9911796707
TMI Blog2011 (11) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... stently followed and even accepted by the Department cannot be departed. - The impugned addition has been made merely on conjectures, surmises and guesswork. 2.1. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) r.w.s. 145(3) of the I.T. Act, 1961 dated 28/12/2007 were that the assessee-company is in the business of processing of Art Silk Fabrics. At the start of the assessment order, it was recorded by the Assessing Officer that on the turnover of ₹ 4,86,80,174/- the appellant had shown ratio of Gross Profit at 19.02% during the year under consideration. As against that on the turnover of ₹ 3,97,01,608/-, the ratio of Gross Profit disclosed by the assessee at 17.83% during preceding assessment year. The Learned Authorised Representative of the assessee has, therefore, pointed out at this juncture that the turnover as well as the Gross Profit ratio, both were better in the assessment year under appeal. 2.1. The Assessing Officer has issued a show-cause notice asking the assessee to provide quantitative details of stock and to inform whether day-to-day register was maintained or not. The assessee has furnished an inventory of closing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that to complete a circle of process in textile processing unit, it takes at least five days. Therefore, a lot of grey cloth put to process on first day comes out on the 6th day duly processed. Therefore, it can be held that the assessee must have five days work-in-process as on 31.03.2005. This works out to 19949 meters x 5 days = 99745 meters. The average cost of processing charges per meter works out at ₹ 5.49 (Gross receipt - Gross Profit = cost/meter processed = 48680174 - 9257502 = 39422672 / 7181664 = ₹ 5.49). Considering the various stages of process, it would be reasonable to adopt 50% i.e. ₹ 2.75/- per meter for arriving at value of work-in-process. Therefore, the closing stock of work-in-process. Therefore, the closing stock of work-in-process in this case is worked out at ₹ 2,74,298/- (99745 meters x ₹ 2.75-). Since the assessee company itself has shown the closing stock of WIP of ₹ 91,960/-, the difference of ₹ 1,82,338/- is treated suppressed value of work in progress. Therefore, the suppressed value of work-in-progress of ₹ 1,82,338/- as worked out above is added to the total income of the assessee. Since the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant paragraph of the Assessing Officer (already reproduced supra) and have noticed that the Assessing Officer has worked out an average of cloth processing per day at 19,949 meters. Then the Assessing Officer had also opined on the basis of a common knowledge that to complete a circle of processing of textile, it generally takes about five days. Therefore in Assessing Officer's opinion about 99,745 meters cloth would be under work-in-progress. On that estimated meters of cloth he has further applied an average of cost of processing charges at ₹ 2.75/- per meter. The Learned Authorised Representative of the assessee has therefore contested that the working of the availability of cloth in meters as work-in-process was a hypothetical figure. As well as, the cost applied at ₹ 2.75 per meter was also merely an estimated average cost alleged to have been incurred presuming that all the five stages of processing was completed. As against that presumption, it has been informed that the value of finished goods and stock in progress declared at ₹ 91,960/- was on physical verification at the close of the accounting period. It is true that the processing of Art Silk fabri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minary argument of Learned Authorised Representative of the assessee was that the purchase and consumption of the coal was duly recorded in the books of account of the assessee and on that basis the stock was valued at the end of the accounting period at ₹ 11,01,223/-. However the strong contention of Learned Departmental Representative was that on verification of quantitative details of purchase, it was evident that there was a shortfall in the available quantity of coal for two months. That shortfall was admitted by the assessee and no convincing reason of the said shortfall was given to the Assessing Officer. The assessee has filed a chart of month-wise consumption of coal vis-à-vis month-wise purchase of the coal. That chart as submitted by the assessee has itself disclosed the impugned deficit of stock of coal. Even at this stage of appeal, we have noticed that no cogent material is placed in defense by the assessee. The only argument of Learned Authorised Representative of the assessee is that the consumption of coal was worked out on an estimate basis but one fact should also not be ignored that the figures of consumption has also been given by the assessee hims ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e done the business with profit and better gross profit compared to earlier years. On this ground we beg to state that allow the expenditures in the account of discount which is just 0.94% of the overall job income." 8.2. However, the Assessing Officer was not convinced and held that in respect of the confirmations produced by the assessee, the claim was admissible and in respect of remaining parties in the absence of confirmation the claim of discount expenses remained unexplained. The Assessing Officer has thereafter on that basis worked out a party-wise discount at ₹ 2,41,265/- and taxed in the hands of the assessee. The said addition was challenged before the first appellate authority who has affirmed the addition barring an amount of ₹ 17,035/- which was found to be an amount representing opening balance of the said party. 9. Having heard the submissions of both the sides and after due consideration of the party-wise details as discussed by the Assessing Officer, we are of the considered view that in respect of the impugned parties, merely for non-furnishing of confirmation the said addition was made, however, in respect of most of the parties no such addition wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds PF & ESI after the due date, as prescribed under the relevant Act but before the due date of filing of the return under I.T. Act, then no disallowance could be made in view of the provisions of section 43-B of the I.T.Act. In a latest decision of ITAT "D" Bench Ahmedabad in the case of Agew Steel Manufacturers Pvt.Ltd. vs. Dy.CIT bearing ITA No.488/Ahd/2011 order dated 22/07/2011 wherein one of us, i.e. JM, is the co-signatory, the provisions of sections 43-B, 2(24)(x) and 36(1)(va) have been considered in the following manner:- "5. We have heard both the parties and gone through the facts of the case as also the aforesaid decisions. As regards employer's and employees' contribution towards PF , we find that the ITAT Ahmedabad Benches have been consistently following the decision of the Hon'ble Delhi High Court in the case of CIT v. P.M.Electronics Ltd., 220 CTR 635 (Delhi), wherein relying upon the decision of Hon'ble Apex Court in the case of CIT Vs. Vinay Cement Ltd.,213 CTR (SC) 268 , the Hon'ble Court concurred with the view taken by the Hon'ble Madras High Court in Nexus Computer (P) Ltd.,219 CTR(Mad) 54 in holding that employer/employees' contribution towards provident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Proviso to s. 43B (b) provided that any sum paid by the assessee as an employer by way of contribution to any provident fund shall be allowed as a deduction only if paid on or before the due date specified in 36(1)(va) of the Act. After the omission of the second Proviso w.e.f 1.4.2004, the deduction is allowable under the first Proviso if the payment is made on or before the due date for furnishing the return of income. The Hon'ble High Court while considering whether the benefit of s. 43B can be extended to employees' contribution as well, which are paid after the due date under the PF law but before the due date for filing the return, held that (i) Though the Revenue has argued that a distinction is to be made between "employers' contribution" and "employees' contribution" and that employees' contribution being in the nature of trust money in the hands of the assessee cannot be allowed as a deduction if not paid on or before the due date specified in the PF etc law, the scheme of the Act is that employees' contribution is treated as income u/s 2 (24) (x) on receipt by the assessee and allowed as a deduction u/s 36 (1) (va) on making deposit with the concerned authorities. S. 43 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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