TaxTMI 
TaxTMI 
2011 (3) TMI 679
X X X X Extracts X X X X
X X X X Extracts X X X X
....esenting 1/10th of total expenses) eligible for deduction under Section 35D of the Act before the commencement of business operations? (ii) Whether in the facts & circumstances of the case the learned ITAT erred in deleting the addition made by the AO on account of excess consumption of sugar and manufacturing of extra soft drinks sold outside the books of accounts by relying on extraneous considerations? (iii) Whether the order of the learned ITAT is liable to be set aside on the ground that it erroneously records that the revised certificate was accepted by the AO while the Remand Report of the AO clearly mentions that even on the consideration of the revised certificate, an excess consumption of sugar by 1259 tonnes calcu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....accepted to amortize the aforesaid expense over a period of ten years and, therefore, for all these ten years, the expenditure is eligible for deduction under Section 35D of the Act. No question of law arises. 4. The second issue which is proposed in this appeal relates to the alleged excess consumption of sugar. 5. The Assessing Officer while carrying out the assessment observed that in the manufacture of soft drinks, sugar is one of the major ingredients apart from soft drinks concentrate. He noticed that the assessee had shown consumption of sugar of 3,22,18,000 kilograms for production of 3,43,31,000 cases of soft drinks giving an average of 938 kilograms of sugar per 1000 cases of soft drinks. The Assessing Officer also....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onsumption of sugar in the year in question. As per CIT(A), the excess consumption was to the tune of 1259 tonnes. This figure was arrived at on the basis of calculations made by the Assessing Officer wherein it was found that total consumption of sugar was 27056 tonnes against 32218 tonnes reported in the earlier year in the audit report. The AO had further noticed that appellant had itself reported a consumption of 26231 tonnes whereas the auditors in their revised certificate had worked out actual consumption at 27056 tonnes. It was further stated that sugar consumption for manufacturing of Mirinda and Mangola had been taken at higher figure as compared to consumption for these two items for the assessment order 1997-98. After applying t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the regular books of accounts and no discrepancy in the books of accounts was found. Assessee is also maintaining the records of stocks. The product of the assessee is also excisable. Furthermore, for higher production sugar is not the only ingredient and it is nowhere pointed out that other ingredients used were also consumed in excess. This was thus a totally illogical conclusion arrived at by the Assessing Officer and rightly rejected by the CIT(A) as well as ITAT. 8. In these circumstances, the only question is, as to whether there was excess consumption of sugar? After going into the minute calculations about the consumption, the ITAT has found that there was no discrepancy and the difference of 1259 tonnes as stated by the AO ....