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2014 (2) TMI 799 - HC - Income TaxAddition made on Expenses u/s 37(4) of the Act - Maintenance of guest house – Held that:- The Assessing Officer while making addition of ₹ 15 lakhs as estimated expenses for guest house has not referred to any expenditure or any material for estimating expenditure of ₹ 15 lakhs – assessee contended that he has not incurred any expenditure apart from paying rent of ₹ 9 lakhs - ad-hoc disallowance on conjectures and surmises is entirely unsustainable in law and on facts - There is no material to indicate that any other expenses have been incurred by the assessee apart from paying the rent – the findings are the finding of fact - The Assessing Officer has also not referred to any kind of expenditure incurred by assessee other than paying rent of ₹ 9 lakhs -Thus, there was no error in the order of the Commissioner allowing the appeal – Decided against Revenue. Allowability of Deduction u/s 80HH of the Act – Whether the deduction is to be allowed on total income including the profit from sale of scrap being part of income of the Industrial Undertaking – Held that:- The Commissioner has clearly directed for including the income from the Scrap generated by specified units as - The Scrap generated from the above units has to be treated as Scrap derived from the industrial undertaking and any income from the sale of the said Scrap has to be included for the purpose of benefit of Section 80-HH –Relying upon Pandian Chemicals Ltd. Vs. Commissioner of Income Tax2003 (4) TMI 3 - SUPREME Court] - the word derived from under Section 80-HH has to be understood as something which has immediate nexus with the industrial undertaking - the scrap generated from the units has direct and immediate nexus with the industrial undertaking since the said scrap has been generated from the manufacturing process itself - the Commissioner as well as the Tribunal has committed no error in allowing the benefit of Section 80-HH to the assessee – Decided against Revenue.
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