M/s Primear Protins, v. The JCIT, S .R. 1,

PAGE 1 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/2005 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER PAN NO. : N.A. I.T.A.NO.980/IND/2003 A.Y. : 1996-97 M/S.PREMIER PROTEINS LIMITED JT. CIT 107 CHETAK CENTRE VS SPECIAL RANGE I R.N.T.MARG INDORE. INDORE. APPELLANT RESPONDENT PAN NO. : N.A. I.T.A.NO.95/IND/2005 A.Y. : 1997-98 ACIT M/S. PREMIER PROTEINS LIMITED 1(2) VS 107 CHETAK CENTRE INDORE. INDORE. APPELLANT RESPONDENT PAN NO. : N.A. I.T.A.NO.1173/IND/2004 A.Y. : 1997-98 M/S.PREMIER PROTEINS LIMITED JT. CIT 107 CHETAK CENTRE VS SPECIAL RANGE I R.N.T.MARG INDORE. INDORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI M. C. MEHTA AND SHRI HITESH CHIMNANI CAS DEPARTMENT BY : SHRI K.K.SINGH CIT DR PAGE 2 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/2005 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. DATE OF HEARING : 5.04.2010 O R D E R PER BENCH THESE APPEALS BELONG TO THE SAME ASSESSEE AND INVOL VE COMMON ISSUES HENCE THESE WERE HEARD TOGETHER AND THESE ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER FOR THE SAKE OF CON VENIENCE. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. FIRST WE SHALL TAKE UP THE ASSESSEES APPEAL IN I. T.A.NO. 980/IND/2003. 4. GROUND NO. 1 READS AS UNDER : THAT THE LD. CIT(A) ERRED IN MAINTAINING ADDITION OF RS. 77 112/- IN RESPECT OF DIFFERENCE IN THE QUANTITY O F STOCK OF SOYA DOC DECLARED TO THE BANK IN HYPOTHECATION STAT EMENT AND THAT AS PER BOOKS OF ACCOUNT WHEN SUCH DIFFERE NCE IN THE STOCK STATEMENT FILED ON ESTIMATE CONSIDERING THE T OTAL QUANTITY OF BUSINESS OF DOC AND ITS LOW VALUE TRANS ACTED BY THE ASSESSEE WAS POSSIBLE. 5. THE FACTS IN BRIEF ARE THAT THERE WAS A DIFFERENC E IN THE QUANTITY OF SOYA DOC BY 10.016 M. T. AS PER THE BOOKS AND AS PER THE STATEMENT PAGE 3 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/2005 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. GIVEN TO THE BANK. THE A.O. TREATED IT AS UNEXPLAIN ED INVESTMENT BY THE ASSESSEE AND WORKED OUT THE VALUE THEREOF AT RS. 70 112/- AND MADE THE ADDITION. IN APPEAL BEFORE THE LD. CIT(A) THE ASSE SSEE SUBMITTED THAT THE DOC CAKE WAS A BY PRODUCT HAVING LOW VALUE BUT OF H UGE QUANTITY. IT WAS STATED THAT QUANTITY OF SUCH STOCK HAD BEEN GIV EN TO THE BANK ON ESTIMATE BASIS. IT WAS FURTHER SUBMITTED THAT THERE COULD BE COMMUNICATION GAP BETWEEN THE AUTHORITIES FURNISHIN G SUCH INFORMATION. THE LD. CIT(A) HOWEVER CONFIRMED THE ACTION OF TH E A.O. FOR THE REASON THAT THE ASSESSEE FAILED TO EXPLAIN THE DISCREPANCY AND PLEA OF THE ASSESSEE THAT DIFFERENCE WAS NEGLIGIBLE COULD NOT BE ACCEPTE D. THE LD. CIT(A) ALSO HELD THAT IT WAS THE CASE OF UN-ETHICAL CONDUCT FOR AVAILING HIGHER OVERDRAFT FACILITY