9911796707
TMI Blog2016 (3) TMI 489X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is a company stated to be engaged in the business of Manufacturing of Pharmaceuticals Fine Chemicals. Assessee filed its return of income for A.Y. 2008-09 on 24.09.2008 declaring total income at Rs. Nil after setting off of brought forward business losses of ₹ 80,37,554/- and book profit u/s. 115JB at ₹ 1,28,66,565/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 13.12.2011 and the total taxable income was determined at ₹ 2,15,20,067/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 20.04.2012 granted substantial relief to the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Revenue is now in appeal before us and has raised the following effective ground:- 1. The ld. CIT(A)-XIV, Ahmedabad has erred in law and on facts in deleting the addition of ₹ 1,93,29,886/- made on account of inflation of purchases of raw material and ₹ 76,35,041/- made u/s. 69 of the Act. 4. During the course of assessment proceedings, A.O noticed that in earlier years, addition was made on account of difference in the actual consumpti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar to that of earlier years, the appeal of Revenue needs to be dismissed. He thus supported the order of ld. CIT(A). 7. We have heard the rival submissions and perused the material on record. In the present case, we find that the addition has been made by the A.O on account of deficit/excess consumption of raw materials on the basis of Standard Input Output ratio of consumption. We find that the Co-ordinate Bench of Tribunal while deciding the appeal in Assessee's own case for A.Y. 04-05 to 06-07 and after relying on the earlier decision of the Coordinate Bench of Tribunal in Assessee's own case for A.Y. 2002-2003 has deleted the addition by holding as under:- 4. Next issue in Revenue's appeal is with regards to addition of ₹ 2,52,05,652/- made on account of deficit/excess consumption of raw materials. This amount include addition of ₹ 73,43,999/- on account of inflation of purchase of raw material and addition of ₹ 1,77,61,653/- on account of unexplained investment in purchase of raw materials. As both the grounds relate to common issue, the same were considered together. Assessing Officer observed that assesse was engaged in the manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statement has been reproduced in the assessment order on page 10 11. He has categorically stated in reply to various questions which have been put-up by the AO that the consumption of raw materials is exactly in accordance to the input output ratio prescribed by the Government and printed in the sale invoices, in reply to question No.5, 6, and 8 he has categorically mentioned that the production of export items is as per the standard norms and these inputs are also mentioned at the bottom of export sales invoice, In reply to question No.8 he has again confirmed that production of the item is as per the standard norms and the inputs are used as per the standard usage mentioned at the bottom of sales bills. If there would have been any variation in the consumption of raw material he would have mentioned the same before the AO. Even otherwise for the formulation of medicine the standard input output ratio will have to be adhered to. He has not mentioned in any of the reply to the question that there was any variation between the standard input and output ratio in the consumption of the raw materials. Therefore, his statement who controls the production certifies that the consumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tandard input output ratio, On these facts, the CIT(A) finally enhanced the addition vide para 2.2.3, by observing as under: 2.2.3 From the facts on record and the above discussion, it is clear that the appellant had shown less consumption of certain input raw material of ₹ 63,04,605/- and the only inference is the same have been purchased from outside the books of account and the same is liable to be added as the investment from undisclosed sources and the appellant has shown more consumption of certain items to the extent of ₹ 1,32,57,449/- which has not been consumed and therefore, the purchased to this extent have been inflated to reduce the profit of the company. Thus the total addition which is liable to be made is ₹ 1,95,62,054/-. After considering the addition of ₹ 89,10,074/-, the income which is to be further enhanced is ₹ 1,06,51,333/-. Therefore, the AO is directed to enhance the income by ₹ 1,06,51,980/- Accordingly this ground is dismissed with direction to enhance the income by ₹ 1,06,51,980/-. The learned counsel of the assessee referred the Tribunal's decision, wherein the Tribunal in the case of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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