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TMI Blog1983 (7) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) considered this issue in para 3 (b). She concurred with the ITO that wastage of 5% was reasonable in the activity of the assessee, and, therefore addition of Rs. 36,800 relating to second period was confirmed. Before us, Shri Dani, ld. representative for the assessee, drew our attention to a comparative chart on page 27, as included in the compilation. From this chart, it is clear that in the case of the assessee itself shortage was taken at 8% in the asst. yrs. 1977-78, 1975-76 and 1974-75 and at 7% in the asst. yr. 1976-77. The argument of Shri Dani is that as compared to the earlier years, the assessee claimed lesser shortage in the year under appeal. Then, he drew our attention to page 31 of the paper book, which is a letter addressed from Iron Steel Controller to M/s Ludhiana Steel Rolling Mills, Miller Ganj, Ludhiana. In this letter, the authority certified the wastage in Billets and several other items, which are being manufactured by the assessee. The wastage so certified ranges between 10 to 20%. On the basis of these materials, Shri Dani argues that the CIT(A) was not right in restricting the shortage to 5% only. We find substance in the submission of Shri Dani. Loo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stock of semi finished goods list of bars, finished goods and old iron scrap. According to her, the position of excess stock emerged as under: . Rs. (i) H.I. Ingots excess as per ITO 1.450 tonnes ignored being marginal. . (ii) Iron Scrap excess as discussed above 62191 tonnes value @ Rs.675 41,980 (iii) Flats excess 42 tonnes @ 1625 per ton 68,250 (iv) Bars 16 tonnes @ 1625 per ton 26,000 (v) Semi finished 10.110 tonnes @ 1270 per ton 12,840 . 1,49,070 6. Thus, in her opinion, the excess stock of the value of Rs. 1,49,070 was there. The addition of Rs. 2,31,965 was, therefore, reduced to Rs. 1,49,070 and relief of Rs. 82,895 was given. It is against this relief, the revenue has come up in appeal. The principal plea of the assessee before the CIT(A) was that there was no excess stock and, in alternative, the assessee pleaded that if any excess stock was found, then the value of such excess closing stock found in the first period be taken to be the opening stock of the second period. The CIT(A) accepted this plea of the assessee. The revenue has challenged thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on each rod. 6.28 Tons 10 big iron ore and 10 heavy iron cylinders/1 ton each/1 ton each are about 100 pieces of iron 80 Kg each 7.20 Tons Iron pieces in bricks 8.6 Tons Iron pieces in bricks 9.25 Tons Long bars and hinglands about 80,51 of 20 tons. 195 Total . 8. On page 2, the description of the bars is as follows: Bars Square and Round 3 Tons Axils 1 Tons Bars 4.50 Tons Angles 26+60 1.50 Tons Bars 4.50 Tons Bars 1.00 Tons Bars 20.00 Tons Bars 1.00 Tons Bars 12.00 Tons Bars 7.00 Tons . 55.00 Tons 9. The description of the finished goods as per page 3 is as follows: Sleeper . 28 Tons 32, 000 Kg. Flats 12x5 sq. 425x20 7 8,500 Kg. Flats 12 1/2x4 8 8,000 Kg. Flats 12 1/2x4 1.50 . . Flats 12 1/2x4 sq. 6.50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number of the pieces and actual weight of each piece. With regard to Item no. 2. Weight and total number of the pieces have been given, but the size, shape and actual weight of each piece have not been mentioned. In respect of Item no. 3, number of iron pieces has not been given, but only weight of a piece has been mentioned. It is not known what was the weight, size and shape of hingland. The position of the other items is not free from such lapses. On page 2 also, number, size and weight of the bars have not been mentioned and only total weight has been mentioned. On page 3, weight of 5" flats has been given, but the size and quantity have not been mentioned. It is not known how the stock on page 4 was weighed and whether such stock bore the same shape, size and weight. From the scanning of these inventories, it can be concluded that while preparing the inventories, the weighment was not done on any scientific or systematic method, but it was purely on estimate basis. The inventories have been signed by one of the partners and he gave more or less the same endorsement on all the inventories that the stock was purely estimated and no actual weighment was done. The ITO has given a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts, the authorities below disallowed the claim of the assessee. The case of the assessee is that to obviate complications, the assessee resorted to a new method, namely, getting these odd jobs done through another concern on payment. The argument of Shri Dani is that in the business of the assessee bundling, cutting, sorting and weighing are essential and the assessee has to incur expenditure necessarily on these items and that in the past also, this expenditure was allowed, when it was incurred by the assessee itself. We agree with Shri Dani that this point requires further consideration. We, therefore, set aside the order of the CIT(A) on this point and restore the case back to her file with a direction that a clear finding will be recorded whether the assessee got the work, i.e., bundling, cutting, sorting and weighing etc. done from other concern and whether the impugned payment was made by the assessee for that. If no actual evidence for this is given by the assessee, then clear finding will be recorded as to how much payment was required to be made for these jobs. The estimate so made will be allowed. 13. The last ground in the appeal of the assessee relates to disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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