AND FOR THIS REASON ALSO THE AD DITION WAS TO BE SUSTAINED. AGGRIEVED BY THIS THE ASSESSEE IS IN AP PEAL BEFORE US. 6. THE LEARNED COUNSEL FOR THE ASSESSEE NARRATED THE F ACTS AND REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT( A) FURTHER DREW OUR ATTENTION TO THE FACT THAT THERE WAS EXCESS STOCK A LSO IN THE BOOKS OF ACCOUNT IN RESPECT OF VARIOUS PRODUCTS OF THE ASSES SEE COMPANY. IT WAS FURTHER CONTENDED THAT THERE WERE MINOR DIFFERENCES AS WELL AND HAVING REGARD TO THE FACT THAT THE ASSESSEES COMPANY WAS HAVING SUBSTANTIAL LOSSES THERE COULD NOT BE ANY ADVANTAGE TO THE ASS ESSEE COMPANY BY PAGE 4 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/2005 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. INDULGING INTO SUCH PRACTICES. IT WAS ALSO CONTENDE D THAT IT WAS ONLY A CASE OF TECHNICAL DEFAULT. 7. THE LD. CIT DR ON THE OTHER HAND PLACED STRONG RE LIANCE ON THE ORDER OF THE LD. CIT(A). 8. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 9. IT IS NOTED THAT THE ASSESSEE IS HAVING HUGE TUR NOVER AND IS RUNNING INTO LOSSES CONTINUOUSLY. IT IS ALSO NOTED THAT THERE HAVE BEEN VARIATIONS IN THE QUANTITIES OF VARIOUS PRODUCTS IN STOCK AS PER THE BOOKS OF ACCOUNT AND AS PER THE BANK STATEMENT. IT IS ALS O NOTED THAT THE ASSESSEES OFFICES ARE SITUATED AT MULTIPLE LOCATIO NS. HENCE COMMUNICATION GAP/MISUNDERSTANDING IN THE FIGURES C ANNOT BE RULED OUT. FURTHER THE QUANTITY IS VERY NEGLIGIBLE. IN OUR VI EW ON THE SAME FACTS THE LD. CIT(A) HAS TAKEN A DIFFERENT VIEW BUT THESE FAC TS CAN ALSO BE INTERPRETED IN FAVOUR OF THE ASSESSEE HAVING REGARD TO WORKING SITUATIONS WHICH ACTUALLY EXIST. FURTHER THE INDULGENCE OF TH E ASSESSEE INTO UN- ETHICAL PRACTICES IN THIS MANNER CANNOT IN OUR OP INION BE PROPER REASON TO SUSTAIN THE ADDITION AS NO SUCH CONDITION EXIST S IN LAW TO MAKE AN ADDITION. THUS IN THE BACKGROUND OF SPECIFIC FACTS OF THE ASSESSEE WE ARE OF THE VIEW THAT THIS ADDITION IS NOT JUSTIFIED. AC CORDINGLY WE DELETE THE SAME. THUS THIS GROUND OF THE ASSESSEE STANDS ALLO WED. PAGE 5 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/2005 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. 10. GROUND NO. 2 READS AS UNDER :- THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALL OWANCE OF RS. 48 19 642/- OUT OF INTEREST PAID IN RESPECT OF INTEREST FREE ADVANCE GIVEN TO NARMADA SUGAR (P) LIMITED. IT IS SUBMITTED THAT ON THE FACTS AND CIRCUMSTANCES OF TH E CASE AND DETAILED SUBMISSIONS MADE BEFORE THE A.O. AND CIT(A ) THE SAID DISALLOWANCE IDS WRONG AND UNCALLED FOR. THE S AME REQUIRES TO BE DELETED IN FULL. 11. