2012 (9) TMI 152

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....enue. 2. The appeal of the Revenue and the Cross Objection filed by the assessee on the similar issue were heard together and are being disposed off by this consolidated order for the sake of convenience. 3. The grounds of appeal raised by the Revenue in ITA No.274/Chd/2012 are as under: "1. That the Ld. CIT(A has erred in law and on facts in directing the A.O. to calculate profit on sale of scrap by applying unitary method by ignoring the fact that scrap is generated as part of the production process and was a waste product to which no cost could be attributed and hence any receipt on sale of scrap would be the profit of the business of the assessee." 4. The brief facts of the case are that the assessment in the case was completed by t....

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.... "6. I have considered the facts of the case and it appears that the Assessing Officer in working out the profit element embedded in the scrap sales has treated the entire amount as profits which would means that the generation of scrap is an activity leading to 100% profits as against normal 10% to 15% profits on the production of finished output of the enterprise. The AO has rejected the arguments of the assessee that the generation of scrap was in fact an indicator of inefficiency of the production process. I am of the view that level of scrap generated by any production process determines the overall profitability of the enterprise which means that the higher the scrap lowers would be profitability and vice- a-versa. It therefore follo....

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....arned D.R. for the Revenue placing reliance on the order of the Assessing Officer pointed out that in the absence of any detail being filed by the assessee, the initial working done by the Assessing Officer needs to be upheld. 8. The learned A.R. for the assessee, on the other hand, placed reliance on the order of the CIT (Appeals) and pointed out that the Assessing Officer had allowed the appeal effect to the order of the CIT (Appeals) and recomputed deduction under section 80HHC, against which it had no grievance. 9. We have heard the rival contentions and perused the record. In the entirety of the facts and circumstances of the present case we are in agreement with the order of the CIT (Appeals) that only the profit element in the sale....