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TMI Blog2019 (1) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... no. of boxes and the total volume soap cakes, sold in grams is arrived at. The assessee has made a mistake while preparing the quantitative information for the relevant assessment year, as the concerned official of the assessee instead of applying the weight of Dettol soap fresh cake as 75 gms, applied as 250 gms (this is actually Dettol liquid soap sold in 250 ml). Now, the assessee has filed the complete data as discussed above and Revenue / learned CIT DR, could not controvert the above discussed facts before us. Accordingly, we are of the view that the difference in stock to the extent of 1737.45 mt in the stock of Dettol is entirely due to above errors, which has been properly explained with the re-conciliations supported by the book entries. Hence, we find no difference in the stock as above explained. Hence, we delete the addition and allow this appeal of the assessee. - Decided in favour of assessee. - ITA No.1626/Mum/2017 - - - Dated:- 12-12-2018 - Shri Mahavir Singh, Judicial Member And Shri Rajesh Kumar, Accountant Member For the Appellant : Shri Ashwani Kumar, Shri Aditya Gupta, ARs For the Respondent : Shri Ajay Kumar, CIT-DR ORDER PER MAHA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les and closing stock and demonstrated the same with documents. Having satisfied, the AO passed the assessment order u/s 143(3) of the Act, but appended office note to the assessment order which reads as under: OFFICE NOTE (i) Certain discrepancies were observed in the quantitative details of the stock of toiletries stated in the audit report. It was explained that the same is a typographical error on account of a wrong conversion parameter inadvertently used. The supporting evidences and details explaining the methodology of computing the closing stock etc. has been furnished. Moreover, the certificate/clarification of the management has also been submitted. Though the assessee has satisfactorily explained the discrepancy, however, the assessee has been asked to furnish the necessary clarification for a month s time to furnish the certificate. If this certificate is not furnished within the stipulated time of one month or if any discrepancies are conveyed in the certificate to be furnished by the auditors, the said assessment will be reopened . 3.1. Subsequently, the CIT initiated revision proceedings u/s 263 of the Act and revised assessment with a direction to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file of AO to verify and examine the aspect of conversion factor applicable to Dettol Soap Fresh in the present case, after considering the relevant records and submissions of assessee. Against this order of ITAT, the assessee approached Hon'ble Bombay High Court and the Hon'ble High Court vide order dated 24-07-2014, dismissed the appeal of assessee. Assessee further challenged the order of Hon'ble Bombay High Court before the Hon'ble Supreme Court by way of SLP (C) No. 21088/2014 which was dismissed by an order dated 14-08-2014. Hence, the present appeal. 4. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the AO during the remand proceedings noted that the assessee has shown stock of Dettol Soap Fresh of 766.73 MT, whereas on considering the opening stock, purchases and sales etc., the quantity of closing stock worked out to a negative figure of 970.72 MT. According to the AO, the difference in stock i.e., unaccounted purchased worked out to ₹ 1737.45 MT which remained unexplained. The AO noted that the assessee has furnished detailed working of the stock of Dettol Soap Fresh claiming that d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Dettol soap cakes in each box in dozen X Soap cakes per dozen X Weight per cake (in grams) Once the multiplier per box is arrived, the same is applied to the total number of boxes and the total volume of Dettol soap cakes, sold in grams is arrived at the correct multiplier/conversion factor that should have been applied is as under:- TABLE-A: Sr. No. Particulars Nos./gms. 1. Total no. of Dettol Soap Cakes in each box (in Dozen) 16 2. Soap Cakes per dozen 12 3. Weight in per cake 75 gms. Multiplier (Total Weight in gms per box) i.e., 16x12x75) 14,400 However, while preparing the quantitative information for the relevant Assessment Year, the concerned official of the assessee instead of applying the weight of the Dettol soap Fresh cake as 75 gms., applied it as 250 gms. (Dettol Liquid Soap is sold in 250 ml). It appears since the assessee was distributing the entire range of Dettol products like s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... breakages. To elaborate, due to the wrong multiplier factor of 48,000 adopted instead of 14,000 (on account of taking the weight of Dettol Fresh Soap as 250 gms. instead of 75 gms), while the opening stock of Dettol Fresh Soap was 72.25 MT and the purchases was 666.74 MT, the Closing stock (after taking into account of 2515.99 MT sales), was 165.45 MT. Because of the erroneous conversion factor adopted, the assessee had negative stock at the year end. Also, as stated above, the total no. of boxes were taken as 52,404 instead of 49,681 boxes, leading to a difference of 1737.45 MT. 5.3 After making corrections for the above two items, there is a difference of 63 MT, which was on account of breakages. It is relevant to state that the CIT by his Order u/s. 263 of the IT Act, has taken 5% as breakages, whereas on a total stock of 11629.12 MT handled during the year (including opening stock and purchases), the breakage of 63 MT amounts to less than 1%. It is also relevant to state that though Soaps are hard and do not break easily, the wrapper gets torn during transportation, storage etc. The assessee cannot sell Soaps with torn wrapper, therefore in such cases also the same is treate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils of VAT calculation for a specific period (as per Annexure-I). The assessee has also filed the summary of various items dealt with by the assessee. A perusal of the clearly demonstrate that the difference in stock was entirely due to the erroneous conversion factor applied by the assessee, in respect of Dettol Soap. 5.5 From the above facts of the case, it is clear that the assessee has applied the conversion factor of Dettol soap as is marketed in bars weighing 75 gms and 150 gms whereas Dettol liquid soap is marketed in 250 ml. bottles/dispensers. Similarly, Dettol anticipated liquid is marketed in 100 ml. and 500 ml bottles and Dettol Shaving creams in 70 gms tubes. The dispute is restricted to the conversion factor applicable in respect of Dettol soap fresh of 75 gms packing and assessee has file quantitative information in this regard and it proves that the assessee is following the system of computing the weight of its item by multiplying the total no. of boxes with an appropriate multiplier. Similarly, once the multiplier per box is arrived at, the same is applied to the total no. of boxes and the total volume soap cakes, sold in grams is arrived at. The assessee has m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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