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY O UT-SET SUBMITTED THAT IN ASSESSMENT YEAR 1993-94 THE TRIB UNAL VIDE ITS ORDER DATED 12.11.2009 HAD DELETED THE SIMILAR DISALLOWA NCE THOUGH THE QUANTUM AS DISALLOWANCE WAS VERY LESS. HOWEVER IN THAT YEAR THE FACT OF COMMERCIAL CONSIDERATION HAD BEEN ACCEPTED. THE LEA RNED COUNSEL FURTHER CONTENDED THAT IN THE ASSESSEES CASE FOR A SSESSMENT YEAR 1994-95 IN I.T.A.NO. 1060/IND/1997 ORDER DATED 15.3.2010 A DVANCE GIVEN BY THE ASSESSEE TO ITS HOLDING COMPANY WAS ALSO FOUND TO H AVE BEEN TRANSACTED OUT OF COMMERCIAL CONSIDERATION. THEREAFTER THE LE ARNED COUNSEL DREW OUR ATTENTION TO NOTE NO. 5 AT PAGE 23 OF THE COMPI LATION COMPRISING OF NOTES OF ACCOUNT WHEREIN IT HAD BEEN STATED THAT T HE ASSESSEE COMPANY FOR MAKING INVESTMENT IN M/S. NARMADA SUGAR LIMITED HAD AVAILED SALES TAX EXEMPTION AS PER THE SCHEME OF THE M.P. STATE GOVER NMENT. IN THIS PAGE 6 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/2005 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. REGARD THE LEARNED COUNSEL ALSO DREW OUR ATTENTION TO THE COPIES OF THE NOTIFICATION ISSUED BY THE CONCERNED AUTHORITIES OF THE STATE GOVERNMENT AT PAGE NO.47 TO 51 OF THE PAPER BOOK. ACCORDINGLY THE LEARNED COUNSEL SUBMITTED THAT DISALLOWANCE SUSTAINED BY THE CIT(A) WAS LIABLE TO BE DELETED. HE FURTHER CONTENDED THAT THE IMPUGNED BAL ANCE WAS A CASE OF OPENING BALANCE ONLY AND IN ASSESSMENT YEAR 1994-95 AND 1995-96 NO SUCH DISALLOWANCE HAD BEEN MADE. HENCE THE NATURE OF ADVANCE HAD TO BE TREATED AS OF THE SAME CATEGORY. IN THIS REGARD TH E LEARNED COUNSEL PLACED STRONG RELIANCE ON THE DECISION OF THE HON'BLE KARN ATAKA HIGH COURT IN THE CASE OF SRIDEV ENTERPRISES AS REPORTED IN 192 ITR 165. 12. THE LD. CIT DR ON THE OTHER HAND PLACED STRONG RE LIANCE ON THE ORDER OF THE LD. CIT(A). 13. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 14. IT IS NOTED THAT THE ASSESSEE COMPANY IS THE PROMOT ER OF M/S. NARMADA SUGAR LIMITED AND IN THE EARLIER ASSESSMENT YEAR 1993-94 THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASS ESSEE. THOUGH THE QUANTUM IS LESS BUT COMMERCIAL CONSIDERATIONS HAVE BEEN FOUND IN RESPECT OF SUCH TRANSACTION. IT IS FURTHER NOTED TH AT THE TRIBUNAL HAS FOLLOWED THE RATIO OF THE DECISION OF THE HON'BLE S UPREME COURT IN THE CASE OF S. A. BUILDERS AS REPORTED IN 288 ITR 1. IN THE YEAR UNDER PAGE 7 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/2005 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. CONSIDERATION FROM THE PERUSAL OF THE NOTES ON ACC OUNTS AND NOTIFICATIONS ISSUED BY THE STATE GOVERNMENT IT IS CLEARLY EVID ENT THAT THE ASSESSEE COMPANY HAS DERIVED THE BENEFIT UNDER SALES TAX DEF ERRED SCHEME/EXEMPTION SCHEME ON ACCOUNT OF SUCH INVESTME NT IN M/S. NARMADA SUGARS LIMITED WHICH HAS DEPLOYED THESE FU NDS FOR GENERATION OF POWER. THUS THIS FACT ALONE IS SUFFICIENT TO NO T TO MAKE ANY DISALLOWANCE. WE ARE FURTHER OF THE VIEW THAT THE D ECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF SRIDEVI ENTERPR ISES (SUPRA) ALSO SUPPORTS THE CLAIM OF THE ASSESSEE AS IT IS A CASE OF CONTINUATION OF OPENING BALANCE WHEREIN NO DISALLOWANCE HAS BEEN MA DE IN THE EARLIER TWO ASSESSMENT YEARS. ACCORDINGLY WE ACCEPT THIS C LAIM OF THE ASSESSEE ALSO. 15. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE STA NDS ALLOWED. 16. NOW WE SHALL TAKE UP THE REVENUES APPEAL IN I.T.A .NO. 95/IND/2005. 17. GROUND NO.1 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1 62 2 81/- ON ACCOUNT OF DISALLOWANCES OF PRIOR PERIOD EXPENSES. PAGE 8 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/2005 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. 18. WE HAVE ALREADY DECIDED THIS ISSUE IN THE CASE OF T HE ASSESSEE VIDE OUR ORDER PASSED IN I.T.A.NOS. 1060/IND/1997 E TC. DATED 15 TH MARCH 2010 IN WHICH IN PARA 8 THE TRIBUNAL HELD AS UNDE R :- 8. IT IS NOTED THAT AS PER THE DOCUMENTARY EVIDEN CE PRODUCED BEFORE US THE IMPUGNED EXPENSES HAVE CRYS TALLIZED DURING THE YEAR UNDER CONSIDERATION AS THERE WERE SOME DISPUTES/CLARIFICATION WHICH HAVE BEEN SETTLED IN THE YEAR UNDER CONSIDERATION. WE FURTHER FIND THAT THE LD. CIT(A) HAS EXAMINED ALL THE ITEMS UNDER THIS HEAD IN DETAI L AND THESE FINDINGS OF THE LD. CIT(A) HAVE REMAINED UNCONTROVE RTED. THEREFORE WE CONFIRM THE ORDER OF THE LD. CIT(A) I N THIS REGARD. THUS THIS GROUND OF THE REVENUE IS DISMISS ED. 19. SINCE THE FACTS ARE IDENTICAL AS STATED BY BOTH THE SIDES HENCE FOLLOWING THE SAME REASONING WE DISMISS THIS GROUN D OF THE REVENUE. 20. GROUND NO. 2 READS AS UNDER ;- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 52 02 000/- ON ACCOUNT OF DISALLOWANCES OUT OF INTEREST. PAGE 9 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/2005 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. 21. WE HAVE ALREADY DECIDED THIS ISSUE IN THE CASE OF T HE ASSESSEE VIDE OUR ORDER PASSED IN I.T.A.NOS. 1060/IND/1997 E TC. DATED 15 TH MARCH 2010 IN WHICH IN PARA 41 THE TRIBUNAL HELD AS UND ER :- 41. IT IS NOTED THAT THERE ARE TRANSACTIONS OF P URCHASE AND SALE BETWEEN TWO COMPANIES. HENCE THE NATURE OF SUCH PARTY IS OF TRADE DEBTORS. IT IS ALSO AN AD MITTED FACT THAT THE ASSESSEE COMPANY HAD NOT CHARGED INTEREST FROM TRADE DEBTORS ON OUTSTANDING AMOUNTS. HENCE THERE ARISES NO QUESTION OF CHARGING INTERES T FROM THIS PARTY. WE ARE OF THE VIEW THAT ONCE THE COMMERCIAL CONSIDERATIONS ARE ESTABLISHED THEN NO NOTIONAL DISALLOWANCE CAN BE MADE OUT OF THE INTERE ST EXPENDITURE CLAIMED U/S 36(1)(III) OF THE ACT. ACCORDINGLY WE DISMISS THIS GROUND OF THE REVENUE. 41. SINCE THE FACTS ARE IDENTICAL AS STATED BY BOTH THE SIDES HENCE FOLLOWING THE ABOVE REASONS WE DISMISS THE GROUND OF THE REVENUE. 