What were the issues?

The Tribunal had to decide the following questions of law: 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in rejecting the claim of the assessee-company for weighted deduction under section 35C on: (a) various expenses incurred on demonstration of modern agricultural techniques and methods; (b) Expenses on transportation services provided to farmers; (c) Expenses on scientific farming including depreciation on assets used for scientific farming; (d) Expenses on distillation services including depreciation on assets used for distillation services; (e) Depreciation on assets used for Mentha Research Centre. Assessee's contentions (implied through the questions): The assessee likely argued that the expenses listed in questions 1(a) through 1(e) qualified for weighted deduction under Section 35C as they were incurred for scientific research or development related to agriculture. Revenue's contention: 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee would be entitled to deduction u/s. 35-C on depreciation on jeeps used for dissemination of information? Revenue's contention (implied through the question): The revenue likely argued that depreciation on jeeps used for disseminating information did not qualify for weighted deduction under Section 35C.

Which sections of the Income-tax Act were involved?

Section 35C, Section 156(1)

AI-generated summary — verify with the full judgment below

K.J. IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX REFERENCE NO.517 OF 1997 M/s.Procter & Gamble India Ltd., ) (previously known as Richardson ) Hindustan Ltd.) ‘Tieciond, Dr.E. ) Moses Road, Bombay-11 )..Applicant V/s. The Commissioner of Income-tax ) Bombay City-V, Bombay ) Bombay-400 011 )..Respondent ---- Mr.P.S.Sahadevan for the respondent. Mr.J.D.Mistry with Ms.Payal Parikh, Ms.Nikita Kadam i/by M & M Legal Venture for the applicant. ---- Coram : F.I.Rebello & R.S.Mohite,JJ Date : 18.3.2009. Judgment :- (Per : R.S.Mohite,J) 1. The questions of law referred to this Court under Section 156(1) of the Income-tax Act are as under :- At the instance of the assessee :- 1. "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in rejecting the claim of the assessee-company for weighted deduction under section 35C on :- (a) various expenses incurred on demonstration of modern agricultural techniques and methods ; (b) Expenses on transportation services provided to farmers ; (c) Expenses on scientific farming including depreciation on assets used for scientific farming ; (d) Expenses on distillation services including depreciation on assets used for distillation services ; (e) Depreciation on assets used for Mentha Research CNR No : HCBM020065481997 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:49:04

: 2 : Centre. At the instance of revenue :- (2) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee would be entitled to deduction u/s. 35-C on depreciation on jeeps used for dissemination of information ? 2. As regards question no.1(a), Counsel appearing for the assessee submits that the said expenses pertained to distillation services. The question is therefore, a part of question 1(d). This question has been answered in the affirmative and against the assessee by our judgment and order dated 18.3.2009 passed in Income Tax Reference No.315 of 1988. The said judgment was passed on a similar factual background in a case involving the same assessee. In this view of the matter question nos.1(a) and 1(d) are answered in the affirmative and against the assessee. 3. As regards question no.1(b), the same has also been decided in the affirmative and against the assessee in a judgment and order dated 18.3.2009 passed in Income Tax Reference No.3 of 1998. The said judgment was also given in a case involving the same assessee. For the same reasons mentioned in the aforesaid judgment, question no.1(b) is answered in the affirmative and against the assessee. 4. As regards question no.1(c), the same has also been decided in the affirmative by our judgment and Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:49:04

: 3 : order passed in Income Tax Reference No.3 of 1998. For the reasons mentioned in the aforesaid judgment, question no.1(c) is answered in the affirmative and against the assessee. 5. As regards question no.1(e), the same has been answered in the affirmative and against the assessee by a judgment and order passed on 18.3.2009 in Income Tax Reference No.699 of 1998. For the reasons as given in the aforesaid judgment, question no.1(e) is answered in the affirmative and against the assessee. 6. As regards question no.2 raised at the instance of revenue, we find that the record indicates and the finding of fact is that the jeeps in question were used for dissemination of information to the farmers. This activity was an integral part of the services contemplated under Section 35-C (b) (ii) of the Income Tax Act and in the circumstances, no fault can be found for allowing weighted deduction under Section 35-C in respect of the depreciation on jeeps used for such services. In the circumstances, the question no.2 is answered in the affirmative and in favour of the assessee. 7. In view of the answers as given, the Income Tax Reference stands disposed off with no orders as to costs. Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:49:04

: 4 : (R.S.Mohite,J) (F.I.Rebello,J) Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:49:04 Powered by TCPDF (www.tcpdf.org)

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