TMI Blog2011 (2) TMI 1473X X X X Extracts X X X X X X X X Extracts X X X X ..... on four different grounds. 2.1 The first dispute is regarding disallowance out of repair and maintenance expenses. The assessee claimed expenditure of Rs..6,95,371/- on repair and maintenance of building which has been disallowed by the AO. In appeal CIT(A) noted that the expenditure included a sum of ₹ 84,372 on flooring, ₹ 38,586/- on foundation work; ₹ 36,000/- pump room construction; ₹ 52,566/- fixing tiles; ₹ 6,250/- watchman cabin totaling ₹ 2,17,774/-. CIT(A) held these expenses were capital in nature and confirmed the disallowance to the above extent and the balance addition was deleted. Aggrieved by the said decision the assessee is in appeal. 2.1.1 Before us the Learned AR for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar treatment should also been given to the other income it was argued. The Learned DR on the other hand strongly supported the orders of authorities below. 2.2.2 We have perused the records and considered the rival contentions carefully. The dispute is regarding treatment of income from scrap sale and other income while computing deduction under section 80HHC. The computation under section 80HHC is made on the basis of profit of business which has been defined as profit computed under the head profit and gains of business and profession as reduced by 90% of income such as interest, rent, commission or other income of similar nature. The scrap generation is part of the manufacturing activity and therefore income arising from scrap sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim and did treat it as contingent liability and disallowed the same. In appeal the assessee submitted that the assessee had incurred the liability at the time of sale which had been determined in an objective manner and therefore it had to be allowed. Reliance was placed on the judgment of Hon ble Supreme Court in case of Calcutta Co. Ltd. (37 ITR 1) and the judgment in case of Metal box India Ltd. (75 ITR 53). CIT(A) however not satisfied. It was observed by him that provision for warranty was against the future liability which had not crystallized during the year. It was only a contingent liability which could not be allowed. CIT(A) accordingly confirmed the disallowance aggrieved by which the assessee is in appeal before the tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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