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TMI Blog2012 (11) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... ses it was noted that on account of better overall performance and profits and due to the maintenance of authentic books of account, no further addition was called for. However, in this case, keeping the various percentages of oil gain in this line of business in the various comparable cases an adhoc addition of Rs.2 lacs as against Rs.4,23,037/- done by AO shall serve the purpose to cover up any leakage as also the gap between the two percentage of oil gain noted by the AO - partly in favour of assessee. Disallowance of credit balance of NCCD (CENVAT) being written off - Held that:- The assessee had maintained exclusive system of accounting, therefore the duty paid was not debited as a part of the purchases but a separate account was ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under TUF scheme of the Govt. 2. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) dated 18.12.2008 were that the assessee-company is in the business of manufacturing of texturised yarn. The assessee has claimed depreciation @ 50% on plant machinery, however, as per AO the eligible rate of depreciation was 25% only. The assessee has informed that the machinery was purchased under Technology Upgradation Fund Scheme (in short TUFS), hence eligible for higher rate of depreciation. However, the AO was not convinced thus accordingly excess depreciation of Rs.9,05,766/- was disallowed. The matter was carried before the first appellate authority who has affirmed the action of the AO. 3. Having heard the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion given that why the Oil gain had reduced from 1.08% of the past year to 0.22% for the year under consideration. The difference between the two percentages was computed at 0.86% and, accordingly, an addition of Rs.4,23,037/- was made. The matter was carried before the first appellate authority. Before the first appellate authority, it was contested that the fall in percentage in Oil gain was due to the use of high speed machine which consumes lower oil in comparison to the older machines. It was also contested that the day-today purchase, consumption, production and sales records have duly been maintained and no defect was found, therefore the percentage of oil gain as disclosed by the assessee should be accepted. However, ld. CIT(A) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e production had been maintained by this assessee and there was no rejection of books of account, therefore the book result ought to have been accepted. 6. On the other hand, from the side of the Revenue, ld. Sr. DR Mr. Rahul kumar appeared and argued that the drastic fall in the oil gain could not be explained by the assessee, therefore the AO had no option but to apply the same percentage of oil gain for the year under consideration. 7. Having heard the submissions of both the sides and on due consideration of the case laws cited, we have noted that the percentage of oil gain differ from case to case. In one of the case M/s.Shailja Polyesters Pvt. Ltd. vs. ITO (ITA No.2490/Ahd/2004 - A.Y. 2001-02) order dated 21.8.2009, the oil gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so the gap between the two percentage of oil gain noted by the AO. Resultantly, part relief is granted thus this ground may be treated as partly allowed. 8. Ground No.3 reads as under:- 3. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of India-tax (Appeals) has erred in confirming the action of the Assessing Officer in making disallowance of Rs.3,23,196/- on account of credit balance of NCCD (CENVAT) being written off. 8.1. It was noted by the AO that for the year under consideration an amount of Rs.3,23,196/- was written off by debiting the profit loss account pertaining to AED NCCD . The explanation of the assessee was as under:- Excise Duty of Rs. 3,23,196/- was written o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the finished goods, i.e. texturised yarn is manufactured, the excise is levied in the form of basic duty. The assessee has adopted exclusive method of accounting, therefore debited the net purchases and those were separately recorded in the books of accounts. We find force in this argument of the assessee because while maintaining the exclusive method of accounting the assessee had a choice to increase the value of the purchases in respect of the duty paid in the form of AED NCCD. In other words, an expenditure was incurred but that expenditure could not be adjusted against the CENVAT Rules because on the finished goods, i.e. texturised yarn only the basic duty is leviable. We, therefore, hold that the amount which is now written off b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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