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Issues Involved:
1. Deletion of addition of Rs. 10,48,68,269/- related to weight loss on dismantling of ships. 2. Deletion of addition of Rs. 25 lakhs on account of labour charges. 3. Deletion of addition of Rs. 10,35,095/- on sale of furnace and lubricant oils. 4. Deletion of addition of Rs. 40,41,847/- related to spare propeller not forming part of LDT. Summary: Issue 1: Deletion of Addition of Rs. 10,48,68,269/- Related to Weight Loss on Dismantling of Ships The main issue involves determining whether the weight loss on dismantling ships should be related to the total weight of the ship or the light displacement tonnage weight (LDT). The Assessing Officer (AO) argued that the weight loss should be 2% of the total weight, not 12%-18% of the LDT as claimed by the assessee, leading to an addition of Rs. 10,48,68,269/- as unexplained sales. The CIT (A) deleted the addition, stating that the industry norm is to measure weight loss with reference to LDT, which ranges from 12% to 20%. The ITAT upheld the CIT (A)'s decision, agreeing that the AO's methodology lacked basis and was inconsistent with industry standards and previous judicial decisions. Issue 2: Deletion of Addition of Rs. 25 Lakhs on Account of Labour Charges The AO compared the labour charges claimed by the assessee with those of an associated company and concluded that the assessee had undercharged labour costs by Rs. 25 lakhs. The CIT (A) deleted the addition, noting that the AO's comparison was flawed and that the payments to labourers were duly recorded in the books and registers without any specific defects. The ITAT upheld the CIT (A)'s decision, finding no basis for the AO's addition. Issue 3: Deletion of Addition of Rs. 10,35,095/- on Sale of Furnace and Lubricant Oils The AO added Rs. 10,35,095/- to the income, assuming that the assessee sold lubricant and furnace oil outside the books of account. The CIT (A) deleted the addition, stating that the figures in the bill of entry were indicative and not physically verified, and that the recovered oil was duly accounted for in the books. The ITAT upheld the CIT (A)'s decision, agreeing that the AO's addition lacked basis and was inconsistent with previous judicial decisions. Issue 4: Deletion of Addition of Rs. 40,41,847/- Related to Spare Propeller Not Forming Part of LDT The AO added Rs. 40,41,847/- to the income, assuming that spare propellers were sold outside the books of account. The CIT (A) deleted the addition, noting that the propellers were accounted for as part of the total scrap and that the sale of propellers in the subsequent year was undisputed. The ITAT upheld the CIT (A)'s decision, finding no basis for the AO's addition and noting inconsistencies in the AO's findings. Conclusion: The Revenue's appeal was dismissed, and the cross-objection in support of the CIT (A)'s order was also treated as dismissed. The ITAT upheld the CIT (A)'s decisions on all issues, finding no basis for the AO's additions.
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