42. GROUND NO. 3 & 4 READ AS UNDER :- 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 6 07 3 93/- ON ACCOUNT OF CONSUMPTION OF COAL. PAGE 10 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/200 5 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 60 739 /-. 43. WE HAVE ALREADY DECIDED THIS ISSUE IN THE CASE OF THE ASSESSEE VIDE OUR ORDER PASSED IN I.T.A.NOS. 1060/IND/1997 E TC. DATED 15 TH MARCH 2010 IN WHICH IN PARA 43 THE TRIBUNAL HELD AS UND ER :- 43. BOTH THE PARTIES SUBMITTED THAT THE IDENTIC AL ISSUE AROSE IN ASSESSMENT YEAR 1993-94 ALSO AND WHE REIN THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL VIDE ITS ORDER DATED 12.11.2009. ACCORDINGLY WE DI SMISS THIS GROUND OF THE REVENUE AND REPRODUCE THE FINDIN GS OF THE TRIBUNAL IN PARA 9 OF THE SAID ORDER AS UNDER FOR T HE SAKE OF READY REFERENCE :- 9. BOTH THE PARTIES AGREED THAT THIS ISSUE WAS COVERED IN FAVOUR OF ASSESSEES BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASES FOR ASSESSMENT YEARS 1991-92 AND 1992-93 WHICH WERE FOLLOWED BY THE LD. CIT(A). ACCORDINGLY WE DISMISS THIS GROUND OF THE REVENUE AND FOR BETTER APPRECIATION OF FACTS WE REPRODUCE THE FINDINGS :- PARA 6 PAGE 11 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/200 5 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. NEXT POINT IS AGAINST ADDITION OF RS.23 37 310/- OUT OF EXPENSES INCURRED ON COAL CONSUMPTION WHICH COMPRISES OF RS. 21 24 882/- AND RS. 2 12 428/-.THE APPELLANT DURING THE YEAR HAD PROCESSED 54466.575 M.T OF SOYASEED ON WHICH COAL CONSUMPTION HAS BEEN SHOWN AT 7618.230 MT WHICH GIVES AN AVERAGE CONSUMPTION OF 140 KG OF COAL FOR PROCESSING ONE M.T OF SOYA SEED. THE ABOVE CONSUMPTION OF COAL HAS BEEN CONSIDERED BY THE ASSESSING OFFICER TO BE EXCESSIVE AND HE HAS ALLOWE D THE COAL CONSUMPTION AT 100 KG FOR ONE M.T. OF PROCESSING SOYA SEED TO BE REASONABLE RESULTING IN THE IMPUGNED ADDITION. THE LD. REPRESENTATIVES RELIES O N THE APPELLATE ORDER IN THE CASE OF THE APPELLANT FO R ASSESSMENT YEAR 1991-92 AND 1992-93 WHERE COAL CONSUMPTION HAS BEEN CONSIDERED REASONABLE AT 140 KG AND 136.91 KG RESPECTIVELY. HE HAS ALSO RELIED O N THE ITAT INDORE BENCH INDORE ORDER IN THE CASE OF VIPPY SOLVEX IN WHICH HIGHER CONSUMPTION OF COAL WA S ACCEPTED. IT IS ALSO POINTED OUT THAT THE SAME ASSE SSING OFFICER IN THE CASE OF THE APPELLANT FOR ASSESSMENT YEAR PAGE 12 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/200 5 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. 1989-90 HAD ACCEPTED THE COAL CONSUMPTION @ 203 KG PER M.T OF SOYA SEED CRUSHED AS REASONABLE THEREFORE THE ADDITION IS UNCALLED FOR. FOLLOWING THE APPELLATE ORDERS IN THE CASE OF THE APPELLANT FOR EARLIER YEARS AND REASONS DISCUSSED THEREIN ADDITIO N OF RS. 23 37 310/- IS NOT JUSTIFIED AND DELETED. 