The ACIT, 1 (2), V. M/s Bhaskar Exxils Ltd,

ITA 165/IND/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2800 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-06-2010
• Assessment Year: misc
• Appeal Filed On: 18-03-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K SINGH
• Assessee Lawyers: S S DESH
• Keywords: Revenue expenditure; Capital expenditure
• Section: 145

Judgement Text

PAGE 1 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL 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. 165/IND/2006 A.Y. : 2002-03 ACIT M/S.BHASKAR EXXOILS LIMITED, 1(2), VS 6,DWARKA SADAN, PRESS COMPLEX, BHOPAL M.P.NAGAR, BHOPAL. APPELLANT RESPONDENT APPELLANT BY : SHRI K.K.SINGH, CIT DR RESPONDENT BY : SHRI S.S. DESHPANDE, C. A. DATE OF HEARING : 04.06.2010 O R D E R PER V.K. GUPTA, A.M. THIS APPEAL FILED BY THE REVENUE ARISES OUT OF ORDE R OF THE LD. CIT(A)-I, BHOPAL , DATED 31.01.2006, FOR THE ASSESS MENT YEAR 2002-03. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. 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. 16, 00,119/- PAGE 2 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BROKERAGE DUE TO UNEXPLAINED BILLS/VOUCHER ETC. 4. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS CARRY ING ON THE MANUFACTURING AND TRADING OF SOYA OIL, DOC. THE ASS ESSEE CLAIMED BROKERAGE CHARGES AMOUNTING TO RS. 16,00,119/- UND ER THE HEAD SALES EXPENSES, WHICH WERE DISALLOWED BY THE ASSESSING OF FICER FOR THE REASON THAT THE ASSESSEE FAILED TO SUBMIT SUPPORTING DOCUM ENTARY EVIDENCE TO SUBSTANTIATE THE SAME. AGGRIEVED BY THIS, THE ASSES SEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHEREIN IT WAS SUBMITTED THA T INCURRENCE OF BROKERAGE EXPENSES IN THIS LINE OF TRADE WAS A NORM AL TRADE FEATURE AND SUPPORTING BILLS AND VOUCHERS WERE SUBMITTED IN RES PECT OF SUCH PAYMENTS AND, THEREFORE, THE AO WAS NOT JUSTIFIED IN DISALLO WING THIS CLAIM OF THE ASSESSEE. IT WAS ALSO CONTENDED THAT THE ASSESSEES ACCOUNTS WERE AUDITED AND NO SHORTCOMINGS/DEFECT HAD BEEN POINTED OUT BY THE AUDITOR. HENCE, FOR THIS REASON ALSO, THE GENUINENESS OF THE CLAIM OF THE ASSESSEE COULD NOT BE DOUBTED. IT WAS ALSO SUBMITTED THAT IN PERCENTAG E TERMS, THE BROKERAGE WAS LESS IN THIS YEAR AS COMPARED TO PRECEDING ASSE SSMENT YEAR. THE LD.CIT(A) AFTER TAKING INTO CONSIDERATION THE SUBMI SSIONS MADE BY THE ASSESSEE HELD THAT INCURRENCE OF THE BROKERAGE IN T HIS LINE OF TRADE WAS PREVALENT. HENCE, THE PAYMENT THEREOF COULD NOT BE RULED OUT COMPLETELY. THE LD.CIT(A) ALSO HELD THAT IN PERCENTAGE TERMS, T HE BROKERAGE PAID IN PAGE 3 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL THIS YEAR WAS LESS THAN THE AMOUNT PAID UNDER THIS HEAD IN THE EARLIER YEARS, WHICH FACT ALSO SUPPORTED THE CLAIM OF THE A SSESSEE. THE LD.CIT(A) ALSO HELD THAT THE ASSESSEE HAD FURNISHED FULL DETA ILS AND SUPPORTING IN REGARD TO SUCH EXPENDITURE AND, THEREFORE, THE AO W AS NOT JUSTIFIED IN HOLDING THAT THE CLAIM OF THE ASSESSEE WAS NOT SUBS TANTIATED AND, ACCORDINGLY, HE DELETED THE ADDITION. 5. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 6. THE LD. CIT DR MAINLY RELIED UPON THE FACT THAT THE REQUIRED DETAILS/SUPPORTING DOCUMENTS WERE NOT FURNISHED BE FORE THE AO AND WHATEVER CLAIMS WERE MOVED BEFORE THE LD.CIT(A), TH OSE WERE BASED ONLY ON THE BASIS OF BOOKS OF ACCOUNT PRODUCED BEFORE TH E AO. HENCE, THE MATTER IN ALL FAIRNESS, SHOULD GO BACK TO THE FILE OF THE AO. THE LD.CIT DR, HOWEVER, HAD FAIRLY ADMITTED THAT THE PAYMENT O F BROKERAGE WAS PREVALENT IN THIS LINE OF TRADE. 7. THE LD.COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, NARRATED THE FACTS, REITERATED THE SUBMISSIONS MADE BEFORE THE R EVENUE AUTHORITIES BESIDES PLACING STRONG RELIANCE ON THE ORDER OF 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 FACT OF INCURRENCE OF THIS TYP E OF EXPENDITURE, IN THIS LINE OF TRADE, IS NOT AT ALL IN DISPUTE. IT IS ALSO NOTED THAT THE PAGE 4 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL EXPENDITURE IN PERCENTAGE TERMS IS LESSER THAN THE EXPENDITURE INCURRED UNDER THIS HEAD IN THE EARLIER YEARS. DURING THE CO URSE OF HEARING OF THE APPEAL, THE REVENUE HAS MAINLY DEPLORED THE CONDUCT OF THE ASSESSEE BY NOT FURNISHING THE REQUIRED DETAILS TO THE AO FOR W HICH, IN OUR OPINION, THE AO HAS GOT ENOUGH POWERS TO TAKE APPROPRIATE AC TION AND NOTHING CAN BE DONE AT THIS STAGE. IN THIS REGARD, WE FURTHER F IND THAT EVEN IN THE ASSESSMENT ORDER, THE FACT OF THE PRODUCTION OF BOO KS OF ACCOUNT ALONGWITH OTHER RECORDS IS ALSO NOTED, HENCE, IT CA NNOT BE SAID THAT THE ASSESSEE DID NOT PRODUCE ANY RECORDS BEFORE THE AO. WE ALSO FIND THAT THE AO HAS GIVEN A GENERAL REMARK WITHOUT POINTING OUT WHAT SPECIFIC DOCUMENTS WHICH HE REQUIRED AND WHICH WERE NOT PROD UCED. THUS, TAKING INTO CONSIDERATION ALL THESE FACTS, WE HOLD THAT NO ADDITION IS WARRANTED UNDER THIS HEAD. ACCORDINGLY, THIS GROUND OF THE R EVENUE IS DISMISSED. 10. 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. 5,4 1,000/- RIGHTLY MADE BY THE ASSESSING OFFICER CLAIMED AS LE ASE RENT, WHICH WAS RIGHTLY CONSIDERED AS CAPITAL EXPENDITURE . 11. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE CLAIMED LEASE RENT OF RS. 5,41,000/- WHICH WAS DISALLOWED BY THE ASSESSING OF FICER TREATING THE SAME AS OF CAPITAL NATURE. AGGRIEVED BY THIS, THE A SSESSEE PREFERRED AN PAGE 5 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL APPEAL BEFORE THE LD. CIT(A), WHEREIN IT WAS POINTE D OUT THAT IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD TAKEN PLANT O WNED BY THE STATE GOVERNMENT