AI Drafter 
TaxTMI 
TaxTMI 
2012 (2) TMI 642
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....round involves determination of weight loss on dismantling of ships-whether the weight loss is in relation to the total weight of the ship or it is in relation to the light displacement tonnage weight of the ship (LDT). 2.2 The Assessing Officer for reasons mentioned in detail in the assessment order - particularly in Paras 6.1 to 6.23 has enumerated the factors on the basis of which he is of the opinion that the weight loss is always a measure of the total weight of the ship - and is normally 2% of the total weight of the ship and never at 12%-18% of the LDT as claimed by the assessee and on this basis the Assessing Officer has concluded in Para 6.23 of the assessment order that the assessee has claimed a higher weight loss/burning loss and thereby suppressed the sales of scrap to the extent of Rs. 10,48,68,269/- which Assessing Officer has added back to the income of the assessee as unexplained sales. 2.3 The assessee has challenged the above finding of the Assessing Officer and stated that as in the past the weight loss/burning loss in relation to the ship breaking industry has always been measured and estimated with reference to the LDT and never to the total weight. It i....
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.... this issue and audited books of account of the appellant under section 44AB in which no discrepancy has been found. Thus, the same is not accepted and the addition made is deleted as stated above". 2.5 Before us, the learned Departmental Representative referred to the order of the Assessing Officer and explained the concept of LDT, total weight and how the Assessing Officer arrived at the net scrap which the assessee should have got and how the Assessing Officer estimated the shortfall in yield of scrap. In reply, the learned Counsel submitted that all the reports relied on by the Assessing Officer as well as the experts reports submitted before the CIT (A) including that of the Ministry of Shipping, Customs authorities indicate the weight of the ship always on the concept of 'LDT' and not on total weight as was considered by the Assessing Officer. It was further submitted that the CIT-7 after the representation from the ship breaking industry placed the norms of burning loss/loss upto 20% and the Assessing Officer had ignored the existing guidelines on the subject. It was further submitted that without any basis or consideration the Assessing Officer arrived at 2% loss on the ....
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....issue of labour charges claimed by the assessee with that of associated company, the Assessing Officer was of the opinion that the assessee has short charged labour charges to the extent of Rs. 25 lakhs and brought the amount as income stating that the assessee could have spent this amount outside books of account. The CIT (A) deleted the addition by stating as under: "I have considered the submissions of the learned Counsel and the Assessing Officer and I am of the opinion that as pointed out by the learned Counsel that in the case of the sister concern the total wages relating to the payment to labourers is only Rs. 7,65,076/- and not Rs. 38,45,350/- because a sum of Rs. 30,80,274/- represents warehousing charges in Mumbai and further that the payments made to labourers have been duly recorded in the books and registers maintained and have not been disputed and therefore, on mere suspicion cannot be rejected and thus the addition of Rs. 25 lakhs made by the Assessing Officer is based upon considerations which cannot be used to assail the records of the appellant when no specific defects has bee pointed out and thus the addition of Rs. 25 lakhs is hereby deleted". 3.2 ....
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....us, the above addition deserves to be deleted, in view of the decision of the Hon'ble ITAT 'H' Bench Mumbai in the case of M/s Anupama Steel Ltd AY 1998- 99 (ITA No. 5136/Mum/2002, Para-6). 4.2 After considering the assessee's submissions, the CIT (A) deleted the addition by stating as under: "4.2 I have considered the submissions of the learned Counsel and it is seen that the above addition has been made on the basis of certain calculations taken from the bill of entries and as held by the Hon'ble ITAT 'H' Bench Mumbai in the case of M/s Anupama Steel Ltd AY 1998-99 (ITA No. 5136/Mum/2002, the same cannot be added back merely on the basis of the bill of entries as it cannot be presumed that sale has also been made at higher price. Thus, this addition of Rs. 10,35,095/- is hereby deleted". 4.3 After considering the rival submissions, we are of the opinion that there is no need to disturb the findings of the CIT (A) as there is no basis for making the addition by the Assessing Officer and further the CIT (A) followed the Coordinate Bench decision where similar issue was considered. Accordingly the ground is rejected. Ground No.4 " (i)The learned CI....