44. SINCE THE FACTS ARE IDENTICAL AS STATED BY BOTH THE SIDES HENCE FOLLOWING THE ABOVE REASONS WE DISMISS BOTH THE GR OUNDS OF THE REVENUE. 45. GROUND NO. 5 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 7 41 6 24/- ON ACCOUNT OF DISALLOWANCES OF LOSS IN MANUFACTURING. 46. WE HAVE ALREADY DEALT WITH THIS ISSUE IN ASSESSEES OWN CASE IN I.T.A.NO. 223/IND/1997 VIDE OUR ORDER DATED 12.11.2 009 WHEREIN THE TRIBUNAL HELD IN PARA 7 AS UNDER :- 7. WE HAVE CONSIDERED THE SUBMISSION MADE BY BOTH THE SIDE MATERIAL ON RECORD AND ORDERS OF AUTHORITY BEL OW. WE FIND THAT ASSESSEES ACCOUNTS ARE AUDITED AND ARE A LSO SUBJECT TO SUPERVISION OF THE EXCISE DEPARTMENT .NO DEFECT HAS BEEN POINTED OUT BY THE AO IN SUCH ACCOUNTS. WE FURTHER FIND THAT PAGE 13 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/200 5 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. THE PERCENTAGE OF MANUFACTURING LOSS IN THE PRODUCT ION OF SOYA NUGGETS IS COMPARABLE TO PERCENTAGE OF SUCH LO SS IN EARLIER YEARS WHEREIN NO SUCH ADDITION HAS BEEN MAD E. WE ALSO FIND THAT THE AO HAS ACCEPTED CERTAIN PART OF MANUFACTURING LOSS AS GENUINE WITHOUT GIVING ANY BA SIS FOR REJECTING THE REMAINING QUANTUM OF SUCH LOSS. IN OU R OPINION THE SUCH KIND OF MANUFACTURING PROCESS RESULTS INTO MANUFACTURING LOSSES HENCE IT CAN NOT BE SAID THA T ASSESSEE HAS SHOWN SOMETHING WHICH IS NOT POSSIBLE. FURTHER THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SUBSTANTI ATE HIS CLAIM THAT CERTAIN QUANTITY HAD BEEN SOLD OUT OF TH E BOOK INSPITE OF SUPERVISION OF EXCISE DEPARTMENT. THUS IN OUR OPINION THE LD CIT(A) HAS RIGHTLY DELETED THIS ADDI TION. AS REGARDS THE SALE OF INFERIOR QUALITY OF NUGGETS IS CONCERNED THE ASSESSEE HAS GIVEN ALL THE DOCUMENTARY EVIDENCE S IN SUPPORT OF SUCH CLAIM AND THE AO ORDER IS A CASE OF PRESUMPTION AND SUBSTANTIATE ONLY AS NO MATERIAL HA S BEEN BROUGHT ON RECORD BY THE AO TO SUBSTANTIATE THE SAM E. ACCORDINGLY BOTH THESE GROUNDS OF THE REVENUE ARE DISMISSED. PAGE 14 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/200 5 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. 47. SINCE THE FACTS ARE IDENTICAL AS STATED BY BOTH THE SIDES HENCE FOLLOWING THE ABOVE REASONS WE DISMISS THE GROUND OF THE REVENUE. 48. IN THE RESULT REVENUES APPEAL STANDS DISMISSED. 49. NOW WE SHALL TAKE UP THE I.T.A.NO. 1173/IND/2004. 50. GROUND NO.1 READS AS UNDER :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER THE SUBMISSIONS MADE THE LD. CIT(A) ERRED IN MAINTAINING DISALLOWANCE OF RS. 66 08 664/- OUT OF INTEREST PAID IN RESPECT OF INTEREST FREE ADVANCE GIVEN TO N ARMADA SUGAR LIMITED. 