ON LEASE BASIS AND THE IMPUGNED SUM REPR ESENTED LEASE RENT FOR THE YEAR UNDER CONSIDERATION FOR OPERATING THE SAME. HENCE, IT WAS A REVENUE EXPENDITURE ALLOWABLE IN COMPUTING THE TOTA L INCOME OF THE ASSESSEE. THE LD.CIT(A) AGREEING WITH THESE SUBMISS IONS OF THE ASSESSEE HELD THAT NO NEW ASSET HAD COME INTO EXISTENCE AND SUCH LEASE RENT WAS ALLOWABLE AS REVENUE EXPENDITURE. AGGRIEVED BY THIS , THE REVENUE IS IN APPEAL BEFORE US. 12. THE LD. SR. DR PLACED STRONG RELIANCE ON THE ORDER OF THE A.O., WHEREAS THE LD. COUNSEL FOR THE ASSESSEE PLACED STR ONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 13. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTANCES , WE HOLD THAT THE IMPUGNED EXPENDITURE IS ALLOWABLE AS REVEN UE EXPENDITURE AS IT PERTAINS TO THE YEAR UNDER CONSIDERATION AND HAS BE EN INCURRED FOR AN ASSET TAKEN ON LEASE AND UTILIZED FOR THE PURPOSE OF THE BUSINESS. ACCORDINGLY, THIS GROUND OF THE REVENUE IS DISMISSED. 14. GROUND NO.3 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS. 3,5 3,97,685/- RIGHTLY MADE BY THE ASSESSING OFFICER, ESTIMATING T HE PAGE 6 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL PRODUCTION, AFTER COMPARING WITH PREVIOUS DATA OF T HE ASSESSEE COMPANY AND REJECTING THE BOOKS OF ACCOUNT U/S 145(3). 15. THE FACTS, IN BRIEF, ARE THAT THE AO ON EXAMINATION OF QUANTITATIVE RECORDS OF PRODUCTION AND CONSUMPTION RELATING TO RAW MATERIAL AND FINISHED GOODS FOUND THAT THERE WAS A DECREASE IN THE YIELD OF SOLVENT OIL AND INCREASE IN THE YIELD OF SOYA DO C. IN THIS VIEW OF THE MATTER, THE AO REQUIRED THE ASSESSEE TO FURNISH MON TH-WISE QUANTITATIVE DETAILS OF PRODUCTION, WHICH WERE NOT FURNISHED. TH EREAFTER, THE AO COMPARED THE PERCENTAGE OF YIELD OF DOC AND SOLVENT OIL OF EARLIER YEARS FROM THE YEAR UNDER CONSIDERATION AND FOUND THAT TH ERE WADS A DIFFERENCE IN THE YIELD OF BOTH THE YEARS I.E. PERCENTAGE OF Y IELD OF DOC AND SOLVENT OIL OF THE YEAR UNDER CONSIDERATION IS 84.21 % AND 17.6 % RESPECTIVELY AS COMPARED TO FIGURE OF YIELD OF THESE ITEMS AT 82.44 % AND 18.95 % RESPECTIVELY FOR THE EARLIER YEARS. THE AO, ACCORDI NGLY, FORMED AN OPINION THAT DUE TO RATE VARIATION, THE ASSESSEE SU PPRESSED THE SALE OF SOLVENT OIL AND INCREASED THE SALE OF DOC. HE FURTH ER HELD THAT THE QUANTITATIVE DETAILS SUBMITTED BY THE ASSESSEE AS P ER THE AUDIT REPORT WERE NOT CORRECT AND COULD NOT BE RELIED ON. THE AO, THE REAFTER, REJECTED THE TRADING RESULTS AND INVOKED THE PROVISIONS OF SECTI ON 145(3) OF THE ACT AND BASED UPON THE PERCENTAGE OF YIELD SHOWN IN THE EARLIER YEARS, RE- PAGE 7 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL WORKED OUT THE ESTIMATED PRODUCTION OF DOC AND SOLV ENT OIL AND COMPUTED THE NET AMOUNT OF ADDITION AT RS. 3,53,97, 