TaxTMI 
TaxTMI 
2016 (9) TMI 1209
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....rief as extracted from the impugned order of the Ld. CIT(A) are that the assessee is a 100% export oriented unit located in SEEPZ, Andheri (E). It manufactures Switch Mode Power Supplies used in the Computer Industry. The assessee submitted that the raw-material comprises electronic components which are largely imported. It was also submitted by the assessee that the electronic components have very short shelf life. During the previous year ended 31st March 1996, the assessee had purchased rawmaterials from Dynamic Systems Limited (USA) and Quality Components and Systems Pte Limited (Singapore) amounting to Rs. 9,09,79,393/- against an export order. However, it was alleged by the assessee that the said order was cancelled in the previous ye....
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....O. "(a) Letter dated 21st October 1996 of appellant to Quality components & Systems Pte. Limited vide which Assessee has requested the party to take back the material latest by 31st March 1997 otherwise the material will be scrapped by the appellant. (b) Letter dated 30th October, 1996 addressed by Quality Components & Systems Pte. Limited to the appellant requesting the appellant to hold the rawmaterial until further notice. (c) Letter dated 24th September, 1996 of appellant to Dynamic Systems Limited vide which the appellant has requested the party to take back the material immediately. (d) Letter dated 10th October, 1996 addressed by Dynamic Systems Limited to the appellant requesting the appellant to hold the raw-material unt....
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....vision of customs. (l) Copy of the challan for payment of Customs duty towards clearance of scrap. (m) Letter dated 28th February, 2005 written by ACIT -8(1) (AO) to the Deputy Commissioner of Customs, SEEPZ-SEZ for information & authenticating the evidence in respect of obsolete raw-material. (n) Letter dated 22nd March, 2005 written by Deputy Commissioner of Customs, SEEPZ-SEZ confirming the information & authenticating the evidence in respect of obsolete raw-material." 3. The assessee submitted that from the aforesaid evidences that it was clear that the assessee was holding the said raw material on behalf of the aforesaid two parties and the said raw-material was totally in obsolete condition and in fact the said raw-material....
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....ro cost. It was therefore contended that no additions were warranted in this case as the profits from subsequent seats were offered for taxation. The Ld. CIT(A), considering the submissions of the assessee observed that it was proved on the file that the material worth Rs. 1,58,33,067/- was destroyed by the SEEPZ Board and Customs Authorities on the request of the assessee and the scrap arising from such destruction was sold at Rs. 4,46,316/- and a custom duty of Rs. 1,50,211/- was imposed by the Customs Authorities on such items. As regards goods of Rs. 33,25,027/-, the said goods were utilized by the assessee in its production and was offered for taxation in three financial years i.e. 1997-98, 1998-99 and 1999-2000. The Ld. CIT(A), there....
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....eopening of the assessment and the consequent additions made by the Assessing Officer (hereinafter referred to as the AO) on account of the material worth Rs. 9,09,79,393/- lying with the assessee unused/not taken back by the concerned supplier. The AO reopened the assessment adding the value of the said material into the income of the assessee under section 28(iv) of the Act. Before the Tribunal, the assessee furnished certain additional evidences. Hence, the Tribunal restored the matter back to the file of the AO. In the set aside proceedings, the assessee pleaded before the AO that the excess material was not utilized rather the same was destroyed by the SEEPZ Board and Customs Authorities on the request of the assessee. The AO, therefo....
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....ing that the said fact could not be verified from the record. From the facts of the case, it is revealed that the assessee had not become the owner of the material in question. The third party/suppliers did not collect the excess material lying with the assessee though they had reimbursed/paid back the cost of material to the assessee. The excess material lying with the assessee was of no use to the assessee. Out of the total material imported worth Rs. 9,09,79,393/-, the assessee had reshipped the goods worth Rs. 7,18,25,299/-. Out of the remaining material worth Rs. 1,91,54,094/-, the Customs & SEEPZ Board Authorities have destroyed the material worth Rs. 1,58,33,067/-. 7. So far as the remaining material of Rs. 33,25,027/- is concerned,....