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Issues Involved:
1. Excess consumption of raw materials. 2. Input-output ratio for Contract Manufacturing Units (CMUs). 3. Adjustment for empty bags of maida. 4. Adjustment for excess weight of biscuits in packets. 5. Allowability of advertisement expenses. Issue-wise Detailed Analysis: 1. Excess Consumption of Raw Materials: The primary issue revolves around the addition of Rs. 1,57,84,868 made by the Assessing Officer (AO) on account of excess consumption of raw materials. The AO noted that in previous years, additions were made for differences between actual and standard consumption based on an input-output formula. The assessee contended that the standard input-output ratio did not account for various wastages and excess weights in finished products. The CIT(A) had previously directed the AO to recompute the excess consumption after considering these factors, leading to a significant reduction in the additions. 2. Input-Output Ratio for CMUs: The AO applied a standard input-output ratio of 108.19:100 for both the assessee's own factory and CMUs, despite the assessee arguing for a ratio of 110.607:100 for CMUs due to higher wastages. The CIT(A) directed the AO to allow the same adjustments for CMUs as for the own factory, but the AO did not fully comply. The Tribunal found merit in the assessee's argument that if the input-output formula of 108.19:100 is applied to CMUs, then the same adjustments allowed to the own manufacturing units should also be applied to CMUs. 3. Adjustment for Empty Bags of Maida: The assessee argued that nearly 1 kg of maida is left over in each bag and should be deducted from the raw material consumption. The CIT(A) directed the AO to allow adjustments for empty bags of maida, consistent with previous years. The Tribunal upheld this direction, finding no infirmity in the CIT(A)'s order. 4. Adjustment for Excess Weight of Biscuits in Packets: The assessee claimed that the actual weight of biscuits in packets often exceeded the printed weight, which should be considered in calculating excess consumption. The CIT(A) verified sample packets and found that the actual weight exceeded the declared weight. The AO was directed to allow adjustments based on these verified results. The Tribunal upheld this direction, emphasizing the need for consistent adjustments. 5. Allowability of Advertisement Expenses: The AO disallowed 50% of the advertisement expenses, treating them as deferred revenue expenditure, while the assessee claimed the entire amount in the computation of income. The CIT(A) allowed the full deduction, noting that the expenditure was revenue in nature and incurred wholly and exclusively for business purposes. The Tribunal upheld this decision, citing precedents that revenue expenditure must be allowed in its entirety in the year incurred, even if amortized in the books. Conclusion: The Tribunal allowed the assessee's appeals for statistical purposes and dismissed the Revenue's appeals, directing the AO to make necessary verifications and adjustments as per the CIT(A)'s directions and previous Tribunal orders. The Tribunal emphasized the need for consistent application of adjustments and upheld the full deduction of advertisement expenses.
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