685/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHEREIN IT WAS CONTENDED THAT THE AO WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT AS NO SPECIFIC DEFECTS WERE POINTED OUT IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND MERELY BECAUSE THERE WAS VARIATION IN THE QUANTUM OF PRODUCTION OF TWO ITEMS, THE SAME COULD NOT BE A PROPER BASIS FOR REJECTING THE BOOKS OF ACCOUNT. IT WAS ALSO SUB MITTED THAT MERE COMPARISON OF AUDIT REPORT BY THE ASSESSING OFFICER OF THIS YEAR WITH THAT RELATING TO EARLIER ASSESSMENT YEARS WOULD NOT LEAD TO THE CONCLUSION WHICH WAS DRAWN BY THE AO FOR INVOKING THE PROVISIO NS OF SECTION 145(3). THE ASSESSEE ALSO RELIED ON VARIOUS JUDICIA L DECISIONS IN THIS REGARD. THEREAFTER, THE ASSESSEE SUBMITTED DETAILS OF RAW MATERIALS CONSUMED AND PRODUCTION OF OILS/DOC FOR BOTH THE YE ARS, WHICH HAVE BEEN REPRODUCED BY THE CIT(A) AT PAGE 11 OF THE APP ELLATE ORDER. THE ASSESSEE FURTHER SUBMITTED THAT MERELY BECAUSE THE ASSESSEE DID NOT SUBMIT THE MONTHWISE QUANTITATIVE DETAILS, THE AO W AS NOT JUSTIFIED IN HOLDING THAT THE QUANTITATIVE DETAILS SUBMITTED BY THE ASSESSEE AS PER AUDIT REPORT WERE NOT CORRECT AND COULD NOT BE RELIED UPO N. THE ASSESSEE ALSO SUBMITTED THE REASON FOR VARIATION IN THE PRODUCTIO N OF THESE TWO ITEMS IN PAGE 8 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL BOTH THESE YEARS. THE LD.CIT(A) AFTER TAKING INTO C ONSIDERATION THESE SUBMISSIONS DELETED THE IMPUGNED ADDITION. THE RELE VANT FINDINGS OF THE LD.CIT(A) ARE AS UNDER :- I HAVE CAREFULLY GONE THROUGH THE DETAILS SUBMITTE D BY THE LD. COUNSEL WHILE OBJECTING TO THE ADDITION RS. 3,5 3,97,685/- MADE BY THE ASSESSING OFFICER. I HAVE ALSO GONE THR OUGH VERY VERY CAREFULLY THE REASONING GIVEN BY THE ASSESSING OFFICER FOR MAKING THE ADDITION. AFTER DUE CONSIDERATION OF THE MATTER, I HOLD THAT THE AO WAS ABSOLUTELY UNJUSTIFI ED IN MAKING THE ADDITION IS BEYOND MY COMPREHENSION. AO HAD NOT COMPARED THE LIKE WITH THE LIKE. IT IS AN ADMIT TED FACT THAT APPELLANT HAD NOT RUN THE PACHAMA UNIT OF PLANT FOR PRODUCTION IN THE PRECEDING ASSESSMENT YEAR AS THE SAME WAS TAKEN ON LEASE FOR OPERATION ONLY FOR THIS YEAR UNDER CONSIDERATION. THUS, THE COMPARISON IN PRODUCTION O F THIS YEAR OF DOC AND SOLVENT OIL WITH THAT OF EARLIER YE AR IS VERY VERY UNREASONABLE. MOREOVER, AO HAD NOT MADE ANY ENQUIRIES WHATSOEVER THAT APPELLANT HAD EARNED AN I NCOME OF RS. 3,53,97,685/- THIS YEAR MORE THAN WHAT HAS B EEN ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNT. AO H AD MERELY THEORETICALLY COMPARED THE FIGURES OF PRODUC TION AND PAGE 9 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL CONSUMPTION OF RAW MATERIAL AS CONTAINED IN THE AUD IT REPORTS FOR THIS ASSESSMENT YEAR AND IN THE PRECEDI NG ASSESSMENT YEAR. THE AO HAD NOT TAKEN THE