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TMI Blog2010 (11) TMI 961X X X X Extracts X X X X X X X X Extracts X X X X ..... leting the addition made of ₹ 4,34,824/- being the difference in the amount of conversion charges credited in the Profit and Loss account of the assessee and the payment of conversion charges to the assessee as stated in the Tax Audit Report of the principal i.e. AIA Engineering Limited. 4. The Ld. Commissioner of Income tax (A) XI, Ahmedabad has erred in law and on facts in deleting the addition made of ₹ 81,68,011/- being the suppressed conversion charges on account of claiming excess burning loss. Grounds raised for Assessment Year 2004-05 1. The Ld. Commissioner of Income tax (A) XI, Ahmedabad has erred in law and on facts in deleting the addition made of ₹ 27,02,925/- on account of disallowance of freight, octroi and cartage expenses. 2. The Ld. Commissioner of Income tax (A) XI, Ahmedabad has erred in law and on facts in deleting the addition made of ₹ 1,12,02,358/- being the suppressed conversion charges on account of claiming excess burning loss. 2. It is informed in the beginning itself that the in between year i.e. Assessment Year 2003-04 has already been decided by the Tribunal. We shall first take up the Revenue s appeal for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the furnishing of requisite form was a mandatory requirement. 3.1. Before concluding the question of disallowance, the Assessing Officer has also mentioned that for Assessment Year 2003-04, the said claim of deduction u/s.80IA was disallowed by his predecessor, however, the said order was reversed by Learned CIT(Appeals) and now the Department has filed the second appeal before the Tribunal. With these remarks, the claim of deduction u/s.80IA of ₹ 78,03,698/- was rejected. The matter was carried before the first appellate authority. 4. Learned CIT(Appeals) has considered both the aspects. In respect of the question of disallowance on the ground of job-work activity , the Learned CIT(Appeals) has discussed the meaning of word industry vis - vis the manufacturing and processing activity. He has cited J.B. Kharwar Sons (163 ITR 394)[Guj.], East India Hotels (209 ITR 854) and Northern Aromatics Ltd. (196 CTR 479)[Delhi] and Warren Laboratories (3 SOT 638)[Mum-Tribunal]. In the light of these decisions, it was held that the alleged job-work activity was nothing but a manufacturing activity because the end product was commercially a different product and came into exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bench D Ahmedabad vide order dated 31/12/2009 (supra) has decided in favour of the assessee, relevant paragraph No.4; reproduced below:- 4. We have heard the learned DR and the learned AR. The learned DR basically relied on the order of the AO. On the other hand, the learned AR submitted that the issue is covered in favour of the assessee by the decisions of the Hon'ble Gujarat High Court in the case of CIT vs. Gujarat Oil and Allied Industries (1993) 201 ITR 325 (Guj) and CIT vs. Mayur Foundation (2005) 274 ITR 562 (Guj) for the proposition that even if Audit Report is not filed along with the return, but if it is filed before completion of the assessment, then the claim of the assessee could not be denied. Since the issue is directly covered in favour of the assessee and it is not disputed that the assessee has filed the Audit Report in correct Form before making of the assessment, there is no case for disallowing the claim. In any case, the breach is technical, the facts and circumstances of the case remain the same, there is no case for disallowing the claim. As a result, this ground of Revenue is rejected. 6.1. Following the above view, this part of the objecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue is hereby dismissed. 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 that the disallowance was unfounded. With this brief background, now before us, an order of the Tribunal ITAT Ahmedabad D Bench for Assessment Year 2003-04 passed in ITA No.2954/Ahd/2006 dated 31/12/2009 is placed before us, wherein vide para-7 it was held as under:- 7. We have heard the learned DR and the learned AR. The learned DR basically relied on the order of the AO and the learned AR relied on the order of the learned CIT(A). After hearing the parties, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harges on the basis of Audit Report. Presently we are relying on the statement given by the learned AR and in case the Revenue finds the facts different i.e. the principal claims higher deduction of conversion charges in the P L Account, it can come up in Miscellaneous Application. Accordingly, this ground of Revenue is rejected. 10. Once a view has already been taken, therefore, for this year as well, we have no reason but to follow the same. However the investigation is still needed because the necessary information is not placed before in this year which was appreciated by the respected coordinate bench in the past. Therefore natural justice demands to restore this ground back to AO to decide afresh but in the light of the above observation after verification of the connected account as mentioned in the afore reproduced paragraph. With the result, this ground of the Revenue is partly allowed that too for statistical purpose only. 11. Apropos ground No.4, the observation of the Assessing Officer was that the average burning loss during the year was 10.92%, which according to him was higher considering the type of furnace, i.e. electric fire furnace used by the assessee. As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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