TaxTMI 
TaxTMI 
2012 (10) TMI 511
X X X X Extracts X X X X
X X X X Extracts X X X X
....st for disposal. 3. Revenue has taken a common grievance in all these appeals which assails the restriction of invisible loss made by the Assessing Officer. As per the Revenue, the Tribunal had earlier observed that 1.5% would be the invisible loss for raw materials consumed based on an article published by South Indian Textile Research Association (SITRA) in Asian Textile Journal in July, 2005. Again, as per the Revenue, no explanation was given by the assessee with regard to the invisible loss claimed by it in excess of 1.5%. 2. Facts apropos are that assessee, a spinning mill having two units, had filed its return for the impugned assessment years, which were initially subjected to a scrutiny proceeding. The A.O., during such proce....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the Assessing Officer for 'staking loss' for the impugned assessment years. However, certain other additions made by the A.O. were sustained by the CIT(Appeals). Resultantly, both the parties moved in appeal before this Tribunal and this Tribunal, vide its order dated 16th February, 2007 in I.T.A. Nos. 1609(Mds)/2003, 3058 & 3051(Mds)/ 2004, held as under at para 5, with regard to the issue of staking loss:- "5. The next issue relates to the disallowance of staking loss. We have heard the rival submissions. The learned departmental representative submitted before us that the assessee did claim this loss without any basis. No evidence in this regard was adduced. No spinning mill in the entire Virudhunagar circle has claimed this st....
X X X X Extracts X X X X
X X X X Extracts X X X X
....file of the Assessing Officer with a direction to decide it de novo in accordance with law after providing adequate opportunity to the assessee of being heard." 3. Pursuant to set aside, the Assessing Officer once again took up the issue regarding staking loss. Assessee was required to explain the loss claimed by it. Submission of the assessee was that it had adopted balancing method to arrive at loss and there was no moisture content of cotton at the point of purchase. However, Assessing Officer was not impressed in the second round also. According to him, such loss claimed by the assessee in the earlier years were about 2.50% only, whereas, for the impugned assessment years, it was in excess of 2.68%. According to A.O., this Tribuna....
X X X X Extracts X X X X
X X X X Extracts X X X X
....him, there was no claim of any invisible loss made by the assessee in its Profit & Loss account or in the balance sheet. There being no claim by the assessee at all, as per the CIT(Appeals), there was no question of disallowance of loss. CIT(Appeals) also noted that there was no evidence to show that any inflated claim of expenditure was made by the assessee. At the best, according to him, it was only a test of efficiency and could not be a basis for making an addition. He thus deleted the additions made by the Assessing Officer for all these assessment years. 6. Now before us, learned D.R., strongly assailing the orders of CIT(Appeals), submitted that the Assessing Officer went by the directions of the Tribunal while considering the iss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....claimed invisible loss at 1.9% against norms appearing in Asian Textile Journal, which gave such percentages as good-0.5%, average-1.0% and poor-1.5%. On the questions raised by the Tribunal as to how the invisible loss was assessed by the assessee and how assessee compiled the data, assessee had given specific replies. Assessee had stated that it had used balancing method to find out the consumption based on stock records. Assessing Officer, pursuant to Tribunal directions, had made a work out considering 1.5% as the standard loss that could be there in processing of cotton and fibre. CIT(Appeals) deleted the addition made by the Assessing Officer, for loss in excess of 1.5%. In our opinion, the work-out made by the Assessing Officer was n....