9911796707
|
Home
Issues involved:
The judgment involves disputes related to disallowance of repair and maintenance expenses, computation of deduction u/s 80HHC for scrap sale and miscellaneous income, deduction of exchange loss from export turnover, and disallowance of provision for warranty. Dispute 1 - Repair and Maintenance Expenses: The assessee claimed expenditure on repair and maintenance of building which was disallowed by the AO. CIT(A) confirmed the disallowance of certain expenses as capital in nature. The tribunal upheld CIT(A)'s decision, stating that the expenses resulted in the creation of enduring assets. Dispute 2 - Deduction u/s 80HHC for Scrap Sale and Miscellaneous Income: The dispute revolved around the treatment of income from scrap sale and other income for computing deduction u/s 80HHC. The tribunal held that income from scrap sale, being part of manufacturing activity, should be considered operational income fully eligible for deduction. However, 90% of other income was required to be excluded while computing the deduction. Dispute 3 - Exchange Loss Deduction: The issue of deduction of exchange loss from export turnover was not adjudicated by CIT(A). The tribunal remanded this issue back to CIT(A) for further consideration after providing an opportunity of hearing to the assessee. Dispute 4 - Provision for Warranty: The assessee, a manufacturer of automotive components, made a provision for warranty which was disallowed by the AO as a contingent liability. CIT(A) upheld the disallowance, considering it as a future liability. The tribunal, relying on a Supreme Court judgment, allowed the provision for warranty as a deduction under section 37 of the Income Tax Act. In conclusion, the tribunal partly allowed the appeal for the assessment year 2004-05 and fully allowed the appeal for the assessment year 2005-06.
|
