M/S.RICHARDSON HINDUSTAN LTD. vs. THE C.I.T.B.C-V.

K.J. IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX REFERENCE NO.699 OF 1998 M/s.Richardson Hindustan Ltd., ) Now known as M/s.Procter & Gamble ) India Ltd. Tieciond House 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 u/s.35C on ; (a) various expenses incurred on provision of Distillation services ; (b) Expenses on transportation services provided to farmers ; (c) depreciation on assets used for Agricultural Research Centre ? CNR No : HCBM020197151994 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:49:07

: 2 : At the instance of the revenue : (2) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in allowing the assessee’s claim of weighted deduction u/s. 35C on Fertilizer subsidy to farmers as cash subsidy amounting to Rs.2,78,384/- ? 2. In our view, question no.1(a) is covered by a judgment passed in Income Tax Reference No.315 of 1988 wherein in respect of the same assessee and on a similar factual background, we have held that expenses on distillation services provided to the cultivator would not be admissible for deduction under Section 35-C of the Income Tax Act. In the circumstances, for the same reasons as in the aforesaid judgment, question no.1(a) is answered in the affirmative and against the assessee. 3. As regards question no.1(b), we have answered the same in a judgment and order dated 18.3.2009 passed in Income Tax Reference No.3 of 1998. The said question has been answered in the affirmative and against the assessee and hence for the reasons given in our judgment passed in Income Tax Reference No.3 of 1998, question no.1(b) is answered in the affirmative and against the assessee. 4. As regards question no.1(c), on behalf of the assessee it was sought to be contended that the assets of the Agricultural Research Centre which is Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:49:07

: 3 : admittedly owned and run by the assessee company must be held to be "tools or implements" for the use by such cultivator. In the judgment given in Income Tax Reference No.315 of 1988 we have already held that the expenses on scientific farming in respect of the agricultural farm belonging to the assessee and cultivated through their own staff cannot be allowed a weighted deduction under Section 35-C of the Income Tax Act. In our view, the asset used for Agricultural Research Centre cannot be said to be tool or implement for use by the cultivator. In a judgment given in Income Tax Reference No.315 of 1988 we have also held that the expenses on research cannot be granted on weighted deduction under Section 35-C. This being the position, in our view, depreciation of such research centre also cannot be granted under Section 35-C. The question no.1(c) is therefore, answered in the affirmative and against the assessee. 5. As regards question raised at the instance of the revenue, it was the assessee’s case that a fertilizer subsidy amounting to Rs.2,78,384/- was paid to the farmers in cash because fertilizer was in short supply. ITAT has held that the assessee’s claim was covered by the judgment of the Special Bench decision in the case of K.C.P.Ltd., Vs. ITO K.C.P.Ltd., Vs. ITO K.C.P.Ltd., Vs. ITO reported in 34 ITD 50. reported in 34 ITD 50. reported in 34 ITD 50. In our view, section 35-C (b) (1) contemplates that goods services or Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:49:07

: 4 : facilities in respect of fertilizers may be considered for grant of weighted deduction. In our view, if cash subsidy is granted in relation to the purchase of fertilizers that would be no different than providing services relating to supply of fertilizer. Such services or facilities would be covered by section 35-C (1) (b) (ii) of the Income Tax Act. We find no error in the reasoning and finding of the ITAT in relation to this question. Question is therefore, answered in the affirmative and in favour of the assessee. 6. In view of the answers as given above, reference is disposed off with no orders as to costs. (R.S.Mohite,J) (F.I.Rebello,J) Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:49:07 Powered by TCPDF (www.tcpdf.org)