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TMI Blog2011 (7) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer that excessive process loss was claimed by the assessee only to suppress real extent of production ? (2) Whether on the facts and in the circumstances of the case, the Appellate Tribunal has substantially erred in law in directing to allow separate relief under sections 80HH and 80I of the Income Tax Act ? 2. Assessee company was involved in processing of raw cotton seed oil, groundnut oil, etc. The Company was purchasing raw material from the market and after processing would sale it in the market. The Company was also doing similar job work on behalf of others. Main business of the company was processing cotton seed oil. While undertaking scrutiny assessment, the Assessing Officer formed an opinion that the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y inflating the process loss. 3. Against the order of the Assessing Officer, assessee went in appeal. CIT(Appeals) relying on the decision of the same assessee partly allowed the appeal. As held in previous years, CIT(Appeals) in the present year also held that process loss of 2% was reasonable and acceptable. CIT(Appeals) therefore, reduced the additions made by the Assessing Officer from ₹ 1,33,80,333/to ₹ 58,66,659/. 4. Against the order of CIT(Appeals), Revenue as well as assessee both approached the tribunal. The tribunal by the impugned judgement taking into account various materials allowed the assessee's appeal and dismissed the Revenue's appeal. 5. Revenue is therefore, before us in the present Tax Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year after year, the Gross Profit rate of the assessee company was increasing. Process loss was fluctuating between a minimum of 1.9% to maximum of 3.05%. The tribunal also observed that the product manufactured by assessee is refined cotton seed oil which is obtained from refining raw cotton seed oil which is in turn obtained from crushing cotton seed by ginning factories. Cotton seed is an agricultural commodity. The quality of cotton seed would certainly impact the raw cotton seed oil and consequently refined cotton seed oil. Quality of raw material would depend on several factors such as rainfall, quality of soil and other such factors. It was also noted that if the raw cotton seed oil is obtained from crushing of inferior quality of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f cotton seed oil procured from the market. Such cotton seed oil depending on quality of cotton produced being an agricultural commodity, naturally quality would depend on the seeds used, the technique employed by farmers for production, soil, rainfall, irrigation and so on. In absence of any additional material, only on basis of an isolated answer by one of the Directors of the company, the Assessing Officer could not have come to the conclusion that the process loss was artificially inflated. Tribunal had also relied on certificate given by the supplier of machine who stated that typically the process loss ranges between 2.65% to 4.20%. 11.In addition to above, we also notice that in earlier years, orders passed by the tribunal were ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has accepted the view taken in these judgements. See CIT v. Nima Specific Family Trust reported in [2001] 248 ITR 29(Bom); CIT v. Chokshi Contacts P. ltd.[2001] 251 ITR 587(Raj); CIT v. Amod Stamping[2005] 274 ITR 176 (Guj); CIT v. Mittal Appliances P. Ltd. [2004] 270 ITR 65(MP); CIT v. Rochiram and Sons [2004] 271 ITR 444(Raj); CIT v. Prakash Chandra Basant Kumar[2005] 276 ITR 664(MP); CIT v. S.B.Oil Industries P. Ltd. [2005] 274 ITR 495 (P H); CIT v. SKG Engineering P. Ltd. [2005] 119 DLT 673 and CIT v. Lucky Laboratories Ltd. [2006] 200 CTR 305(All) Since the special leave petitions filed against the judgement of the Madhya Pradesh High Court have been dismissed and the Department has not filed the special leave petitions against t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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