TROUBLE OF POINTING OUT A NY DEFECTS IN THE MAINTENANCE OF BOOKS OF ACCOUNT. IT APPEARS FROM THE PARA 3 OF THE ASSESSMENT ORDER THAT BOOKS OF ACCOUNT HAVE BEEN PLACED BEFORE THE AO FOR HIS EXAM INATION. IF THIS IS THE CORRECT, THE AO OUGHT TO HAVE FOUND OUT THE DEFECTS IN THE MAINTENANCE OF BOOKS OF ACCOUNT AND ONLY THEN AO OUGHT TO HAVE REJECTED THE BOOK RESULTS OF THE A PPELLANT AND APPLIED THE PROVISIONS OF SECTION 145(3). THE A O HAD GIVEN VAGUE FINDING IN THE ASSESSMENT ORDER FOR MAK ING THE HUGE ADDITION. THE AO HAD NOT BROUGHT ON RECORD ANY EVIDENCE THAT APPELLANT HAD SUPPRESSED ITS PRODUCTI ON OF SOLVENT OIL THIS YEAR AND HAS INCREASED THE PRODUCT ION OF DOC THIS YEAR IN COMPARISON OF PRECEDING ASSESSMENT YEAR. AS I SAID ABOVE LIKE IS TO BE COMPARED WITH THE LIK E AND IF FOR MOMENT WE IGNORE THE PRODUCTION OF SOLVENT OIL AND DOC AND CONSUMPTION OF RAW MATERIAL BY PACHAMA UNIT THE N COMPARISON OF PRODUCTION OF SOLVENT OIL AND DOC IN BOTH THE YEARS WILL BE AS UNDER : PAGE 10 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL FOR ASSESSMENT YEAR 2002-03 UNIT SEED OIL PRODUCTION PERCENTAGE DOC PRODUCTION PERCENTAGE DEWAS UNIT 127,309 MT 23,552 MT 18.49 % 106.272 MT 83.46% FOR ASSESSMENT YEAR 2002-03 UNIT SEED OIL PRODUCTION PERCENTAGE DOC PRODUCTION PERCENTAGE DEWAS UNIT 100,673 MT 19,076 MT 18.94 % 82,995 MT 82.44% IT IS CLEAR FROM THE ABOVE THAT THERE IS NO DOUBT T HAT THERE IS DECREASE IN THE OUTPUT OF SOLVENT OIL BY A SMALL MA RGIN OF 0.45 % AND THERE IS CORRESPONDING INCREASE IN THE PRODUCTI ON OF DOC IN THIS YEAR IN COMPARISON OF LAST YEAR BUT ONE SHOULD NOT FORGET THE FACT THAT THE OUTPUT IN TERMS OF SOLVENT OIL AND DO C DEPEND UPON A NUMBER OF FACTORS SUCH AS QUALITY OF SEED. THE PROD UCTION OF OIL AND DOC CANNOT CHURNOUT UNIFORMLY FROM YEAR TO YEAR BECAUSE OF QUALITY OF THE SEED AND NATURE DEFERS FROM YEAR TO YEAR. IT CAN VARY WITHIN REASONABLE LIMITS. ACCORDINGLY, I HOLD THAT AO WAS NOT JUSTIFIED IN APPLYING THE PROVISIONS OF SECTION 145 (3) AS AO HAD NOT POINTED OUT THE DEFECTS IN THE MAINTENANCE OF BOOKS OF ACCOUNT. SINCE AO HAD NOT BROUGHT ON RECORD ANY EVIDENCE THA T APPELLANT PAGE 11 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL HAD SUPPRESSED ITS PRODUCTION IN RESPECT OF SOLVENT OIL AND INCREASE THE PRODUCTION OF DOC THIS YEAR IN COMPARISON OF LA ST YEAR, THE ADDITION MADE BY THE ASSESSING OFFICER IS HELD UNJU STIFIED. I, THEREFORE, DELETE THE ADDITION MADE BY THE ASSESSIN G OFFICER AMOUNTING TO RS. 3,53,97,685/- 16. