TaxTMI 
TaxTMI 
2000 (4) TMI 169
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.... expenses and telephone expenses. 2. The first ground raised by the assessee in this appeal relates to the confirmation of the addition made on account of shortages in various items. The first addition is of Rs. 4,008 made in respect of value of scrap of jali obtained by the assessee in the course of manufacturing of jali from raw material known as wire. The AO has observed that the assessee has shown the total consumption of wire of 20,788 kgs. on which it claimed the shortage of 501 kg. of wire which comes to 2.5 per cent. The AO required the assessee to explain the reasonableness of such shortage claimed at 2.5 per cent. It was explained on behalf of the assessee that purchase of raw materials of wire in gross weight included packing ....
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....sive weight of wire. In the process of manufacturing iron wire net wire is cut into pieces and small pieces left over can be sold as scrap material. Such scrap has realisable value and is being often sold by such industrial units. I am, therefore, of the opinion that the learned CIT(A) has rightly confirmed the said addition of Rs. 4,008. I do not find any justification to interfere with the view taken by him. 4. The next ground relates to the addition of Rs. 1,477 and Rs. 4,213 in respect of shortage of Loha in taxable goods and Loha S.T. paid goods. The learned counsel pointed out that the shortage in Loha taxable goods account was 0.05 per cent which is most reasonable and which has been accepted in previous and subsequent assessment ....
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....te of Rs. 9.47 per kg. The AO therefore, calculated the value of closing stock @ Rs. 9.47 per kg. which comes to Rs. 75,305 as against the declared value of such stock at Rs. 63,059. The AO thus made an addition of Rs. 12,246. The learned CIT(A) confirmed the said addition. 7. The learned counsel submitted that the method of valuation adopted by the AO at the average purchase price is acceptable to the assessee in relation to all the items of closing stock appearing in Loha taxable stock inventory except in relation to three items which were valued at the same rates at which opening stock of such material was made. He drew our attention to the opening stock and closing stock inventory furnished at pp. 19 and 20 of the paper book. The lea....
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.... 7 3,290 Chadar pieces 656 5 3,280 Round bar pieces 1662.900 4 6,651.60 The learned counsel submitted that these were stock of dead goods. No further purchases were made during the year under consideration. Sales were made out of goods lying in the opening stock. The balance quantity lying in the closing stock was accordingly valued at the same rate. If these three items are excluded, the value of rema....