- (1.) These two appeals involving common questions of law relating to the assessment years 1993-94 and 1994-95 have been heard together and are being decided by this common judgment. We have heard Sri R.K. Upadhyaya, learned counsel for the appellants and Sri Bhupesh Jain assisted by Sri Suyash Agarwal learned counsels for the assessee.
(2.) The questions of law on which both the appeals have been admitted are being similar. It is sufficient to refer to the questions of law as framed in Income Tax Appeal No. 3 of 2011 for deciding both the appeals.
(3.) The appeal has been admitted on the following questions of law: "1. Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal is legally justified in deleting the disallowance under section 40A(2)(b) of the Income-tax 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 learned Income-tax Appellate Tribunal 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 the provisions of section 37(4) read with section 37(5) of the Income-tax Act? 3. Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was legally justified in deleting the disallowance on account of the claim for discount amounting to Rs. 56,28,773 whereas the disallowance was made over and above 2 per cent discount allowed in the earlier years keeping in view the legitimate needs of the business? 4. Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was legally justified in confirming the order of the Commissioner of Income-tax (Appeals) deleting the addition of Rs. 9,20,827 on account of bad debts in the absence of any effort for the realisation of the amount in the light of the provisions contained in section 36(2) read with section 36(1)(vii) of the Income-tax Act without contemplation of subsequent realisation? 5. Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was legally justified in holding that the deduction under section 80-I amounting to Rs. 15,36,77,258 is admissible to the assessee ignoring the fact that the assessee was engaged in manufacturing an item of office equipment mentioned at Sl. No. 22 of the Eleventh Schedule to the Income-tax Act read with the Explanation pertaining thereto? 6. Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was legally justified in holding that the assessee can claim deduction under section 80-I on two profit making units, M/s. Xerographic undertaking and M/s. Toner, Developer, and Photo Receptor Unit, and ignoring the third unit, M/s. Service Trading and other which had suffered losses without considering the business of M/s. Modi Xerox Ltd. as a whole, in totality whereas the deduction under section 80-I was not allowable to the assessee in view of the question of law mentioned at paragraph 6 above? 7. Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was legally justified in the Commissioner of Income-tax (Appeals)'s order allowing the claim of the company that it could claim deduction under section 80HH on two profit making units, M/s. Xerographic undertaking and M/s. Toner, Developer, and Photo Receptor Unit, and ignoring the third unit, M/s. Service Trading and other which had suffered losses yet constituted a unit for the business of the assessee as a whole, in totality and without appreciating the provisions of section 80AB and section 80B(5) of the Income-tax Act? 8. Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was legally justified in deleting the addition of Rs. 65,857 on account of club membership subscription even though there is no material on record to substantiate that the expenditure is commercially expedient for the purpose of business of the assessee as required by the provisions of section 37(1) of the Income-tax Act? 9. Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was legally justified in confirming the order of the Commissioner of Income-tax (Appeals) allowing the assessee's claim of lease rentals/charges of Rs. 1,09,29,470 even though the xerox machine and equipment had not passed on the lessors being purchaser 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 learned Income-tax Appellate Tribunal was legally justified in declining to interfere on the issue of the 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 learned Income-tax Appellate Tribunal was legally justified in holding that the deduction under section 80HH is to be allowed on total income including the profit from sale of scrap being part of income of the industrial undertaking?";