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TMI Blog2018 (7) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. for deciding the same afresh after verifying the claim of the assessee that there was no contract between the assessee and M/s. Murshed Weigh Bridge for use of waybridge - Decided in favour of assessee for statistical purposes. - I.T.A. No. 177/Kol/2017 - - - Dated:- 6-7-2018 - Shri P.M. Jagtap, AM For The Assessee : Shri V. N. Purohit, AR For The Revenue : Shri D.C. Mondal, Addl. CIT ORDER This appeal filed by the assessee is directed against the order of Ld. CIT (Appeals) 14, Kolkata dated 28.10.2016. 2. The issue involved in ground no 1 relates to the addition of ₹ 35,40,260/- made by the A.O. and confirmed by the Ld. CIT(A) by way of disallowance of 19% of the job charges. 3. The assessee in the present case is a partnership firm which is engaged in the business of iron galvanizing work on labour job basis. The return of income for the year under consideration was filed by it on 28.09.2012 declaring a total income of ₹ 1,26,016/-. During the course of assessment proceedings, it was found by the A.O. that the expenditure claimed by the assessee on consumables to the tune of ₹ 1,32,18,734/- was about 71% of the total labo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are so many other factors for fluctuations of consumables for one unit to the other mostly depending on the technical norms of the industry. It is not correct to depend on the arithmetical percentage of consumption on job charges without determining the size of the vat run by oil fired or coal fired etc. and other components. The consumption of consumables depends on whether the process in run by coal fired vat or oil fired vat. Moreover, the size of the vat is also very important. In our case, size of the vat is 22 x 3 x 3 oil fired which consumes huge consumables instead of labour components, moreover, the size of the vat of other two units as mentioned by the Ld. A.O. is very small and in one case it is like a small pot or kadai. So the comparison made by the Ld. A.O. is not at all acceptable. The Ld. A.O. mentioned in his order, the turnover of those two concern is ₹ 1,54,57,056/- in the A.Y. 2010-11 whereas the turnover of your assessee for the A.Y. 2010-11 is ₹ 4,51,42,147/-. It is clearly stated here that your assessee is much more big concern than other two mentioned concern in terms of production and volume of work. Beside this your assessee is a IS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereas the furnace of the assessee and the other two cases relied upon is run by oil. So, the ratio of the case as relied upon by the assessee is not acceptable. The assessee could not point out any case where furnace is run by oil and percentage of consumable is nearly 71% on job charges. 2. The assessee claims that says that the volume of work was extremely huge on that particular year i.e. Rs. for the A.Y.2010-11 is ₹ 4,51,42,147/- which leads to higher consumables @69% of job charges. But in the instant case for the A.Y.2012-13, the turnover of the assessee is ₹ 1,86,33,472/-, (comparatively lower than A.Y.2010-11) and consumables claimed by the assessee @ 71% ,comparatively higher than the A.Y.2010-11. Thus, there is no relevance for higher consumables rate is required for huge turnover as claimed by the assessee. 3. As regards to engineers certificate as claimed by the assessee, the certificate has not been produced before the undersigned. However, it is unearthed in the A.Y.2010-11, that the said engineer was not a production engineer and he had no expertise knowledge in production. 4. The issue here is whether the expenses claimed by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment or appeal proceedings. Thus he has denied the revenue the opportunity to correlate the consumption process with the actual consumption of the consumables. The AO has also been denied the opportunity of verifying the genuineness of the expenses so claimed. The question of finding defects in the books does not arise therefore. The AO of course has commented that the mere showing of purchases in the books without actually pointing out where this consumption was used cannot be an acceptable claim of the assessee. The books, in my opinion have not been proved for heir veracity since they have not been connected to the consumption process involved. In these circumstances, they cannot be relied upon and stand rejected. As regards the reliance on the claimed consultant, the AO has made a categorical finding that the said consultant is not a production Engineer with no knowledge of this production process. The appellant, during appeal proceedings, has said that the consultant was not issued a notice. But he has not even tried to produce this claimed consultant during appeal proceedings to establish the competence of this consultant and the veracity of his own statements. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e wherein the expenses claimed on consumables were nearly 65% of the job charges earned. A certificate issued by a Plant Engineer was also filed by the assessee to show that the percentage of consumable expenses in the industry of assessee s type was 75 to 80%. As rightly contended by the learned counsel for the assessee, it appears that the Assessing Officer however brushed aside all these submissions made by the assessee to justify the consumable expenses of 69% claimed by it and disallowed the same to the extent of 19% point. The Ld. CIT(A) however appreciated all these relevant aspects of the case in the right perspective and also considered the past result of the assessee s case for the immediately succeeding two years wherein the consumable expenses claimed by the assessee were 67.63% and 67.75% as against the consumable expenses of 69.98% claimed by the assessee for the year under consideration. He accordingly found that the claim of the assessee for the consumable expenses as made in the year under consideration 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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