2016 (10) TMI 980 - HC - Income Tax

Quantification of the losses - Held that - The Tribunal while passing the impugned order has made an error which is apparent on the face of the record because the Tribunal has accepted these losses to the extent of 10% for the previous years i.e. 1989-90. The order passed by the Tribunal for the assessment year-1989-90 is on record of this case at page 169 and in paragraph 20 thereof a chart has been reproduced which shows that assessee had claimed a loss at the rate of 5.58% and 14.42%. In addition of the allowances made towards losses come to 17.9%. From this very paragraph it is clear that contention of the assessee that it was confined to 10% is correct. It was more than 10%. The matter requires reconsideration by the Tribunal on the quantification of the losses.

Summary

Issues:
1. Justification of confining losses to a particular percentage without factual basis.
2. Misreading and misconstruing the order of the earlier year.

Analysis:

Issue 1:
The appellant, a steel rolling mill, appealed against the order passed by the Appellate Tribunal for the assessment year 1990-91. The primary contention was regarding the assessment of losses incurred during the manufacturing process. The Tribunal had accepted losses to the extent of 10% based on previous years without factual basis. The appellant argued that the Tribunal erred in confining the losses to a specific percentage without proper justification. The Tribunal's decision was based on conjectures rather than factual evidence, raising concerns about the accuracy of the assessment.

Issue 2:
The Tribunal's order for the assessment year 1989-90 was a crucial point of contention in the case. The Tribunal had accepted losses at varying rates for different types of wastage incurred during the manufacturing process. The appellant highlighted an error in the Tribunal's order, pointing out that the losses claimed were not limited to 10% as contended by the Tribunal. The appellant argued that the Tribunal misread and misconstrued the order of the earlier year, leading to an inaccurate assessment of losses for the current year. The Court directed the Tribunal to reconsider the quantification of losses for the assessment year 1989-90, emphasizing the need to rectify any arithmetical mistakes in the assessment process.

In conclusion, the High Court, in a common judgment for identical controversies, directed the Tribunal to reevaluate the quantification of losses for the appellant's steel rolling mill. The Court emphasized the importance of factual basis and accurate assessment in determining losses incurred during the manufacturing process. The judgment provided clarity on the errors made by the Tribunal in assessing losses based on previous years and highlighted the necessity for a thorough reconsideration of the quantification process to ensure fairness and accuracy in the assessment of losses.