TaxTMI 
TaxTMI 
2012 (4) TMI 652
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....g an addition on account of work-in-progress. 2) It is, therefore, prayed that the above addition confirmed by the learned Commissioner of Income Tax (Appeals) may please be deleted. 3) The Appellant prays for granting such other relief as may be deemed just and proper by your Honours considering the factual and legal aspects of the case of the appellant. 4) The Appellant craves leave to add, amend, alter, delete, substitute or modify any or all of the Grounds of Grounds of Appeal." 2. The brief facts of the case are that the assessee is engaged in the business of job work of dyeing of fabrics. The case of the assessee was selected for scrutiny for the assessment year 2006-07 and the assessment proceedings u/s ....
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....d submitted the confirmation letter from the parties who have assigned the job work to the assessee. The Ld. A.R. further submitted that the valuation adopted by the A.O. at the per meter basis is also wrong as the cloth which is dyed is taken on the basis of weight. The Ld. A.R. submitted that his case is squarely covered by the decision of Coordinate bench of the Tribunal passed in I.T.A.No. 2728/Ahd/2000 in the matter of M/s. Adarsh Textile Mills Vs ITO. 4. Ld. D.R. of the revenue supported the assessment order. 5. We have heard the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that the Coordinate bench of the Tribunal under the identical set of facts in I.T.A.No. 2....
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...."12. I have carefully considered the fact of the case and submissions made by the Id AR. As regards the addition made in respect of estimated work in progress, it is seen that the appellant in the instant case is a job-worker and process grey cloth for its customers according to their requirement. The appellant not engaged in any manufacturing activities of its own. The cloth processed by the appellant thus belong to its customers is processed by the appellant and. after processing the same in accordance with the customers requirement, it is returned. In the above facts of the case the question of showing any work in progress in the books of account of the appellant in respect of the cloth belonging to its customers did not arise as such cl....
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....siness of sale of the processed cloth or in the production for sale of the processed cloth but was engaged in the business of rendering of services for processing of grey cloth for its customers the principles laid down in AS-2 for the "valuation of Inventories" were not applicable in its case in accordance with item l(b) thereof. However, the materials or supplies to be consumed in the production process or in the rendering of services would evidently fail in category (c) of the aforesaid "definitions" provided in item 3 of the Accounting principles laid down in AS-2, and the same would be required to be accounted for by it in the Form of stock, which has been done in the instant case. The method of accounting followed by the appellant is ....
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....irm the order of the CIT(A), the addition on account of estimated value of work-in-progress is required to be deleted." 5.1 Following the view taken in the aforcited decision, the ITAT in their decision dated 16-07-2010 in the case of Krishna Art Silk Cloth (P) Ltd. vs. DCIT in ITA No.1264/Ahd/2010, in which case also, the Id. CIT(A) upheld the findings of the AO in the light of decision dated 26.10.2007 in the case of Akruti Dyeing & Printing Mills Pvt. Ltd. in ITA No.2551/Ahd/2006, allowed the claim of the assessee. 5.2 In another decision dated 13-05-2011,following the view taken by the ITAT in their decision dated 3.04.09 in ITA No. 167/Ahd/2009 in the case of Kanhaiya Processors Pvt. Ltd. vs. ITO, we concluded as unde....