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 17. THE LD. CIT DR SUBMITTED THAT, FIRSTLY, THE ASSESS EE DID NOT SUBMIT THE QUANTITATIVE DETAILS ON MONTHLY BASIS AS REQUIRED BY THE ASSESSING OFFICER. HENCE, THE CONDUCT OF THE ASSESS EE WAS NEITHER TRANSPARENT NOR THE ASSESSEE CAN BE SAID TO HAVE DI SCHARGED ITS BURDEN AS PER THE PROVISIONS OF LAW. THE LD. CIT DR FURTHER S UBMITTED THAT IF THE AO DID NOT COMPARE THE FIGURES IN A PROPER MANNER, THE LD.CIT(A) ALSO DID NOT COMPARE THE FIGURES IN A CORRECT MANNER. FO R THIS, HE DREW OUR ATTENTION TO PAGE 19 OF THE PAPER BOOK SHOWING THE DETAILS OF PRODUCTION OF DIFFERENT ITEMS IN THE YEAR UNDER CONSIDERATION AS WELL AS OF THE SAME ITEMS IN THE EARLIER YEARS. HE SPECIFICALLY POINTED OUT THAT PRODUCTION OF OIL IN THE YEAR UNDER CONSIDERATION COMPRISED OF GU M AND SOLVENT OIL, WHEREAS IN THE EARLIER YEAR, THE FIGURE ONLY OF SOL VENT OIL HAD BEEN TAKEN I.E. PRODUCTION OF OIL OF 23,552 M. T. IN THE YEAR UNDER CONSIDERATION WAS COMPARED WITH THE PRODUCTION OF 19,076.202 M. T. ON LY, WHEREAS THE PRODUCTION OF GUM AMOUNTING TO 1451.860 M. T. SHOUL D HAVE BEEN ADDED PAGE 12 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL TO THE PRODUCTION IN THE EARLIER YEARS AND IF THAT WAS DONE TOTAL PRODUCTION PERCENTAGE OF BOTH THE UNITS OF EARLIER YEAR WOULD BE 102.50 % APPROXIMATELY AS COMPARED TO 101.39 % SUBMITTED BY THE ASSESSEE BEFORE THE LD.CIT(A). HENCE, THE TRADING RESULTS WERE NOT RIGHTLY SHOWN TO THE LD.CIT(A). IT WAS ALSO CONTENDED THAT EVEN THE ASSE SSEE DID NOT SUBMIT THE DETAILS OF PRODUCTION OF TWO UNITS I.E. DEWAS UNIT AND PACHAMA UNIT SEPARATELY TO FIND OUT THE INDIVIDUAL PERCENTAGE AN D TO MAKE THE CORRECT COMPARISON TO WORK OUT THE YIELD. 18. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN T HE YEAR UNDER CONSIDERATION, THE ASSESSEE PURCHASED AN OLD UNIT F ROM THE STATE GOVERNMENT, WHICH RESULTED INTO YIELD OF SOYA DOC A ND SOLVENT OIL AND SINCE THIS WAS THE FIRST YEAR OF PRODUCTION OF THE OLD UNIT TAKEN BY THE ASSESSEE FROM THE STATE GOVERNMENT, THE MARGIN FOR THIS HAD TO BE GIVEN. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED T HAT THE AO DID NOT COMPARE COMPARABLES AND OVERALL PRODUCTION OF BOTH THESE ITEMS WITHIN THE NORMAL RANGE PRESCRIBED BY THE ASSOCIATION AS WELL AS PREVALENT IN THE INDUSTRY. IT WAS ALSO CONTENDED THAT THE PRODUCTION OF BOTH THESE ITEMS DEPENDED UPON THE QUALITY OF SEEDS AS WELL AS MANU FACTURING PROCESS. HENCE, MERELY BECAUSE ONE PRODUCT WAS SALEABLE AT H IGH VALUE, A PRESUMPTION COULD NOT BE MADE THAT THE ASSESSEE MAN IPULATED THE FIGURES OF THE PRODUCTION OF THESE ITEMS, INTER SE. IT WAS ALSO CONTENDED THAT PAGE 13 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL MERELY BECAUSE MONTHLY PRODUCTION DETAILS COULD NOT BE FURNISHED, THE AO ACTED IN THIS MANNER, WHEREAS THE FACT WAS THAT IT WAS A CASE OF SEASONAL OPERATION AND DUE TO WORK IN PROGRESS, THE MONTHWISE QUANTITATIVE DETAILS COULD NOT BE GIVEN. THE LD. CO UNSEL THEREAFTER CONTENDED THAT IT WAS NOT CORRECT TO SAY THAT