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TMI Blog2019 (12) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... "1) "Whether the id. CIT(Appeal) is right in law and on facts in deleting the addition ofRs. 4,47,060/- made on account of loss of raw tobacco. " 2) "Whether the Ld. CIT(Appeal) is right in law and on facts in deleting the addition of Rs. 12,74,187/- made on account of undervaluation of closing stock. " 3) "Whether the Id. CIT(Appeal) is right in law on facts in restricting the addition on account of manufacturing loss from Rs. 2,36,64,474/- to Rs. 4,47,060/- ." 4) "Whether the Ld. CIT(Appeal) is right in law and on facts in deleting the disallowance of Rs. 91,372/- made on account of damaged goods." Cross Objection No. 50/Ahd/2018 filed by assessee 3. The assessee has raised following grounds in the cross objection:- "1. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round No. 1 (Deleting the addition of Rs. 4,47,060/- on account of loss of raw tobacco) 5. During the course of assessment, the assessing officer noticed that assessee has claimed loss of 7745.2 kg. raw tobacco, the value of which comes to Rs. 4,47,060/-. On query, the assessee explained that tobacco flakes contained various impurities which were required to be removed before processing the same, therefore, the same resulted in weight loss. The assessing officer has not accepted the explanation of the assessee stating that modern machine has improved techniques of SI in packs used by the assessee and disallowed the claim of loss of Rs. 4,47,067/- Ground No. 2 (Deleting the addition of Rs. 12,74,187/- on account of undervaluation of closin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the explanation of the assessee and treated the manufacturing loss of Rs. 2,36,64,474/- as unexplained and added to the total income of the assessee. Ground No.4 (Deleting the disallowance of 91,372 on account of damage goods) 8. During assessment , the assessing officer noticed that assessee has debited Rs. 91,372/- in the Profit and Loss account on account of damaged goods claim and disallowed the same stating that assessee has not produced any detail or any other documentary evidences to show that the loss was actually incurred by the assessee. 9. Aggrieved assessee has filed appeal before the ld. CIT(A). 10. Regarding addition of loss of Rs. 4,47,060/- on account of raw tobacco, the ld. CIT(A) has deleted the said addition stating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent proceedings, the assessing officer has not demonstrated how the method of valuation adopted for valuation of stock by the assessee was wrong. Therefore, we do not find any error in the finding of ld. CIT(A). Accordingly, this ground of appeal of the revenue is dismissed 10.2 The addition of Rs. 2,36,64,474/- for the manufacturing loss was made by the assessing officer on the observation that in the process of manufacturing of tobacco, there cannot be any process loss as the assessee has used the processed material. In this regard, we have noticed that during the course of assessment, the assessee has elaborately explained the entire process where the wastage is occurred. The relevant part of the same is reproduced as under:- "i. Raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescribed on the respective packing. Thereby in the packing process there is some quantity of give away loss" It is observed that assessing officer has not pointed out any specific defect in the manufacturing process and on general basis rejected the manufacturing loss claimed by the assessee. The entire production record was maintained as prescribed by the excise authority which was subject to scrutiny and examination by the excise authorities. During the year under consideration there was increase in the gross profit and net profit of the assessee compared to the other years. Considering the above facts and circumstances, we do not find any infirmity in the decision of ld. CIT(A) in restricting the addition of manufacturing loss to Rs. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ackage and the assesse could not demonstrate with supporting evidences that tour was connected with business purpose of the assessee. Therefore, this ground of cross objection filed by the assessee is dismissed. Ground No. 3 of cross objection against disallowance of Rs. 64,886/- as excess depreciation on electrical installation 12. It is noticed that the assessee has failed to substantiate with relevant supporting evidences that the electrical fitting was part of plant and machinery, therefore, we do not find any error in the decision f ld. CIT(A). Accordingly, this ground of cross objection of the assessee stands dismissed. Ground No. 4 of cross Objection against confirming disallowance of employees contribution to PF or ESIC 13. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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