51. BOTH THE PARTIES SUBMITTED THAT THIS ISSUE WAS IDEN TICAL TO THE ISSUE RAISED IN GROUND NO.2 OF THE ASSESSEES APPEA L IN I.T.A.NO. 980/IND/2003. HENCE FOLLOWING THE SAME REASONS TH IS GROUND OF THE ASSESSEE STANDS ALLOWED. 52. GROUND NO.2 READS AS UNDER :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER MAIN SECTION 43B THE LD. CIT(A) ERRED IN MAINTAINING DISALLOWANCE OF RS. 2 55 228/- AND RS. 32 169/- OUT OF PF AND ESI PAYMENTS MADE DURING THE PREVIOUS YEAR. PAGE 15 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/200 5 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. 53. BOTH THE PARTIES AGREED THAT NOW THIS ISSUE WAS COV ERED BY THE DECISION OF THE APEX COURT IN THE CASE OF ALUM EXTR USION AS REPORTED IN 319 ITR 306. HENCE WE ALLOW THIS GROUND OF THE REV ENUE. 54. GROUND NO. 3 READS AS UNDER :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND THE SUBMISSIONS MADE THE LD. CIT(A) ERRED IN NOT ALLOWI NG THE CLAIM OF LOSS IN STOCK OF DOC AT THE PORT VALUED AT RS. 154.76 LACS. 55. THE FACTS IN BRIEF ARE THAT THE ASSESSEE CLAIMED LOSS AMOUNTING TO RS. 154.76 LAKHS ON ACCOUNT OF PILFERAGE/WASTAGE OF DOC STOCK AT THE PORT WHICH WAS DISALLOWED BY THE ASSESSING OFFICER WITHOUT ANY DISCUSSION IN THE ASSESSMENT ORDER. IN APPEAL BEFOR E THE LD. CIT(A) THE ASSESSEE SUBMITTED THAT DOC SENT TO JAMNAGAR WAS ST ORED IN THE GODOWN OF THE CLEARING AGENTS AND ALSO AT THE PORT. IT WAS IN HUGE QUANTITY. IT WAS ALSO SUBMITTED THAT PHYSICAL VERIFICATION HAD NOT B EEN DONE AND IN ASSESSMENT YEAR 1991-92 TO 1996-97 THE ASSESSEE HA D CLAIMED LOSSES FOR THE VERY SAME REASONS AND THE SAME HAD BEEN ACCEPTE D BY THE DEPARTMENT. IT WAS FURTHER SUBMITTED THAT IN THE YE AR UNDER CONSIDERATION THE QUANTITY OF STOCK LYING AT THE PORT HAD BEEN SU BSTANTIALLY REDUCED DUE TO SLUMP IN THE SOYA TRADE AND THEREFORE COMPANY CARRIED OUT PHYSICAL VERIFICATION OF STOCK AT PORT AND WITH THE CLEARING AGENT AND ON SUCH PAGE 16 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/200 5 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. VERIFICATION PHYSICAL STOCK WEIGHING 1759M.T. WAS FOUND SHORT. THE ASSESSEE ALSO SUBMITTED BREAK UP OF SUCH SHORTAGES IN ALL THE YEARS QUANTITY OF SALES QUANTITY SENT TO PORT/GODOWNS OF CLEARING AGENTS TO JUSTIFY THE SAME. THE LD. CIT(A) HOWEVER REJECTED THESE CLAIMS OF THE ASSESSEE FOR THE REASONS THAT LOSS COULD BE ALLOWED IN THE YEAR IN WHICH IT CRYSTALLIZED AND IN THE FACTS OF THIS CASE THIS FA CT COULD NOT BE CONFIRMED AND THE ACTUAL FIGURES OF SUCH SHORTAGE HAD NOT BEE N EVEN AUTHENTICATED OR CERTIFIED BY ANY OF THE AUDITORS. THE LD. CIT(A) AL SO HELD THAT NOTHING PREVENTED THE ASSESSEE TO CLAIM THE LOSS ON ACTUAL BASIS IN EARLIER YEARS AS AGAINST ON ESTIMATED BASIS. