2013 (11) TMI 1722

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....production of _bricks to 35,00,000 against 64,58,700 estimated by the AO." 2. Grounds raised in the assessee's appeal are following : "1. That learned CIT(A) was not justified in estimating production of total bricks near to sanctioned capacity of the kiln at 35,00,000 against 22,40,000 bricks shown by the appellant whereas sanctioned capacity being the maximum possible upper limit was for fixation of royalty and it does not work as a realistic yardstick for actual production. 2. That learned CITtA) was not justified in holding GP rate of 22 per cent to be reasonable against 18 per cent worked out by the appellant on the sales declared." 3. From the above grounds raised by the Department and the assessee, it is noticed that ....

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....4,715. 6. The assessee carried the matter to the learned CIT(A) and submitted that due to continuous extraction of soil since 1994-95 from the land on which present kiln exists, it had virtually lost viability to yield further soil for bricks and assessee had to purchase soil from outside for manufacturing of bricks in order to keep kiln running. Therefore, the AO's findings for making of bricks from soil of its own, on sole basis of royalty payment was unrealistic and sheer hypothetical because the royalty payment as explained by the Mining Department was fixed and was like a dead rent (license money for capacity sanctioned i.e. 23 blocks in this case based on probable maximum extraction of soil) having no relevance with actual extr....

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....n totality and right perspective and highly exaggerated quantity of bricks manufactured/sold and the selling rate of Rs. 1,872. He further observed that the pertinent facts about sanctioned capacity of kiln and selling rates were available in Shri Lalit Kumar's statement as well as in the assessee's books of account and that the AO estimated number of bricks manufactured at 69,06,000 merely on presumption basis particularly when the assessee purchased soil for manufacturing of bricks and the details were available on the record. The learned CIT(A) observed that the assessee during the Course of assessment proceedings, filed his submission and clearly stated that the kiln sanctioned in 1994-95 was situated on the land which was trans....

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....ted to allow interest and remuneration to the partners from the said property. Now both the parties are in appeal. 8. The Department has challenged the estimation of the bricks manufactured directed to be adopted while the assessee had challenged the estimation of production of bricks as well as application of GP rate. 9. Learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the learned CIT(A) was not justified in estimating the bricks at 35 lakhs without bringing any cogent material to prove the sales outside the books of account and also was not justified in applying the GP rate of 22 per cent instead of 18 per cent declared by the assessee. Reliance was placed on th....