UNIT- WISE PRODUCTION DETAILS WERE NOT GIVEN AND IN THIS REGARD REFER TO PAGE 25 OF THE PAPER BOOK SHOWING THE UNIT-WISE PRODUCTION OF THESE ITEMS. AS REGARD TO THE MISTAKE POINTED OUT BY THE LD. CIT DR, THE LD. COUNSEL FAI RLY SUBMITTED THAT EVEN IF THIS MISTAKE WAS TAKEN INTO CONSIDERATION, THEN ALSO THERE WAS NO MATERIAL DIFFERENCE IN THE OVERALL PRODUCTION RESUL TS. HENCE, FOR SUCH A MINOR MISTAKE, NO ADVERSE INFERENCE COULD BE DRAWN AGAINST THE ASSESSEE NOR IT COULD BE SAID THAT IT WAS A CASE OF NON-APPL ICATION OF MIND BY THE CIT(A), BECAUSE THE LD.CIT(A) ALSO TOOK INTO CONSID ERATION, VARIOUS OTHER FACTORS, WHILE DECIDING THE ISSUE. IT WAS ALSO CONT ENDED THAT THE UNIT AT PACHAMA HAD BEEN TAKEN ON LEASE IN THIS VERY YEAR F ROM THE STATE GOVERNMENT AND IT WAS HAVING A DIFFERENT CAPACITY A ND WAS A VERY OLD UNIT. HENCE, THE PRODUCTION IN THIS UNIT WAS LESSER AS COMPARED TO THE DEWAS UNIT AND, THEREFORE, OVER ALL TRADING RESULTS WERE AFFECTED. HE FURTHER SUBMITTED THAT IF THE PRODUCTION DETAILS OF DEWAS UNIT WERE TO BE COMPARED ON STAND ALONE BASIS, EVEN THEN THE TRADIN G RESULTS COULD NOT BE SAID TO BE DIFFERENT FROM THE NORMAL RANGE. FOR THI S PROPOSITION, HE DREW PAGE 14 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL OUR ATTENTION TO THE NOTICE INVITING TENDERS PUBLIS HED BY THE STATE GOVERNMENT AND DATA OF SOPA SHOWING THAT IN THE YEA R UNDER CONSIDERATION, SOYA OIL RECOVERY WAS 17 %, WHEREAS THE ASSESSEE HAD SHOWN MORE THAN 18 %. SIMILAR WAS THE CASE FOR EARL IER YEARS ALSO. ON THE BASIS OF THESE DOCUMENTS, WHICH WERE SUBMITTED BY H IM AS PER THE DIRECTION OF THE BENCH, THE LD. COUNSEL CONTENDED T HAT THESE EVIDENCES FURTHER SUPPORTED THE CLAIMS OF THE ASSESSEE. THE L D. COUNSEL FURTHER SUBMITTED THAT THE REMAND REPORT HAD ALSO BEEN CALL ED FROM THE AO, WHEREIN THE AO REITERATED THE ORIGINAL STAND. HE FU RTHER PLACED STRONG RELIANCE ON THE ORDER OF THE LD.CIT(A). 19. THE LD. CIT DR, IN THE REJOINDER, MERELY REITERATED THE SUBMISSIONS MADE EARLIER. 20. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 21. IT IS NOTED THAT THE ASSESSEE IS MANUFACTURING SOLV ENT OIL AND DEOILED CAKE. THE ASSESSEE IS HAVING ONE UNIT OF IT S OWN FOR A NUMBER OF YEARS AT DEWAS. ANOTHER UNIT WAS TAKEN ON LEASE FRO M STATE GOVERNMENT IN THE YEAR UNDER CONSIDERATION. THE UNIT TAKEN ON LEASE IS HAVING DIFFERENT CAPACITY AND IS AN OLD ONE. THE AO HAS TA KEN INTO CONSIDERATION THE OVERALL RESULTS OF THE ASSESSEES PRODUCTION OF THE CONSUMPTION OF THE YEAR UNDER CONSIDERATION I.E. THE OPERATIONS CARRIE D OUT AT BOTH THE UNITS PAGE 15 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL FOR THE YEAR AS A WHOLE AND THE AO HAS COMPARED SUC H RESULTS WITH THE OVER-ALL PRODUCTION/CONSUMPTION RESULTS OF ASSESSEE S PRODUCTION