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TMI Blog2016 (9) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... he remaining material worth ₹ 1,91,54,094/-, the Customs & SEEPZ Board Authorities have destroyed the material worth ₹ 1,58,33,067/-. So far as the remaining material of ₹ 33,25,027/- is concerned, the plea of the assessee is that the worth value of the material at the time of use was not that of invoice value. The material at the time of use had reduced to the scrap value which was used by the assessee for its manufacturing activity and the value of the material used was taken at ‘zero’ cost. The profits from the corresponding sales have already been offered for taxation by the assessee. Under such circumstances, in our view, the Ld. CIT(A) was not justified in confirming the additions of ₹ 33,25,027/- at original bill value. Since the assessee has offered the profits from the sales of the goods and the raw material used has been taken at ‘zero’ value, hence, in our view, the value of the material has already been taxed and adding the bill value of the goods at ₹ 33,25,027/- would amount not only to the excess addition but also to the double addition. We, therefore, direct the AO to verify whether the raw material worth ₹ 33,25,027/- (as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respective parties and for the balance raw-material worth ₹ 1,91,54,094/- debit notes were raised on the said parties. The assessee before the Assessing Officer (hereinafter referred to as the AO) submitted that as the parties from whom the said raw-material worth ₹ 1,91,54,094/- were purchased did not lift the goods, the said raw-materials were lying with the assessee at the risk and cost of the said parties. The assessee was not the owner of the said goods. The said parties were in fact the owner of the said goods. As the ownership of the said stock was not vested with the assessee, the said stock can never be treated as assessee s stock so as to attract the provisions of the Section 28(iv) of the Act. In order to substantiate its averment, the assessee placed following evidences before the AO. (a) Letter dated 21st October 1996 of appellant to Quality components Systems Pte. Limited vide which Assessee has requested the party to take back the material latest by 31st March 1997 otherwise the material will be scrapped by the appellant. (b) Letter dated 30th October, 1996 addressed by Quality Components Systems Pte. Limited to the appellant requesting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial. 3. The assessee submitted that from the aforesaid evidences that it was clear that the assessee was holding the said raw material on behalf of the aforesaid two parties and the said raw-material was totally in obsolete condition and in fact the said raw-material was destroyed in presence of the Customs Authorities. The assessee further submitted that it being in SEEPZ, it was not possible for the assessee to ship any goods out of the premises without complying with the required procedure of the Custom Authorities. The assessee further submitted before the AO that after destruction of the said raw-materials, the Custom Authorities assessed the value of the scrap at ₹ 4,46,316/- for the purpose of levying Custom Duty and the Custom Duty of ₹ 1,50,211/- was recovered by the Custom Authorities. Thereafter the scrap was disposed off by the Custom Authorities. The AO, however, did not accept the contention of the assessee and held that the raw material worth ₹ 1,91,54,094/- was in good condition and was held as stock in trade. The assessee had not included the same as its closing stock. Thus, it was a benefit accrued to the assessee in terms of sec. 28(iv) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this respect was produced. Being aggrieved by the above order of the Ld. CIT(A), the assessee has come in appeal before us agitating the confirmation of addition of ₹ 33,25,027/-. Whereas the Revenue has come in appeal agitating the action of the Ld. CIT(A) in deleting the remaining part of the additions made by the AO. 5. Before proceeding further, we may point out that this is a fourth round of litigation/appeal before us. In the first round, the assessee has agitated the reopening of the assessment and the consequent additions made by the Assessing Officer (hereinafter referred to as the AO) on account of the material worth ₹ 9,09,79,393/- lying with the assessee unused/not taken back by the concerned supplier. The AO reopened the assessment adding the value of the said material into the income of the assessee under section 28(iv) of the Act. Before the Tribunal, the assessee furnished certain additional evidences. Hence, the Tribunal restored the matter back to the file of the AO. In the set aside proceedings, the assessee pleaded before the AO that the excess material was not utilized rather the same was destroyed by the SEEPZ Board and Customs Authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time of use was not that of invoice value. The material at the time of use had reduced to the scrap value which was used by the assessee for its manufacturing activity and the value of the material used was taken at zero cost. The profits from the corresponding sales have already been offered for taxation by the assessee. Under such circumstances, in our view, the Ld. CIT(A) was not justified in confirming the additions of ₹ 33,25,027/- at original bill value. Since the assessee has offered the profits from the sales of the goods and the raw material used has been taken at zero value, hence, in our view, the value of the material has already been taxed and adding the bill value of the goods at ₹ 33,25,027/- would amount not only to the excess addition but also to the double addition. We, therefore, direct the AO to verify whether the raw material worth ₹ 33,25,027/- (as per their original bill value) was used in the manufacturing activity at zero cost and if the corresponding profit from the sale of goods manufactured from the use of the said raw material has been offered for taxation, then no additions be made in respect of the said value of ₹ 33,25 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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