M/s. Avishkar Processing Mills Pvt.Ltd., Surat v. The Dy.CIT.,Circle-1,, Surat

ITA 3236/AHD/2009 | 2006-2007
Pronouncement Date: 30-08-2011 | Result: Allowed

Appeal Details

RSA Number 323620514 RSA 2009
Assessee PAN AACCA0038P
Bench Ahmedabad
Appeal Number ITA 3236/AHD/2009
Duration Of Justice 1 year(s) 8 month(s) 27 day(s)
Appellant M/s. Avishkar Processing Mills Pvt.Ltd., Surat
Respondent The Dy.CIT.,Circle-1,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 30-08-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 30-08-2011
Date Of Final Hearing 30-08-2011
Next Hearing Date 30-08-2011
Assessment Year 2006-2007
Appeal Filed On 03-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI A N PAHUJA ACCOUNTANT MEMBER ITA NO.3236/AHD/2009 (ASSESSMENT YEAR:-2006-07) M/S AVISHKAAR PROCESSING MILLS (P) LTD. 145 GIDC PANDESARA SURAT V/S DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-1 AAYAKAR BHAVAN MAJURA GATE SURAT PAN: AACCA 0038 P [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI K K SHAH AR REVENUE BY:- SHRI VINOD TANWANI DR DATE OF HEARING:- 30-08-2011 DATE OF PRONOUNCEMENT:- 30-08-2011 O R D E R A N PAHUJA: THIS APPEAL BY ASSESSEE AGAINST AN ORDER DATED 28 - 10-2009 OF THE LD. CIT(APPEALS)-I SURAT FOR THE A SSESSMENT YEAR 2006-07 RAISES THE FOLLOWING GROUNDS:- [1] THE LEARNED CIT(A) ERRED IN CONFIRMING ESTIMATIN G VALUE OF WORK IN PROGRESS AS PART OF CLOSING STOCK AT RS.7 99 740/- AS PER PAR A 2.3 OF THE CIT(A) ORDER. [2] THE APPELLANT RESERVES RIGHT TO ADD ALTER OR WIT HDRAW ANY GROUNDS OF APPEAL. 2 FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.19 99 686/- FILED ON 31-12-2006 BY TH E ASSESSEE ENGAGED IN DYEING AND PRINTING OF CLOTH ON JOB WORK BASIS WAS SELECTED FOR SCRUTINY WITH THE ISSUE OF A NOTICE U/ S 143(2) OF THE INCOME-TAX ACT 1961 [HEREINAFTER REFERRED TO AS TH E ACT] ON 10-09- 2007.DURING THE COURSE OF ASSESSMENT PROCEEDINGS T HE ASSESSING OFFICER [AO IN SHORT] NOTICED THAT THE ASSESSEE R EFLECTED GROSS PROFIT [GP] @ 10.49% ON TURNOVER OF RS.11 15 03 658 /- FOR THE YEAR UNDER CONSIDERATION AS COMPARED TO 13.74% ON TURNOV ER OF 2 ITA NO.3236/AHD/2009 RS.7 43 06 363/- IN THE PRECEDING YEAR . TO A QUERY BY THE AO SEEKING REASONS FOR FALL IN GP RATE THE ASSESSEE SUBMITTED THAT THE FALL IN GP WAS DUE TO THE INCREASE IN THE COST OF C OAL AND FUEL. HOWEVER THE AO DID NOT ACCEPT THE SUBMISSIONS OF T HE ASSESSEE AND REJECTED THE BOOK RESULTS FOR THE FOLLOWING REA SONS:- (I) THE ASSESSEE DID NOT MAINTAIN THE DETAILS AS PE R THE QUALITY OF COLOUR CHEMICALS PURCHASED AND HENCE THE DIFFERENT RATES OF PURCHASES WERE UNVERIFIABLE; (II) THE ASSESSEE FAILED TO MAINTAIN THE STOCK MOV EMENT REGISTER WHICH COULD HELP THE A.O. TO ASCERTAIN THE QUALITY OF GOODS PURCHASED AND HENCE