TaxTMI 
TaxTMI 
2014 (2) TMI 799
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....in deleting the dis-allowance under section 40 A(2)(b) of the I.T. Act amounting to Rs. 27,88,335/ out of payment made to M/s Modi Rubber Ltd. whereas the assessee failed to prove that the claim amount of expenditure was made for the purpose of business and was commercially expedient ? 2. Whether on the facts and in the circumstances of the case, the Ld. ITAT was legally justified in deleting the addition of Rs. 9,00,000/ on account of rent paid by the assessee for hiring certain premises for its training centre which was in the nature of guest house in contravention of provisions of section 37 (4) read with section 37 (5) of the I.T. Act ? 3. Whether on the facts and in the circumstances of the case, the Ld. ITAT was legally justified in deleting the disallowance on account of claim for discount amounting to Rs. 56,28,773/ whereas the disallowance was made over and above 2% discount allowed in earlier years keeping in view the legitimate needs of the business ? 4. Whether on the facts and in the circumstances of the case, the Ld. ITAT was legally justified in confirming the order of CIT(A) deleting the addition of Rs. 9,20,827/ on account of bad debts in absence of any ef....
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....ser of the same goods from the assessee company for certain period and the lease charges were not directly connected with the user of the goods ? 10. Whether on the facts and in the circumstances of the case, the Ld. ITAT was legally justified in declining to interfere on the issue of addition of Rs. 15,00,000/- made on account of expenses incurred on maintenance of guest house not shown in the books of account ? 11. Whether on the facts and in the circumstances of the case, the Ld. ITAT was legally justified in holding that deduction under section 80 HH is to be allowed on total income including the profit from sale of scrap being part of income of the Industrial Undertaking ?" Learned counsel for the appellants as well as learned counsel for the assessee are at an agreement that above questions except question Nos. 10 & 11 are covered by one or other judgment of this Court. It is useful to refer to the details of the judgment, which covers the question Nos. 1 to 9. Question No. 1:- The question is answered in favour of the assessee in its own case in Income Tax Appeal No. 30 of 2001 (The Commissioner of Income Tax, Meerut & another Vs. M/s Modi Xerox Ltd., New Delhi) ....
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....lier judgment in Income Tax Appeal No. 244 of 1999. Following the said judgment, the issue is answered in favour of the assessee. Question No. 10:- The brief facts for answering the above question No. 10 now needs to be noted. The Assessing Officer while finalising the assessment for the year 1993-94 made addition under the heading 'guest house expenses' estimated as the expenses on maintenance of guest house as Rs. 15 lakhs. The assessee filed the appeal and the Appellate Authority deleted the aforesaid addition observing that there is nothing to indicate that the assessee has incurred the expenditure of Rs. 15 lakhs on maintenance of guest house. Against the order of the Commissioner of Income Tax Appeal, both the Department and the assessee had filed appeal before the Tribunal. The Tribunal confirmed the said order against which this appeal has been filed. Sri R.K. Upadhyaya, learned counsel for the appellant submitted that guest house was being run as training centre by the assessee which naturally involved expenditure at the hand of the assessee and the Assessing Officer has rightly estimated the expenses of Rs. 15 lakhs. He further submits that as per provision of Secti....
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....vertone India Ltd. The appellant pays to that company only Rs. 9,00,000/- as rent for the premises. No other payment is made by the appellant for the said premises to that company. This expenditure of Rs.9,00,000/- has already been disallowed by the Assessing officer, again on suspicious and surmises, as guest house expenses. In this background, making a further addition of Rs. 15,00,000/- where no such expenditure was incurred or claimed by the appellant is, in our respectful submission, wholly arbitrary and, hence, calls for being deleted." 13.2:- "I find that the addition made by the A.O. Is on presumption and there is nothing to indicate that the appellant incurred an expenditure of Rs. 15,00,000/- on maintenance of guest house. Even in respect of alleged training centre only expenses claimed were Rs. 9,00,000/- i.e. rent for the premises. This finds support from Auditor's report at page 346 of the paper book. I, therefore, see no reason to sustain this addition. The addition is, therefore, deleted." The Tribunal has also affirmed the findings of the Commissioner. The Appellate Authority came to the finding of fact that there is no material to indicate that any other e....
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....undertaking. The issue is as to whether the income of Rs. 63,66,932/- can be said to be income derived from industrial undertaking or not? The assessee's submission in the above regard has been noted by CIT Appeal and CIT Appeal has directed the Assessing Officer to take income from the sale of Scrap by xerographic equipment unit and Toner, Developer, Photocopier unit as profit of the said unit. The submission of the assessee was that the said Scrap which is sold and income of Rs. 63 lakhs and odd was generated in the manufacturing process itself. It is useful to refer to Paragraph No. 6.2 which is to the following effect:- "6.2:- During this year only new issue involved is that the A.O. has while working out the deduction u/s 80HH reduced the income from other sources from the net reasonable income to the extent of Rs. 83,66,932 (so per order u/s 154). In the original order it was taken at Rs. 63,66,932. The statement of profitability of different unite filed by the appellant shows the other income at Rs. 83,66,932 (Refer page 1 of the Paper Book). The A.O. has deducted this income while working out the relief allowable u/s 80HH. The learned counsel for the appellant has sub....
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..... It is submitted that without the supply of electricity the industrial undertaking could not run and since electricity was an essential requirement of the industrial undertaking, the industrial undertaking could not survive without it. It is further pointed out that for the purpose of getting this essential input, the statutory requirement was that the deposit must be made as a pre-condition for the supply of electricity. Consequently, according to the appellant, the interest on the deposit should be treated as income derived from the industrial undertaking within the meaning of Section 80HH. 5. The High Court rejected the submission of the appellant by relying upon the decision of this court in Cambay Electric Supply Industrial Co. Ltd. v. CIT , where this court had clearly stated that the expression "derived from" had a narrower connotation than the expression "attributable to" (page 93) : "In this connection, it may be pointed out that whenever the Legislature wanted to give a restricted meaning in the manner suggested by the learned Solicitor-General, it has used the expression 'derived from', as, for instance, in Section 80J. In our view, since the expression of wider i....