TaxTMI 
TaxTMI 
2014 (10) TMI 490
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....ision without finalization and quantification nof expenses does not constitute an ascertained liability, for which no deduction is allowable. Hence, the addition made by the Assessing Officer is justifiable in this case. 2. That the learned CIT(A) has erred in deleting the addition on the ground that the Assessing Officer has neither brought any material facts on record to show that the appellant was suppressing its burning loss nor any defects has been pointed out. The assessee has claimed 5.43% burning loss in which the Assessing Officer has disallowed only 0.74% amounts to 9,76,821. The assessee and the learned CIT(A) also not given any specific reason for allowing full burning loss @ 5.43% as claimed by the assessee. Hence, disallowance of 0.74% is very nominal and justified addition made by the Assessing Officer." 2. Facts in brief:- The assessee is a partnership firm engaged in the business of trading, manufacturing and export of steel products viz. S.S. Billets, Bars and S.S. Wires, etc. The Assessing Officer, on a perusal of details of commission, noticed that a sum of Rs. 9,22,777, has been included in the form of provision for the month of March 2007. In response to....
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....;ble Supreme Court in Bharat Earth Movers (supra) such a liability is to be allowed on accrual basis. He further noted that the assessee has given detail working of commission payable which was around 2% of sale bill raised by the assessee and in the next financial year such payment has been made. Thus, he deleted the said disallowance. 5. Before us, the learned Departmental Representative submitted that so long as the payments are in the nature of provisions, the same should not be allowed. He thus strongly relied upon the reasoning given by the Assessing Officer. 6. Before us, the learned counsel submitted that the details of provision for export commission which provides the invoice number, date, name of customer, value of sale and the rate of commission payable. He submitted that such a system of accounting has been allowed in all the years. In any case, he submitted that such a payment has already been made in the earlier part of the immediate financial year, therefore, no disallowance should be made. 7. We have heard the rival contentions, perused the relevant findings of the authorities below and the material available on record. From the records, it is evident that....
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....iven at Page-2 and 3 of the assessment order. 9. Before the learned Commissioner (Appeals), it was submitted that during the rolling process, following types of wastage is generated. "Burning Loss (irrecoverable in nature) Cobbles (Saleable as such) Re-heat billets (Reusable/Saleable as such) Scrap and End cutting (Metallic loss recoverable in the form of scrap sales)" 10. Further, the assessee does not own manufacturing activity and all the work are done on job work basis outside the premise. The scrap which is generated in the production process in the factory of job workers are kept by them and the value of scrap sale is included in the local sales on which excise duty has been paid. The observation of the Assessing Officer that the scrap retained by the job workers is excessive is not correct. The loss of 3.74% is an account of burning loss as well as the scrap in the form of cut end which are retained by the job workers. The assessee had given a working of loss in the following manner:- Particulars Qty (MT) Qty (MT) Consumption during the year Billets consumed 5588.48 Reheat consumed 222.98 5811.463 ....
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....nt Order is reproduced as under: Rolling process Cobbles Reheat Particulars Opening Stock 66.01 81.30 Production 101.90 208.20 Consumption - - 222.98 Sale 75.39 19.18 Closing stock 92.52 47.33 Particulars Quantity Billet consumed 5588.48 M.T Re-heat consumed 222.98 M.T 8511.463 M.T Production Quality Rolled production 5284.20 M.T Re-heat generate 208.20 M.T Cobbles generate 101.90 M.T 5594.298 M.T Loss on production 217.16 M.T (3.74%) The explanation of the Appellant regarding the loss in production of 3.74% was not accepted by the A.O. and restricted to 3% basically on the ground that the Appellant's loss due to cut end/scrap should be very negligible and that the cut ends and scraps were retained by the job workers resulting in the shortage of 3.4%. The A.O. also held that the Appellant's claim that cut ends and scrap retained by the job workers. The A.O. held that the Appellant can claim revised back of certain cut end and scrap from the job workers which has been done and this is so called....