CONSUMPTION OF COLOUR CHEMICAL WAS UNVERIFIABLE; (III) THE ASSESSEE MAINTAINED ONLY THE QUANTITY OF GOODS CONSUMED AND PRODUCED BUT DID NOT MAINTAIN THE QUAL ITY AND HENCE EVEN SALES RATE WERE NOT VERIFIABLE; (IV) THE ASSESSEE DID NOT SUBMIT THE DETAILS OF CLO SING STOCK OF WORK-IN-PROGRESS AND . (V) THE ASSESSEE DID NOT SUBMIT DETAILS TOTAL GREY CLOTH PROCESSED NOR SHORTAGE/SHRINKAGE THEREOF DURING THE PROCESS AND DID NOT FURNISH QUALITATIVE DETAILS OF PRODUCTION AND OPENING STOCK OF CONSUMABLES.. 2.1 BEFORE THE AO THE ASSESSEE MADE A GENERAL SUBMISSION THAT ITS PRODUCTION INCREASED IN VOLUME TERMS AND FURTH ER EXPLAINED THAT THE IMPORTED COAL HAD FOUR TIMES MORE CAPACITY OF P RODUCING HEAT THAN THE LIGNITE COAL PURCHASED FROM THE LOCAL MARK ET WHILE THE AVERAGE COST OF PURCHASE PER TON INCREASED DURING T HE YEAR ALONG WITH INCREASE IN CONSUMPTION OF COAL FROM 2234.620 MT TO 2642.420 MT BESIDES INCREASE IN THE RATE OF FREIGHT CHARGES OF COAL AND COST OF COLOUR CHEMICALS GP DECLINED IN THE Y EAR UNDER CONSIDERATION. THE AO DID NOT ACCEPT THIS EXPLANAT ION AND ACCORDINGLY REJECTED THE BOOK RESULTS FOR THE AFOR ESAID REASONS. CONSEQUENTLY WHILE FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF BRITISH PAINTS INDIA PVT. LTD. 188-ITR- 3 ITA NO.3236/AHD/2009 44(SC) AND SAMIR DIAMONDS EXPORT PVT. LTD. 71-ITD- 75(MUM) THE AO ADDED AN ESTIMATED AMOUNT OF RS.7 99 740/-TOWARDS W IP IN PARA-5.3 OF THE ASSESSMENT ORDER BESIDES AN ADDITIO N OF 1% ON ACCOUNT OF GP RESULTING IN AN ADDITION OF RS.11 1 5 036/-. 3. ON APPEAL THE LEARNED CIT(A) SUSTAINED THE ADDI TION OF RS.7 99 740/- WHILE TELESCOPING THE GP ADDITION IN THE FOLLOWING TERMS:- 2.2 DURING THE APPELLATE PROCEEDINGS THE APPELLANT STATED THAT THE AO HAD ISSUED NOTICES U/S. 133(6) TO VARIOUS SUPPLIERS OF CHEMI CALS BUT NO ADVERSE MATERIALS HAVE BEEN BROUGHT ON RECORD. ALMOST 9 9% OF THE TOTAL PURCHASES WERE SUPPORTED BY BILLS AND CHALLANS AND THE P AYMENTS ARE BY ACCOUNT PAYEE CHEQUES. THE A.O. HAS BROUGHT NO SPECIFIC DEF ECTS ON RECORD. THE ARGUMENTS GIVEN BY THE A.O. ARE GENERAL. I T WAS FURTHER ARGUED THAT THE TURNOVER HAS INCREASED FROM RS.7.43 CROR ES TO RS.11.15 CRORES WHICH COULD BE ACHIEVED ONLY A COMPETITIVE RATES THE REBY DECREASING G.P. MARGIN. WITH RESPECT TO THE WORK-IN-PROG RESS ADDITION THE APPELLANT STATED THAT THE ASSESSEE HAS BEEN FOLLOWING TH E SAME METHOD YEAR TO YEAR AND HENCE NO ADDITION SHOULD BE MADE. 2.3 I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND THE OBSERVATION OF THE A.O. FIRSTLY THE WORK-IN-PROGRESS ADDIT ION IS TAKEN. AS PER THE BASIC ACCOUNTING PRINCIPLE AS WELL AS THE DECISION O F THE HON'BLE SUPREME COURT IN THE CASE OF BRITISH PAINTS INDIA LTD. (SUPRA) THE CORRECT PROFIT CAN ONLY BE ASCERTAINED IF THE CLOSING