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TMI Blog2013 (1) TMI 626X X X X Extracts X X X X X X X X Extracts X X X X ..... [2010 (1) TMI 618 - KERALA HIGH COURT]& Mahavir Cycle Industries [2013 (1) TMI 610 - PUNJAB AND HARYANA HIGH COURT ] - substantial question of law answered in favour of assessee. - I.T.A. No. 119 of 2012 - - - Dated:- 22-1-2013 - MR. HEMANT GUPTA AND MS. RITU BAHRI JJ. Present:- Mr. Akshay Bhan and Mr. Alok Mittal, Advocates, for the appellant. Mr. Rajesh Katoch, Advocate, for the respondents. HEMANT GUPTA, J.(Oral) The present appeal under Section 260-A of the Income Tax Act, 1961 arises out of an order passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short 'the Tribunal') dated 6.1.2012 pertaining to the assessment year 2003-2004 raising following substantial questions of law:- (i) Whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal of the assessee relying upon a judgment of this Court in CIT, Ludhiana Vs. Bicycle Wheels 335 ITR 388 that scrap is generated in the course of manufacturing of goods. The scrap is systematically sold by the assessee forming part of its business. It was held that value of scrap generated goes on to increase the profits of organization and that there is no profit element embedded in the value of scrap. Thus, the order of the Assessing Officer was set aside. But in further appeal before the Tribunal at the instance of Revenue, the Tribunal recorded the following findings:- 9. As regards the inclusion of value of scrap sale in the profits of the business for computing the relief u/s 80HHC, the entire value of scrap sales cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -over but cannot be included in business profit as only the profit after deducting the expenses of generation of scrap can be added in the business profit. We find that the argument raised by Mr. Katoch is wholly untenable. The expenditure is incurred by the assessee not for generation of the scrap but for generation of the finished product. There is and cannot be any expenses which are incurred for generation of scrap. Scrap is bi-product of the manufacturing activity. Therefore, there are no expenses which could be excluded from the sale of scrap. Since the question of law stands answered by this Court in favour of assessee in the above mentioned judgments, therefore, the first substantial question of law is answered in favour of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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