Notional profit in job-work valuation cannot be added where job charges already include a normal profit margin.

Notional profit could not be added to job-work charges for valuing manufactured goods where the quotation already included a normal profit margin. The computation of notional profit had not been independently established, and the term "profit" was capable of different meanings. On that material, the assessee's position that the job charges already reflected profit could not be rejected unless the department disproved it. The valuation adopted by the lower authority was therefore unsustainable, and the addition of notional profit was disallowed.

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Issues: Whether notional profit could be added to the job charges for valuation of the manufactured goods.

Analysis: The assessee's case was that the quotation for job work charges already included the normal profit margin. The computation of notional profit had not been independently determined, and the expression "profit" was capable of different meanings. In the circumstances, the statement that the job charges included profit margin could not be disregarded unless the department disproved it. The valuation approach adopted by the lower authority was therefore not sustainable.

Conclusion: The addition of notional profit was not justified, and the assessee succeeded.

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