STOCK IS CORRECT LY SHOWN. ADMITTEDLY THE COST OF VARIOUS INPUTS LIKE COLOUR & CHEM ICALS LABOUR POWER FUEL COAL ETC. HAVE BEEN PUT ON THE FABRIC LYI NG ON THE MACHINE UNDER VARIOUS STAGES OF COMPLETION FOR FIVE DAYS. THESE COSTS HAVE BEEN DEBITED TO THE PROFIT & LOSS ACCOUNT BUT CORRESPONDING WO RK-IN-PROGRESS HAS NOT BEEN SHOWN WHICH LEADING TO DISCLOSURE OF LESS PROF IT. THE APPELLANT HAS FOUND NO MISTAKE IN CALCULATION MADE BY THE A.O. HENCE THE ADDITION OF RS.7 99 740/- ON ACCOUNT OF WORK-IN-PROGRESS IS SUSTAINED. 2.4 WITH RESPECT TO THE G.P. ADDITION I AGREE WITH T HE APPELLANT THAT THE INCREASE OF TURNOVER IS DUE TO NON-DISCLOSURE OF WORK-IN-P ROGRESS AND NO OTHER MAJOR DEFECTS HAVE BEEN BROUGHT ON RECORD BY THE A.O. THE ADDITION OF WORK-IN-PROGRESS HAS TAKEN CARE OF MAJOR AMOUNT OF ADD ITION AND HENCE THE G.P. ADDITION CANNOT BE SUSTAINED. 2.5 IN VIEW OF THE ABOVE GROUND NO.2 IN RESPECT OF TH E WORK-IN- PROGRESS ADDITION IS THEREFORE CONFIRMED BUT GROUND N O.1 IS DISMISSED. 4 ITA NO.3236/AHD/2009 4 THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON B EHALF OF THE ASSESSEE CONTENDED THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE IN TERMS OF DECISIONS IN KRISHNA ART SILK CLOTH V/S . DCIT IN ITA NO. 1264/ AHD/2010 AND PRATIK PROCESSORS PVT. LTD. V/S. DC1T IN ITA NO. 165/ AHD/2009. THE LEARNED DR ON THE OTHER HAND S UPPORTED THE FINDINGS OF THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISIONS OF THE ITA T. THERE IS NOTHING TO SUGGEST AS TO WHETHER OR NOT REVENUE IS IN APPEAL BEFORE THE ITAT AGAINST THE FINDINGS OF THE LD. CIT(A) IN PARA 2.4 OF THE IMPUGNED ORDER. WE FIND THAT WHILE ADJUDICATING AN IDENTICAL ISSUE A CO-ORDINATE BENCH IN THEIR DECISION DATED 28.5.20 10 IN THE CASE OF ITO VS. M/S RISHABH DYEING & PRINTING MILLS (P) LTD . IN ITA NO. 1823/AHD./2007 HELD AS UNDER :- 3. AGAINST THIS LD. AR SUBMITTED THAT SIMILAR ISSU E HAD COME BEFORE THE TRIBUNAL IN THE CASE OF PRATIK PROCESSOR S PVT. LTD V DCIT IN ITA NO.1956/AHD/2007 WHEREIN TRIBUNAL HAS HELD THAT THERE CANNOT BE ANY WORK-IN-PROGRESS IN A CASE WHERE BUSI NESS OF DYEING AND PRIMING OF CLOTH IS DONE ON JOB WORK BASIS. HE REFERRED TO PARA-6 FROM THAT ORDER AS UNDER:- '6. AT THE TIME OF HEARING BOTH THE REPRESENTATIVES AGREED THE SIMILAR ISSUE AROSE IN AN APPEAL BY THE REVENUE IN ITA NO. 2649/AHD/2006 IN THE CASE OF VIPUL INDUSTRIES PVT. LTD. V/S ACIT ORDER D ATED 17.9.2003 IN THE SAID CASE WHEN IN THE SAID CASE THE ASSESSEE WHICH IS ENGAGED IN THE BUSINESS OF DYEING AND PRINTING OF CLOTH ON JOB WOR K BASIS AND WHERE THE ASSESSES HAD NOT SHOWN ANY WORK-IN-PROGRESS AT THE YEAR END THE SAME WAS ESTIMATED TO BE 50% OF THE JOB RECEIPT OF THE L IKELY STOCK REMAINING IN PROCESS. HOWEVER WAS DELETED BY THE LD. CIT(A) BY