9911796707
TMI Blog1981 (7) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... to the previous year ended 31-12-1975, the ITO scrutinised the quantitative tally statements and found that there was an invisible loss of 2.18 per cent, which was excessive when compared to the similar loss of 1.18 per cent shown in the preceding year. He also noticed that the gross profit had declined from 17.1 per cent to 9.02 per cent and asked the assessee to explain the increased claim in the invisible loss with reference to the monthly figures of production. The assessee explained that the monthly figures were rough and ready estimates and that several factors, such as, the mixing of usable waste called sweepings, the variation in the use of the foreign and Indian cotton, the suspension of work due to strike and consequential accumul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts which had been checked by the authorities concerned and, therefore, there was no justification for assuming that any yarn had been produced or sold outside the books and for making an addition in that regard. 5. On consideration of the rival submissions, we are of the opinion that the order of the Commissioner should be confirmed on this point. The fact that the gross profit was lower than that in the earlier year may provoke the ITO to enquire into it. But in this case, we find that even after the enquiry he had not made any addition on account of any suppression in the gross profit. That being the position, there cannot be an addition for any invisible loss in the process of production, unless there is further material to show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of which showed that the development rebate was granted at 25 per cent in respect of the spinning machinery, motor and ring frame starters of the electrical machinery and at 15 per cent only on the generator set and low tension panel board. The assessee appealed and the ITO explained that in the view of the internal audit wing, only textile machinery was entitled to the higher rate of development rebate and even the motor and ring frame starters were only ancillary to the textile machinery. The Commissioner found that there was no scope for such an invidious distinction and that the machinery installed for the purpose of the business were entitled to the higher rate of development rebate when the business was that of the production of ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. The only way to read the sub-section is that machineries installed for the purpose of business of construction, or the business of manufacture or the business of production of an article listed in the Fifth Schedule would be entitled to the higher rate of development rebate allowance. It would follow that since the business of the assessee is the production of cotton yarn which is an item listed in the Fifth Schedule all the machinery used for the purpose of such business as categorised in the opening of the section would be entitled to the higher rate of development rebate. The revenue advanced another argument that a generator should be left out of the scope of the textile machinery for the purpose of this section, as it can be util ..... X X X X Extracts X X X X X X X X Extracts X X X X
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