TaxTMI 
TaxTMI 
2016 (8) TMI 1043
X X X X Extracts X X X X
X X X X Extracts X X X X
....under section 80-HHC by considering enhanced income of Rs. 1,06,51,980/- as having become infructuous on the ground that the assessee's appeal in regard to enhancement had been allowed?" Tax Appeal No. 1182 of 2008: (1) "Whether the Appellate Tribunal is right in law and on facts in deleting the addition made on account of inflated purchase of Rs. 1,95,62,054/-?" (2) "Whether the Appellate Tribunal is right in law and on facts in deleting the entire addition of Rs. 2,12,92,907/- made on account of recalculation of transfer price of arm's length price?" Tax Appeal No. 1719 of 2010: (A) "Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 1,53,44,220/- made on account of inflation of purchase of raw materials?" (B) "Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 45,22,659/- made under section 69 of the Act on account of unexplained investment in the purchase of raw materials?" (C) "Whether the Appellate Tribunal is right in law and on facts in deleting the disallowance of 90% of interest received by the assessee from the profit of the business for the purpose of quantifying the d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t page Nos. 206 to 212 of the paper book which is reproduced hereinbelow: "From the above ground, the only issue emerged as under: `Rs. 63,04,605/- on account of deficit in consumption of some of the raw materials as compared to Standard input output norms prescribed by the Government of India for quantifying the export benefits given to exporters added as on account of unexplained investment in the purchase of raw materials. Rs. 1,32,57,449/- on account of excess consumption of some of the raw materials as compared to standard input output norms prescribed by the Government of India for quantifying the export benefits given to exporters added as inflated purchases of raw materials.' At the outset, the learned counsel of the assessee fairly stated that the issue is squarely covered in favour of the assessee by the decision of the ITAT Bench-C Ahmedabad in ITA No. 887/Ahd/2002 for A.Y. 1997-98 dated 28.2.2006 in the case of M/sk. Gujarat Woolen Felt Mills. On the other hand the learned DR relied on the order of the lower authorities. 4.1 First of all, we have gone through the facts narrated by the CIT(A) in para 2.2 which reads as under: "2.2 I have considere....
X X X X Extracts X X X X
X X X X Extracts X X X X
....use the production manager who is the in-charge of production has nowhere mentioned that there is even slight variation in consumption from the standard input out ratio. The appellant has also not proved with any other evidence that the consumption has been different because of factors mentioned by it. Therefore, the consumption of raw material will have to be compared vis a vis the standard input output ratio and there is no justification of giving margin of 10% considering the statement of General Manager. After comparing the standard input and output ratio and actual consumption, it was found that there was a deficiency of certain raw material of Rs. 63,04,605/- and there was excess consumption shown by the appellant of other raw materials as Rs. 1,32,57,449/-. As the deficit and excess is of different raw materials, there cannot be offset against each other as has been done by AO in the assessment order. The appellant's another argument that record are being examined by the excise department and sales tax department is of no relevance because the excise department is only concerned with the actual production and levy of excise duty rather than to examine the excess of deficienc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and treating the production at the carding stage as final. The difference of 11,506 kg. Is due to wastage in the production approximately 13% of the production and looking to the standard fixed by the Handbook of the procedures, the percentage of wastage cannot be said to be excessive. In these circumstances, particularly in the absence of any specific material to show that the assessee has made a false claim of wastage, which in any case is within the parameters laid down under the Excise Duty Exemption Scheme, no addition can be made to the income of the assessee. The conclusion of the Assessing Officer, as observed by the CIT(A) is based on the production register upto the carding stage is incomplete or partial stage of the material and the addition made on the basis of such incomplete and partial effect cannot be justified. The CIT(A), in our opinion, was right in allowing the claim of the assessee." 42. It is seen from the above facts as narrated in the order of the CIT(A0, which are undisputed, as well as the case law relied on by the learned counsel for the assessee, we are of the view that the CIT(A) has adopted the norms prescribed under the standard input and output r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T(A) was wrong in relying on the input out consumption ratio. In our view, the Assessing Officer and the Commissioner of Incometax (Appeals) have gone on different directions. Therefore, the view taken by the Tribunal is required to be accepted. In that view of the matter, we answer issue No. 1 in Tax Appeal No. 1182 of 2008 in favour of the assessee and against the revenue. 7.1 So far as issue No. 2 of Tax Appeal No. 1182 of 2008 is concerned, since learned counsel for the revenue is not ready with the matter, he requested for some time. Hence we have not decided this issue and the matter is adjourned to 31.8.2016 on that point. Tax Appeal No. 1816 of 2008 arises out of a consequential penalty order passed by the Assessing Officer in respect of the adjustment made in international transaction relating to export of finished goods. Since Tax Appeal No. 1182 of 2008 is kept on 31.8.2016 for deciding this issue, Tax Appeal No. 1816 of 2008 is also kept on 31.8.2016. 7.2 Tax Appeal No. 1181 of 2008 is consequential to Tax Appeal No. 1182 of 2008. Since we have answered issue No. 1 in Tax Appeal No. 1182 of 2008 in favour of the assessee, Tax Appeal No. 1181 of 2008 becomes infruc....