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TMI Blog2012 (2) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... he weight loss is in relation to the total weight of the ship or it is in relation to the light displacement tonnage weight of the ship (LDT). 2.2 The Assessing Officer for reasons mentioned in detail in the assessment order particularly in Paras 6.1 to 6.23 has enumerated the factors on the basis of which he is of the opinion that the weight loss is always a measure of the total weight of the ship and is normally 2% of the total weight of the ship and never at 12%-18% of the LDT as claimed by the assessee and on this basis the Assessing Officer has concluded in Para 6.23 of the assessment order that the assessee has claimed a higher weight loss/burning loss and thereby suppressed the sales of scrap to the extent of ₹ 10,48,68,269/- which Assessing Officer has added back to the income of the assessee as unexplained sales. 2.3 The assessee has challenged the above finding of the Assessing Officer and stated that as in the past the weight loss/burning loss in relation to the ship breaking industry has always been measured and estimated with reference to the LDT and never to the total weight. It is for the first time that an attempt has been made to link the weight /bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which no discrepancy has been found. Thus, the same is not accepted and the addition made is deleted as stated above . 2.5 Before us, the learned Departmental Representative referred to the order of the Assessing Officer and explained the concept of LDT, total weight and how the Assessing Officer arrived at the net scrap which the assessee should have got and how the Assessing Officer estimated the shortfall in yield of scrap. In reply, the learned Counsel submitted that all the reports relied on by the Assessing Officer as well as the experts reports submitted before the CIT (A) including that of the Ministry of Shipping, Customs authorities indicate the weight of the ship always on the concept of LDT and not on total weight as was considered by the Assessing Officer. It was further submitted that the CIT-7 after the representation from the ship breaking industry placed the norms of burning loss/loss upto 20% and the Assessing Officer had ignored the existing guidelines on the subject. It was further submitted that without any basis or consideration the Assessing Officer arrived at 2% loss on the total weight. The ld. counsel explained the issue by giving this example: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of the case and in law, erred in deleting the addition of ₹ 25 lakhs made on account of labour charges ignoring the fact pointed out by the Assessing Officer in response to assessee s submission forwarded by the learned CIT (A) . 3.1 After comparing the issue of labour charges claimed by the assessee with that of associated company, the Assessing Officer was of the opinion that the assessee has short charged labour charges to the extent of ₹ 25 lakhs and brought the amount as income stating that the assessee could have spent this amount outside books of account. The CIT (A) deleted the addition by stating as under: I have considered the submissions of the learned Counsel and the Assessing Officer and I am of the opinion that as pointed out by the learned Counsel that in the case of the sister concern the total wages relating to the payment to labourers is only ₹ 7,65,076/- and not ₹ 38,45,350/- because a sum of ₹ 30,80,274/- represents warehousing charges in Mumbai and further that the payments made to labourers have been duly recorded in the books and registers maintained and have not been disputed and therefore, on mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which, cranes or generator. Regarding lubricating oil, these are sold as lube oil and included in total sale of oil-copies of sale bills are duly entered. Regarding paint, thinol and chemicals-they are not recoverable and they either get destroyed in the dismantling process or used for cleaning purposes. Thus, the above addition deserves to be deleted, in view of the decision of the Hon'ble ITAT H Bench Mumbai in the case of M/s Anupama Steel Ltd AY 1998- 99 (ITA No. 5136/Mum/2002, Para-6). 4.2 After considering the assessee s submissions, the CIT (A) deleted the addition by stating as under: 4.2 I have considered the submissions of the learned Counsel and it is seen that the above addition has been made on the basis of certain calculations taken from the bill of entries and as held by the Hon'ble ITAT H Bench Mumbai in the case of M/s Anupama Steel Ltd AY 1998-99 (ITA No. 5136/Mum/2002, the same cannot be added back merely on the basis of the bill of entries as it cannot be presumed that sale has also been made at higher price. Thus, this addition of ₹ 10,35,095/- is hereby deleted . 4.3 After considering the rival submissions, we are of the opinion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the Assessing Officer ignoring his own findings on MV Avicena reiterated the sale of scrap on propeller at 73.88 MT and requested the CIT (A) to consider it while considering on addition. The CIT (A) vide Para 5.3 deleted the addition stating as under: 5.3 I have considered the submissions of the learned Counsel and the Assessing Officer and I am of the opinion that as stated by the appellant that the same is not accounted for separately because the appellant being a scrap dealer accounts for the total scrap of the ship as such without separately classifying the same. Also, the fact of selling the propeller in the subsequent year is clear and undisputed therefore, the addition of ₹ 40,41,847/- is deleted . 5.3 After considering the rival submissions and examining the facts, we are of the opinion that the Revenue grounds are misplaced. First of all there is no basis for arriving at undisclosed sale of propellers when the assessee has accounted for all the propellers at the time of scrap and further there is no basis for observation, after the remand report regarding the additional propeller of MT Avicena as he himself accepted at Para 9.5 that the propeller were f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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