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TMI Blog2012 (11) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... ter before the learned CIT(A) where the learned CIT(A) vide order dated 16-03-2009 allowed partial relied to the assessee. Against the aforesaid order of the learned CIT(A), the revenue is now in appeal before us. 3. The revenue has raised 5 elaborate grounds of appeal wherein grounds No.4 and 5 are general in nature and therefore not adjudicated. Rest three effective grounds of the revenue are discussed and disposed of herein below. 4. Ground No.1 of the appeal of the revenue relates to deletion of addition of Rs. 59,27,275/- made on account of G. P. Addition. During the course of assessment proceedings the Assessing Officer observed that the assessee had shown gross profit of 26.73% as against the gross profit of 30.28% in the immediately preceding previous assessment year. The assessee inter alia explained the fall in gross profit on account of increase in price of diesel and cost of power and fuel. The assessee also submitted that higher gross profit of earlier year was due to the reason that in that year it had done job work on items which had high profitability. Those items were not repeated in the year under consideration. It was further submitted that if the gross profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial was supplied to it by the principal and consequentially entire finished goods was taken away by it, meaning thereby that the ownership of the entire stock of the appellant effectively belonged to the principal and not to the appellant. 2.2.3 It is also seen that the appellant had been declaring process loss of 10% to 11% consistently since its inception more than 10 years ago. 2.2.4 It is also seen that the appellant has justified the marginal fall in GP during the year under consideration on account of increase in price of diesel on which it did not have any control. It is vital to note here that upon placed before it, the Assessing Officer has also not refuted this claim of the appellant. 2.2.5 In the light of the facts placed before me, I am of the opinion that the appellant did not maintain day to day stock register and further that the fall in GP during the year under consideration is majorly on account of increase in price of diesel. I am of the further opinion that in view of the appellant operating only on job work the quantity of stock or valuation thereof would not affect the profitability of the appellant as the same belonged to its principal. Hence the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the same was not repeated in the year under consideration. This factual aspect has not been controverted by the revenue by bringing any contrary material on record. Further, during the year under consideration, increase in diesel price and power also contributed to fall in gross profit. The learned CIT(A) has given a finding that the assessee has declared process loss of 10% to 11% consistently. Further, the assessee is liable to excise whereupon the assessee is required to maintain day to day stock register in RG 23. During the course of survey proceedings carried out at the assessee's premises on 12-10-2004, the stock register maintained was also impounded. In view of these facts, the learned CIT(A) has given a finding that the assessee had maintained day to day stock registers. These factual aspects have also not been controverted by the revenue by bringing any contrary material on record. In view of the totality of the aforesaid facts we are of the view that in the present case, no interference is called for to the order of the learned CIT(A). We thus confirm the findings of the learned CIT(A) and dismiss this ground of appeal of the revenue. 7. Ground No.2 of the appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but however, relied on the order of the Assessing Officer. 9. We have heard the rival submissions and perused the material on record. We find that before the Coordinate Bench for assessment year 2002-03 one of the ground of appeal of the revenue was "the learned CIT(A) has erred in law and on facts in deleting the addition made of Rs. 20,84,412/- on account of disallowance of freight and expenses. The Tribunal has upheld the order of the learned CIT(A) in deleting the addition by holding as under: "7. Apropos ground No.2, the observation of the Assessing Officer was that in terms of an agreement with the holding company, AIA Engineering Ltd. the freight in respect of incoming raw-material and dispatch of the goods was to be borne by the said holding company, then the assessee has wrongly debited the freight in Profit & Loss account. When the matter had gone before the first appellate authority, the Learned CIT(Appeals) examined each head of the expenditure in respect of which freight and octroi, etc. were claimed. The learned CIT(Appeals) has distinguished the nature of expenditure with the nature of expenditure which was covered by the said agreement. On that basis, he has held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the copy of statement recorded was not provided to it; further the statement refers only to melting/ burning loss while the one declared by the assessee is process loss which includes loss in all the processes including the melting loss. It was also submitted that the assessee is involved in manufacturing of alloy steel castings from various types of scraps and ferro alloys. The composition of each product depends upon the specifications provided by the principal. Various processes are involved namely melting, knock off, fettling, machining, finishing etc. in the manufacturing activity. At each stage there is loss of weight in castings. It was further submitted that the actual process loss worked out in the range of 10 to 12% for the last almost 7-8 years depending on the composition of raw material, quality of scrap and various other factors. The Assessing Officer did not agree with the contentions of the assessee. He referring to the agreement entered into between the assessee and the principal, observed that since the burning loss was to the account of the principal and therefore the same cannot be borne by the assessee and therefore the assessee cannot claim the loss. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during all the processes ranges between 10% to 12%. He further submitted that from the statement recorded of two employees wherein they have stated that the loss to be around 5% it was not very clear as to whether the loss referred to was process loss or burning loss. Further, the assessee has not been provided with the copy of the statement. He further submitted in the earlier years, on identical issues the ITAT Ahmedabad "D" Bench has set aside the issue to the file of the Assessing Officer for re-examination. He placed on record the copy of the decision in ITA No.2954/Ahd/2006 dated 31-12-2009 for assessment year 2003-04 and ITA No.1807 and 1808/Ahd/2007 dated 19-11-2010 for assessment year 2002-03 and 2004-05. He, therefore, submitted that since the facts in the current year are identical to that of earlier year, following the decision of the Tribunal of earlier years, the matter be remitted back to the file of the Assessing Officer with similar directions. 13. We have heard the rival submissions and perused the material on record. We find that in the assessment year 2003-04 there was a similar issue before the Coordinate Bench. The issue was undisclosed conversion charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee, other comparative instances, the reasons for incurring loss and other factors such as type of machinery used, claim of manufacturer of machines as to the amount of loss likely to occur when work is done on their machines. Accordingly, we restore this issue to the file of the AO for examining it afresh. As a result, this ground of Revenue is allowed but for statistical purpose." 13. Since the Respected Co-ordinate Bench has taken a view and there upon restored the matter to affirm the correctness of the claim of burning-loss for re-adjudication by the Assessing Officer as per the directions, therefore, for the year under consideration on identical facts the matter is hereby restored to be decided de novo, needless to say after providing an adequate opportunity of hearing to the assessee." 13.2 We find that in the earlier years, the Coordinate Bench had taken a view and thereupon restored the matter to the file of the Assessing Officer to affirm the correctness of the assessee's claim of loss. We, thus, following the decision of the Coordinate Bench in the earlier years, restore the matter to the file of the Assessing Officer for examining it afresh after giving r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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