O BSERVING AS UNDER: 12 I HAVE CAREFULLY CONSIDERED THE FACT OF THE C ASE 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 ACC ORDING TO THEIR REQUIREMENT. THE APPELLANT NOT ENGAGED IN ANY MANUF ACTURING ACTIVITIES 5 ITA NO.3236/AHD/2009 OF ITS OWN. THE CLOTH PROCESSED BY THE APPELLANT TH US 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 CLOTH WAS REQUI RED TO BE SHOWN IN THE CLOSING STOCK OF THE CONCERNED CUSTOMERS. ON THE BASIS OF THE COMPLETION OF WORK ON THE CUSTOMERS CLOTH THE APPE LLANT IS ENTITLED TO RECEIVE ITS WORK CHARGES. NO INTERIM PAYMENTS OR ADVANCES PAYMENTS ARE RECEIVED BY THE APPELLANT FROM ITS CUSTOMERS DU RING THE PENDENCY OF THE JOB WORK. THE RECEIPTS FROM THE JOB WORK AR E BEING ACCOUNTED FOR BY THE APPELLANT ON COMPLETED CONTRACT METHOD AS PER A S-9. THE CLOSING STOCK OF MATERIALS USED FOR PROCESSING OF CLOTH I. E. COLOUR CHEMICALS ETC. HAVE BEEN DULY ACCOUNTED FOR BY THE APPELLANT IN AC CORDANCE WITH AS-9 IN REGARD TO THE VALUE ADDITION MADE BY THE APPELLA NT ON THE CUSTOMER'S CLOTH WHICH MAY HAVE BEEN AT DIFFERENT INTERMEDIAT E STAGES OF PROCESSING AS ON 31.3.2003 NEITHER ANY OPENING STOCK NOR CLOS ING STOCK WAS EVER SHOWN BY THE APPELLANT. AS PER THE PRINCIPLES OF AC COUNTING LAID DOWN BY THE ICAI UNDER THE SCOPE OF VALUATION OF INVENTORI ES IN ITEM 1 (SUB-ITEM (B) OF AS-2 (REVISED) THE 'WORK-IN-PROGRESS AR ISING IN THE ORDINARY COURSE OF BUSINESS OF SERVICE PROVIDER' HAS BEEN SP ECIFICALLY SCOPED OUT OF THE SAID STATEMENT. FURTHER IN THE DEFINITIONS PRO VIDED UNDER ITEM 3 OF THE AS-2 'INVENTORIES' HAVE BEEN DEFINED AS 'ASSETS (A) HELD FOR SALE IN THE ORDINARY COURSE OF BUSINESS (B) IN THE PROCESS OF PRODUCTION FOR SUCH SALE' OR (C) IN THE FORM OF MATERIALS OR SUPPLIES T O BE CONSUMED IN THE PRODUCTION FOR SALE' OR IN THE RENDERING OF SERVICE S. SINCE THE APPELLANT WAS NOT ENGAGED IN THE BUSINESS OF SALE OF THE PROC ESSED 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 ;HE 'VALUATION OF INVENTORIES' WERE NOT APPLICABLE IN ITS CASE IN ACC ORDANCE WITH ITEM L(B) THEREOF. HOWEVER THE MATERIALS OR SUPPLIES TO BE C ONSUMED IN THE PRODUCTION PROCESS OR IN THE RENDERING OF SERVICES WOULD EVIDENTLY FAIL IN CATEGORY (C) OF THE AFORESAID DEFINITIONS' PROVIDE D IN ITEM 3 OF THE ACCOUNTING PRINCIPLES LAID DOWN IN AS-2 AND THE SA ME WOULD BE REQUIRED TO BE ACCOUNTED FOR BY IT IN THE FORM OF STOCK WHI CH HAS BEEN DONE IN THE INSTANT CASE. THE METHOD OF ACCOUNTING FOLLOWED BY THE APPELLANT IS THUS SEEN TO BE IN ACCORDANCE WITH THE ACCOUNTING PRINCI PLES LAID DOWN BY THE ICAI. 13 IT IS FURTHER SEEN THAT THE AFORESAID METHOD OF ACCOUNTING OF OPENING/CLOSING STOCK HAS BEEN REGULARLY AND CONSIS TENTLY FOLLOWED BY THE APPELLANT COMPANY SINCE THE BELONGING THE APPELLANT HAS ALSO