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TMI Blog2017 (7) TMI 1163X X X X Extracts X X X X X X X X Extracts X X X X ..... deration was slightly higher by 2% than that of the immediately preceding two years and accordingly restricted the disallowance of 19% made by the AO to the extent of 2% of the job charges earned. Having regard to all the facts of the case, we find no infirmity in the impugned order of the Ld. CIT (JA) restricting the disallowance of 19% made by the AO to the extent of 2% and upholding the same, we dismiss the appeal filed by the revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... e has failed to substantiate his huge claim of about 69% on job charges expenses in form of consumable by referring to a single case. 2. As regards to engineers certificate as discussed earlier it is to be noted that such engineer is not a production expert engineer. He has no expertise knowledge in production. He is an expert setting up of a plant only. 3. The case referred to by the assessee is also a group related concern of the assessee. In addition to that the furnace of this company (as relied upon by the assessee) is run by coal which is different to the case of the assessee as well as other two cases as relied upon by me. The issue here is whether the expenses claimed by way of "consumable" is justified and reasonable. It is not that issue that the assessee has not purchased the consumable. The assessee might have purchased the consumable but that does not mean that huge percentage of expenses by way of consumable is justified and reasonable has actually been used for that extent as claimed. On the basis of the reason given above, the AO arrived at the conclusion that the expenses claimed by the assessee on consumable stores were excessive and unreasonable. He however ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nergy consumption in the form of oil and coal up to the amount of 87% has been included. The A.O. has given no finding or observation on actual consumption as claimed of oil and coal. From the profit and loss account, it is seen that the Appellant has offered ₹ 30,43,631/- of net profit in the P&L account on turnover of ₹ 4,51,42,147/- which is about 6.74% of turnover being labour charges. The gross profit is ₹ 42,19,819/- which is 9.35% of labour charges shown in the trading or manufacturing account. The assessed income of ₹ 1,14,07,080/- (excluding partner's salary) is 25.27% of the turnover, which in my view is extremely high. In my view, the A.O. has no material to reject the book profit shown by the Appellant. Consumption of oil or coal may depend on various factors like technical, operational or commercial. Without rejecting the books of accounts, it is not permissible for the A.O. to be guided by net profit or gross profit margin of some other businessmen. It is only when the books are rejected that the A.O. gets the authority or has the option of using G.P. or N.P. from some other source in similar circumstances. The A.O. has not been able to demon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were always in the range of 68% to 70% in the immediately preceding two years as well as in the immediately succeeding two years. He contended that even the gross profit shown by the assessee during this year was quite comparable to that of the year under consideration. He also contended that distinguishing features between the case of the assessee and the comparable cases cited by the AO were specifically pointed out by the assessee to show that the comparison sought to be made by the AO was not fair and proper. He contended that the Ld. CIT (A) however appreciated these relevant facts of the matter in right perspective while deleting substantially the disallowance made by the AO on account of consumable stores. 8. We have considered the rival submissions and also perused the relevant material available on record. It is observed that the disallowance on account of consumable expenses was made by the AO to the extent of 19% of the job charges earned by the assessee by mainly relying on the two comparable cases where the consumable expenses claimed were relatively on the lower side. During the course of assessment proceeding, it was pointed out on behalf of the assessee that the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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