OF ONE UNIT OF DEWAS OF EARLIER YEARS WITHOUT CONSIDERING THE FACTS AS STATED HEREINBEFORE, HENCE, THE ACTION OF AO PRIMA FACIE A PPEARS TO BE INCORRECT AS THE OVERALL TRADING RESULT OF BOTH THE YEARS ARE HAVING DIFFERENT SET OF CIRCUMSTANCES. ANOTHER REASON FOR ESTIMATING THE CO MPOSITION OF PRODUCTION OF THE ASSESSEE. ANOTHER REASON FOR ESTI MATING THE COMPOSITION OF PRODUCTION BY THE ASSESSING OFFICER IS THAT THE ASSESSEE DID NOT FURNISH THE MONTHWISE PRODUCTION/CONSUMPTION DETAILS AS REQ UIRED BY THE ASSESSING OFFICER. IN OUR VIEW, THOUGH SUCH DETAILS SHOULD HAVE BEEN FURNISHED, HOWEVER, HAVING REGARD TO THE SEASONAL N ATURE OF THE MANUFACTURING OPERATIONS AND IN THE ABSENCE OF ANY SPECIFIC FINDING AS TO HOW SUCH DETAILS WERE NECESSARY TO FIND OUT THE ACT UAL COMPOSITION, NON- FURNISHING OF SUCH INFORMATION BY THE ASSESSEE IS M ERELY AN INSTANCE OF PRETENCE ENABLING THE AO TO REJECT THE QUANTITATIVE DETAILS OF PRODUCTION SHOWN BY THE ASSESSEE AND, THEREFORE, NOT MUCH SIGN IFICANCE CAN BE GIVEN TO SUCH ACT AS VEHEMENTLY ARGUED BY THE REVENUE BE FORE US. NOW, ADMITTEDLY, BOTH THE PLANTS ARE HAVING DIFFERENT CA PACITIES AND ARE OF DIFFERENT AGE. HENCE, THE RESULT OF THESE UNITS CAN ALSO NOT BE COMPARED TO ESTIMATE THE PRODUCTION OF DIFFERENT ITEMS. WE ARE FURTHER OF THE VIEW THAT PRODUCTION OF ITEMS DEPENDS NOT ONLY ON THE MANUFAC TURING PROCESS BUT PAGE 16 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL ALSO ON THE QUALITY OF SEEDS, MOISTURE CONTENTS AND OTHER FACTORS SUCH AS INTERRUPTION OF POWER SUPPLIES ETC. AND, THEREFORE, PRODUCTION RESULTS OF ONE YEAR SOLELY CANNOT BE MADE AS A BASIS TO ESTIMA TE THE PRODUCTION OF OTHER YEAR. WE HAVE ALSO FOUND THAT THE PRODUCTION RESULTS ARE WITHIN THE PARAMETERS/NORMAL RANGE PRESCRIBED BY THE SOYA/SOYA PRODUCTS MANUFACTURERS ASSOCIATION. HENCE, THE CLAIMS OF TH E ASSESSEE CANNOT BE REJECTED FOR THIS REASON ALSO. WE ALSO FIND THAT TH E PRODUCTION RESULT, THOUGH SUBMITTED IN A LITTLE BIT DIFFERENT MANNER T O LD.CIT(A) FOR COMPARISON, HOWEVER, EVEN IF THE REVENUES CONTENTI ONS ARE TAKEN INTO CONSIDERATION AND THE PRODUCTION RESULTS ARE MODIFI ED, THEN ALSO, THE PRODUCTION OF THE YEAR UNDER CONSIDERATION WOULD BE REASONABLY COMPARABLE AND, THUS, NOT REQUIRING ANY ESTIMATION. THUS, TAKING INTO CONSIDERATION THE OVERALL FACTS, WE ARE OF THE VIEW THAT THE YIELD SHOWN BY THE ASSESSEE SHOULD BE ACCEPTED. WE ORDER ACCORDING LY. THUS, THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 22. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DIS MISSED. PAGE 17 OF 17 - I.T.A.NO. 165/IND/2006 BHASKAR EXXOILS LIMITED, BHOPAL THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 17 TH JUNE, 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 17 TH JUNE, 2010. CPU* 1415166