CONSISTENTLY FOLLOWED THE ACCOUNTING POLICY OF REC OGNIZING REVENUE OF COMPLETED CONTRACT METHOD. WHILE THE PRINCIPLES OF RES-JUDICATA ARE NOT APPLICABLE TO THE INCOME-TAX PROCEEDINGS IT HAS BE EN HELD BY THE COURTS 6 ITA NO.3236/AHD/2009 IN SEVERAL JUDGMENTS: THAT WHERE THE APPELLANT HAS BEEN FOLLOWING REGULAR SYSTEM OF ACCOUNTING SINCE THE LAST SO MANY YEARS AN SUCH METHOD WAS BASED ON ACCEPTED PRINCIPLES OF ACCOUNTING THER E WAS NO JUSTIFICATION FOR REJECTING THE SAID METHOD FOR VALUATION OF STOC K. THIS WOULD ESPECIALLY HOLD IN A CASE WHERE THE PROPOSED CHANGE IN THE MET HOD OF VALUATION IS FOUND TO HAVE NO IMPACT AS IN THE INSTANT CASE IF THE CHANGED METHOD ADOPTED BY THE ASSESSING OFFICER WERE APPLIED FOR V ALUATION OF THE OPENING AS WELL AS THE CLOSING STOCK. 14 FOR REASONS DISCUSSED ABOVE IN DETAIL IN MY OPI NION THERE WAS NO BASIS OR JUSTIFICATION IN MAKING THE ANY ESTIMATED ADDITION ON ACCOUNT OF WORK-IN-PROGRESS IS THIS CASE. THE ADDITION OF RS.1 2.56.970/- MADE BY THE AO IN RESPECT OF ESTIMATED WORK IN PROGRESS IS THER EFORE DELETED. THIS GROUND OF APPEAL IS ALLOWED ' THUS DELETION WAS CONFIRMED BY THE TRIBUNAL. THER EFORE IN THE PRESENT CASE ALSO FOLLOWING THE DECISION OF THE TRI BUNAL CONFIRM THE ORDER OF THE CIT(A) THE ADDITION ON ACCOUNT OF EST IMATED VALUE OF WORK-IN-PROGRESS IS REQUIRED TO BE DELETED. 5.1 FOLLOWING THE VIEW TAKEN IN THE AFORCITED DEC ISION THE ITAT IN THEIR DECISION DATED 16-07-2010 IN THE CASE OF KRI SHNA ART SILK CLOTH (P) LTD. VS. DCIT IN ITA NO.1264/AHD/2010 IN WHICH CASE ALSO THE LD. CIT(A) UPHELD THE FINDINGS OF THE AO IN THE LIGHT OF DECISION DATED 26.10.2007 IN THE CASE OF AKRUTI DY EING & PRINTING MILLS PVT. LTD. IN ITA NO.2551/AHD/2006 ALLOWED TH E CLAIM OF THE ASSESSEE. 5.2 IN ANOTHER DECISION DATED 13-05-2011 FOLLOW ING 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. IT O THE ITAT CONCLUDED AS UNDER: 7. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE TRIBUNAL I N THE CASE OF KANHAIYA PROCESSORS PRIVATE LTD. (SUPRA) OBSERVED T HAT THE AO COULD NOT BE ABLE TO APPRECIATE THE TRUE NATURE OF THE BUSINESS OF A PROCESSING HOUSE. HE UNDERTOOK THE JOB WORK. THE FA BRIC DOES NOT BELONG TO THE ASSESSEE. THERE IS DIFFERENCE IN RAW MATERIAL AND THE CONSUMABLES. RAW MATERIAL ONCE CONSUMED DOES NOT LO SE ITS IDENTITY IT ONLY GETS ITS UTILITY TRANSFERRED. WHI LE THE CONSUMABLES ONCE CONSUMED CANNOT BE SEPARATELY IDENTIFIED AND IT LOSES ITS 7 ITA NO.3236/AHD/2009 IDENTITY. WHEN THE ASSESSEE HAS BEEN ENGAGED IN THE BUSINESS OF DYEING AND PRINTING OF ART-SILK CLOTH ON JOB WORK B ASIS THE RAW MATERIAL DOES NOT BELONG TO THE ASSESSEE. THE ASSES SEE HAS SIMPLY TO INCUR THE EXPENDITURE ON COLOUR CHEMICAL WAGES POWER AND FUEL. COLOUR AND CHEMICALS ARE CONSUMABLES