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TMI Blog2011 (1) TMI 1350X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of suppressed yield, without appreciating the facts of the case." 3. The brief facts leading to the above issue are that assessee is engaged in the business of manufacture, importer, trader and exporter of diamonds. The assessee has filed its return of income for the year under consideration on 24-10-2005 declaring total income of ₹ 40,32,786/-. The Assessing Officer during the course of assessment proceedings noted that assessee has shown yield of polished diamond @ 30.77% on the basis of data of Hansal diamond, Mitul Gems, Pavasiya Exports & Miraj Gems. The AO required the assessee to explain the suppressed yield and assessee replied that in diamond industry the yield of rough diamond depends not only on the basis of rough diamond but on the size, purity, colour and shape of diamond etc. The assessee claimed that if one wants more yield then purity of diamond will be low and cannot be sold at higher price. He stated that procedure in every unit has its own and that also own quality, own customer and own market. They have workers who can polish the diamond of specific quality, size, colour and cutting. He narrated example that from the rough diamond of ₹ 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y defects in the same. He has also not rejected the book results by invoking provisions of section 145 of the Act. However, he made addition to the income of assessee on account of suppression of yield on the ground that yield shown by assessee is lower than that shown by other assessee's engaged in this line of activity. However, in my opinion addition to the income of assessee cannot be made purely on this ground as there should be some other cogent evidence on record which indicates that there is suppression of income. Even in respect of comparable instances cited by assessing officer, I find that even in those cases there is variation in yield. For e.g. in the case of M/s. Hansal Diamond where average cost of rough diamond is ₹ 5703 per carat the yield comes to 57.4%, whereas in respect of rough diamond costing as high as ₹ 112528 per carat the yield is only 51% i.e. yield is lower in this case although cost of rough diamond is almost twice the cost of rough diamond where yield is 57.4%. This clearly denotes that there cannot be any exact correlation between yield & the cost of rough diamond. Further, I also find that average selling priced of assessee is much highe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of Revenue is against the order of CIT(A) in deleting the addition of ₹ 6,12,797/- made by Assessing Officer on account of labour charges. For this, Revenue has raised the following ground No.2:- "2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of ₹ 6,12,797/- made by the A.O on account of excess labour charges, without appreciating the facts of the case." 6. The Assessing Officer during the course of assessment proceedings noted that labour charges were charged at ₹ 375/-, which is very high as per comparable in the same line of business as against labour charges paid in comparable diamond manufacturing industry at ₹ 275/- to 350/-. According to AO, assessee has not produced nor maintained piece-wise details as per books of account and accordingly he restricted the labour charges at ₹ 350/- and made disallowance of ₹ 6,12,797/-. Aggrieved, assessee preferred appeal before CIT(A). The CIT(A) deleted the addition by giving following findings at page 4 & 5 of his appellate order:- "I have carefully considered the contention of appellant as well as that of the assessing office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Revenue is not supported by any evidence whatsoever rather the claim of assessee is supported by bills and vouchers, as the bills and vouchers were produced by assessee are supported by the payment made by assessee at ₹ 375/- per carat. Accordingly, we are of the view that CIT(A) has rightly deleted the addition and we confirm the same. This issue of Revenue's appeal is dismissed. 8. The next issue in this appeal of Revenue is against the order of CIT(A) treated the loss on account of forward contract as business loss. For this, Revenue has raised the following ground No.3:- "On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in treating the loss of ₹ 4,62,105/- on cancellation of forward contract as business loss as against the speculation loss head by the A.O, without appreciating the facts of the case." 9. At the outset Ld. Counsel for the assessee stated that in similar issue, this Tribunal in the case of ACIT Circle 9 Surat v. M/s. Marvin Gems in ITA No.3435/Ahd/2008 dated 29-10-2010 for assessment year 2005-06, wherein the Tribunal held in para-13 & 14 as under:- "13. We have heard the rival submissions and perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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