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEFORE US. 56. THE LEARNED COUNSEL FOR THE ASSESSEE NARRATED THE F ACTS REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT( A) AND DREW OUR ATTENTION TO THE RELEVANT PAGES OF THE PAPER BOOK T O JUSTIFY ITS CLAIM. THE LEARNED COUNSEL THEREAFTER MADE A SPECIFIC CLAIM TH AT IN ANY CASE THE LOSS OF PHYSICAL QUANTITY OF STOCK PERTAINING TO THIS YE AR HAD TO BE ALLOWED ON THE BASIS OF PERCENTAGE OF LOSS ACCEPTED BY THE DE PARTMENT IN THE EARLIER YEARS AND THE QUANTITY AND VALUE OF SUCH LOSS ON T HAT BASIS WAS 929 M. T. AND RS. 37 74 420/- RESPECTIVELY. 57. THE LD. CIT DR ON THE OTHER HAND SUBMITTED THAT T HE LD. CIT(A) HAS GIVEN SPECIFIC FINDINGS WHICH REMAINED UNANSWERED EVEN AT PAGE 17 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/200 5 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. THIS STAGE. HENCE THE DISALLOWANCE CONFIRMED BY TH E CIT(A) WAS CORRECT AND JUSTIFIED. 58. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 59. IT IS NOTED THAT THE ASSESSEE IS EXPORTING DOC WHI CH IS A BULKY ITEM HAVING LOW VALUE. IT IS FURTHER NOTED THAT TH ERE IS A CONSIDERABLE DISTANCE BETWEEN THE PRODUCTION FACILITIES AND STO RAGE FACILITIES OF THE CLEARING AGENTS/PORTS. HENCE TRANSPORTATION LOSS/S HORTAGE/SPOILAGE CANNOT BE RULED OUT. HOWEVER IT IS QUITE SURPRISING THAT THE ASSESSEE HAS NOT LODGED ANY CLAIM AGAINST PORT AUTHORITIES NOR IT HA S RECOVERED ANY AMOUNT FROM CLEARING AGENTS FOR SUCH SHORTAGE. IT IS ALSO NOTEWORTHY THAT NO STANDARD PERCENTAGE OF SUCH LOANS HAS BEEN FIXED WI TH THE CLEARING AGENT BECAUSE ULTIMATELY IT IS THE CLEARING AGENT WHO IS RESPONSIBLE FOR THE WAREHOUSING OF SUCH DOC. HOWEVER IN THE EARLIER YE ARS CERTAIN PERCENTAGE OF LOSS SHOWN BY THE ASSESSEE HAS BEEN A CCEPTED BY THE DEPARTMENT IN A CONSISTENT MANNER AND THEREFORE W HEN THE FACTS ARE SAME HENCE TO THAT EXTENT THE ASSESSEES CLAIM CA N BE ACCEPTED. ACCORDINGLY WE MODIFY THE ORDER OF THE LD. CIT(A) BY HOLDING THAT LOSS OF STOCK @ 3.61% AMOUNTING TO RS. 37 74 420/- SHOUL D BE ALLOWED TO THE ASSESSEE. THE BALANCE CLAIM OF THE ASSESSEE HAS REM AINED UNSUBSTANTIATED FOR WANT OF NECESSARY DOCUMENTARY EVIDENCES AND LAC K OF ANY PAGE 18 OF 18 - I.T.A.NO. 980/IND/2003 95/IND/200 5 AND I.T.A.NO. 1173/IND/2004. PREMIER PROTEINS LIMITED INDORE. COMMERCIALLY PRUDENT ACTION BY THE ASSESSEE AND TH EREFORE THE SAME IS REJECTED. THUS THIS GROUND OF THE ASSESSEE IS PART LY ALLOWED. 60. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE STA NDS PARTLY ALLOWED. 61. TO SUM UP APPEAL IN I.T.A.NO. 980/IND/2003 IS ALLO WED APPEAL OF REVENUE IN I.T.A.NO. 95/IND/2005 IS DISMISSED AN D APPEAL OF ASSESSEE IN I.T.A.NO.1173/IND/2004 STANDS PARTLY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 8 TH APRIL 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :8 TH APRIL 2010. CPU* 564