AND ONCE THESE ARE APPLIED TO THE FABRIC UNDER PROCESS THEY LOSE THEIR IDENTI TY AND CANNOT BE PART OF THE STOCK IN PROCESS. THE ASSESSEE IS VALUI NG THE STOCK BY FOLLOWING THE SAME METHOD CONSISTENTLY IN WHICH THE RE IS NO ILLEGALITY. ON THIS BASIS ADDITION MADE ON ACCOUNT OF SUPPRESSED WORK-IN- PROGRESS IS DELETED BY THE TRIBUNAL 'D' B ENCH VIDE ORDER DATED 3RD APRIL 2009 IN THE OF KANHAIYA PROCESSORS PVT. LTD. (SUPRA). 7.1 THE SIMILAR VIEW HAS BEEN TAKEN IN OTHER CASES RELIED ON BY THE ID. COUNSEL OF ASSESSEE. UNDER THE FACTS AND CI RCUMSTANCES WE ARE OF THE VIEW THAT THE AO WAS MOT CORRECT IN LAW IN VALUING THE WORK-IN-PROGRESS IN RESPECT OF VARIOUS EXPENSES INC URRED BY THE ASSESSEE RELATING TO FABRIC WHILE IN PROCESS FOR DY EING AND PRINTING. WE. ACCORDINGLY DELETE THE ADDITION OF RS.4 11 335 /-. RESULTANTLY THE APPEAL OF THE ASSESSEE IS ALLOWED. 5.3 INDISPUTABLY THE ASSESSEE IS DOING THE JO B WORK AND THE GREY CLOTH LYING IN THE PREMISES OR IN THE MACHINE AT TH E END OF ACCOUNTING YEAR BELONGS TO OTHER PARTIES . THE ASSE SSEE IS CONSISTENTLY FOLLOWING THE METHOD OF VALUATION RIGH T SINCE ITS INCEPTION AND HAS BEEN ACCEPTED BY THE DEPARTMENT. THE ASSESSEE NEVER REFLECTED ANY OPENING OF STOCK OF WORK IN PR OGRESS NOR CLOSING STOCK THEREOF . THE ITAT IN THEIR DECISION DATED 1 3.5.11 IN GAGAN SILK MILLS PVT. LTD. IN ITA NO.4036/AHD/2008; DECIS ION DATED 27.5.2011 IN BHAGWATI SYNTEX P. LTD. IN ITA NO.324 9/AHD/2009 AND DECISION DATED 28.5.2010 IN VARDHAMAN FABRICS P. LT D. IN ITA NO.794/AHD/2008 ALLOWED A SIMILAR CLAIM OF THE ASS ESSEE WHILE HOLDING THAT THE AO WAS NOT CORRECT IN LAW IN VALUI NG THE WORK-IN- PROGRESS IN RESPECT OF VARIOUS EXPENSES INCURRED BY THE ASSESSEE RELATING TO FABRIC IN PROCESS OF DYEING AND PRINTI NG. IN THE LIGHT OF CONSISTENT VIEW TAKEN IN THE AFORESAID DECISIONS IN CLUDING IN BHAGWATI SYNTEX P. LTD.(SUPRA) VARDHAMAN FABRICS P . LTD.(SUPRA) AND M/S.BAJRANG PROCESSORS P. LTD.(SUPR A) ON IDENTICAL FACTS AND CIRCUMSTANCES WE HAVE NO ALTERNATIVE BUT TO ALLOW THE 8 ITA NO.3236/AHD/2009 CLAIM OF THE ASSESSEE IN THE INSTANT CASE. THEREFOR E GROUND NO.1 IN THE APPEAL IS ALLOWED. 6. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE U S IN TERMS OF RESIDUARY GROUND NO.2 IN THE APPEAL ACCORDINGLY T HIS GROUND IS DISMISSED. 7. IN THE RESULT APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 30-08-2011 SD/- SD/- ( BHAVNESH SAINI ) JUDICIAL MEMBER ( A N PAHUJA ) ACCOUNTANT MEMBER DATED : 30-08-2011 COPY OF THE ORDER FORWARDED TO: 1. M/S AVISHKAAR PROCESSING MILLS (P) LTD. 145 GI DC PANDESARA SURAT 2. THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-1 SURAT 3. CIT CONCERNED 4. CIT(A)-I SURAT 5. DR ITAT AHMEDABAD BENCH-C AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD