The ITO, Ward-4(4), Ahmedabad V. Maruti Aluminium Pvt.Ltd., Ahmedabad

ITA 2336/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5492 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 27-07-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 19-06-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL H TALATI
• Keywords: Business income
• Section: 251

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI D.C. AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 28/07/2010 DRAFTED ON: 2 9/07/2010 ITA NO.2336/AHD/2008 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER WARD-4(4) AHMEDABAD VS. MARUTI ALUMINIUM PVT.LTD. GROUND FLOOR OMKAR BLDG DARIAPUR 4 RASTA DARIAPUR, AHMEDABAD PAN/GIR NO. : AADCM 8728 P (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI K.MADHUSUDAN, SR.D.R. RESPONDENT BY: SHRI SUNIL H.TALATI O R D E R PER MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WH ICH HAS EMANATED FROM THE ORDER OF THE LEARNED CIT(APPEALS) -VIII AHMEDABAD DATED 28/03/2008 PERTAINING TO THE ASSESSMENT YEAR 2005-06. 2. FIRST GROUND OF THE REVENUE READS AS FOLLOWS:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACT S IN DELETING THE ADDITION OF RS.23,50,000/- MADE ON ACCOUNT OF UNACCOUNTED SHARE APPLICATION MONEY, U/S.68. 2.1. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDI NG ASSESSMENT ORDER PASSED U/S.143(3) DATED 27/12/2007 WERE THAT THE AS SESSEE-COMPANY IS IN THE BUSINESS OF MANUFACTURING AND TRADING OF FERROU S & NON-FERROUS ITA NO.2336/AHD /2008 ITO VS. MARUTI ALUMINIUM PVT.LTD. ASST.YEAR 2005-06 - 2 - METAL AND ALLOYS. PERTAINING TO THE ABOVE GROUND, THE OBSERVATION OF THE ASSESSING OFFICER WAS THAT A SHOW-CAUSE NOTICE WAS ISSUED IN RESPECT OF INTRODUCTION OF FRESH SHARE CAPITAL OF RS.23.50 LA CS ACCEPTED IN CASH DURING THE YEAR. IN COMPLIANCE, A DETAILED COMPIL ATION WAS FURNISHED BEFORE THE ASSESSING OFFICER ALONGWITH LIST OF SHAR E APPLICATION MONEY WITH RELEVANT EVIDENCES. ON SCRUTINY OF THE SAID DETAILS, THE ASSESSING OFFICER HAS NOTED CERTAIN LACUNAE, SUCH AS, THE AP PLICANTS WERE ALLEGED TO BE LOW PAID, ILLITERATE, AGRICULTURIST, NOT SUBJEC T TO TAX AND THAT THE MONEY WAS RECEIVED IN CASH. THOUGH THE AFFIDAVITS WERE ANNEXED ALONG WITH EXPLANATION TENDERED FROM THE SIDE OF THE ASSE SSEE, BUT THOSE WERE SAID TO BE STEREOTYPE BY THE ASSESSING OFFICER AND REJECTED. THE ASSESSING OFFICER HAS ASKED TO PRODUCE THE SHARE AP PLICANTS AS WELL. IN HIS OPINION, THE ASSESSEE HAS NOT FULFILLED THE CON DITIONS, SUCH AS TO ESTABLISH THE IDENTITY, CAPACITY, GENUINENESS AND THE CREDITWORTHINESS, HENCE, FINALLY THE SAID AMOUNT OF RS.23.50 LACS WAS TAXED IN THE HANDS OF THE ASSESSEE U/S.68 OF THE I.T. ACT, 1961. THE SAI D ADDITION WAS CHALLENGED. 3. THE LEARNED CIT(APPEALS) HAS EXAMINED THE FACTS OF THE AT LENGTH AND THEREAFTER VIDE PARAGRAPH NO.3.2 ALLOWED THE CL AIM AS FOLLOWS: 3.2. I HAVE CONSIDERED THE SUBMISSIONS OF THE A.R. CAREFULLY. I FIND THAT THE APPELLANT HAS SUBMITTED COPIES OF SHA RE APPLICATION FORMS AND COPIES OF IDENTITY CARDS ISSUED BY THE EL ECTION COMMISSIONER OF INDIA AND AFFIDAVITS FROM SHAREHOLD ERS CONFIRMING INVESTMENT IN SHARE APPLICATION MONEY FO R ALL THE SHAREHOLDERS. IN SOME CASE, COPIES OF RATION CARD S HAVE ALSO BEEN SUBMITTED. THE SHAREHOLDERS HAVE EXPLAINED IN THEI R AFFIDAVITS, THE SOURCE OF THEIR INVESTMENTS. SOME HAVE STATED TO H AVE INVESTED OUT OF AGRICULTURAL INCOME AND HAVE ALSO FILED PROOF OF HOLDING OF ITA NO.2336/AHD /2008 ITO VS. MARUTI ALUMINIUM PVT.LTD. ASST.YEAR 2005-06 - 3 - AGRICULTURE LAND AND OTHERS HAVE STATED TO HAVE INV ESTED OUT OF SALARY OR BUSINESS INCOME. THUS, THE SHARE APPLICA NTS HAVE BEEN IDENTIFIED AND THEY HAVE ALSO CONFIRMED HAVING MADE INVESTMENT IN SHARES. IN VIEW OF THE DECISION OF GUWAHATI HIGH COURT IN THE CASE OF DOWN TOWN HOSPITALS PVT.LTD. AND OTHER DECI SIONS CITED BY THE A.R. INCLUDING THE ORDER OF ITAT AHMEDABAD IN I TA NO.2175/AHD/2005 DATED 8.12.2005 IN THE CASE OF ITO V. SPINNING KING INDIA LTD. FOR A.Y. 2002-03, AS THE SHAREHOLD ERS ARE IDENTIFIED AND THEY HAVE CONFIRMED THAT THEY HAVE M ADE INVESTMENT IN SHARES, I DO NOT FIND ANY JUSTIFICATION FOR ADDI TION U/S.68 AS MADE BY THE A.O., THEREFORE THE ADDITION OF UNEXPLA INED SHARE CAPITAL OF RS.23,50,000/- IS DELETED. 4, ON HEARING THE SUBMISSIONS OF BOTH THE SIDES, TH E ISSUE APPEARS TO BE DIAMETRICALLY COVERED BY TWO DECISIONS OF HON'BL E SUPREME COURT; NAMELY, CIT VS. STELLER INVESTMENT LTD. REPORTED AS 251 ITR 263(SC) AND CIT VS. LOVELY EXPORTS (P) LTD. REPORTED AS 21 6 CTR (SC) 195. FACTS OF THE CASE HAVE REVEALED THAT THROUGH SHARE APPLICATIONS, THE ASSESSEE-COMPANY WAS IN A POSITION TO IDENTIFY THE APPLICANTS. IT HAS ALSO BEEN INFORMED DURING THE COURSE OF PROCEEDINGS TO T HE ASSESSING OFFICER THAT ALONGWITH THE SHARE APPLICATION MONEY THE APPL ICANTS HAVE FURNISHED THEIR RESPECTIVE RATION CARDS, ELECTION CARDS AND I N SUPPORT ALSO FILED AFFIDAVITS AS A CONFIRMATION OF THE IMPUGNED TRANSA CTION. BEFORE THE LEARNED CIT(APPEALS) THE ASSESSEE HAS REITERATED AL L THOSE FACTS AND AN INVENTORY-WISE DETAIL WAS AGAIN FURNISHED. IT WAS ARGUED THAT THEIR IDENTITY, CAPACITY AND GENUINENESS OF THE TRANSACTI ONS WERE ESTABLISHED. FROM THE SIDE OF THE ASSESSEE A DECISION OF THE RES PECTED CO-ORDINATE BENCH SMC AHMEDABAD HAS ALSO BEEN CITED IN THE CA SE OF ITO VS. SPINNING KING INDIA LTD. IN ITA NO.2175/AHD/2005 FO R ASSESSMENT YEAR 2002-03 DATED 08/12/2005, WHEREIN THE STELLER INVESTMENT LTD. [251 ITA NO.2336/AHD /2008 ITO VS. MARUTI ALUMINIUM PVT.LTD. ASST.YEAR 2005-06 - 4 - ITR 263 (SC)] AND THE FULL BENCH DECISION OF DELHI HIGH COURT IN THE CASE OF SOPHIA FINANCE LTD. [205 ITR 98 (FB)] HAVE BEEN RELIED UPON AND THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE . UNDER THESE CIRCUMSTANCES, AND ALSO CONSIDERING THE CASE LAWS, WE HEREBY AFFIRM THE FINDINGS OF THE LEARNED CIT(APPEALS). WITH THE RE SULT, THIS GROUND OF REVENUE IS HEREBY DISMISSED. 5. SECOND GROUND OF THE REVENUE READS AS FOLLOWS:- 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACT S IN DELETING THE ADDITION OF RS.3,51,70,869/- MADE ON ACCOUNT OF EXCESSIVE CLAIM OF BURNING LOSS. 5.1. IT WAS NOTED BY THE ASSESSING OFFICER THAT AS PER AUDIT REPORT, THE ASSESSEE HAS SUFFERED A BURNING LOSS AT 45.80%. AS PER ASSESSING OFFICER THAT PERCENTAGE OF LOSS WAS HIGHLY EXCESSIVE. DUR ING THE COURSE OF PROCEEDINGS, THE ASSESSEE HAS RE-WORKED OUT THE LOS S AND INFORMED THE ASSESSING OFFICER THAT ACTUALLY THE BURNING LOSS WA S AT 38.39%. THE DIFFERENCE BETWEEN THE TWO PERCENTAGES WAS STATED T O BE ON ACCOUNT OF TAKING INTO CALCULATION THE CONSUMPTION OF HARD COK E WHICH WAS MISTAKEN ADDED BY THE TAX AUDITOR. NONETHELESS, AS PER ASSESSING OFFICER NO PRUDENT BUSINESS-MAN WOULD TOLERATE SUCH HUGE BURNING LOSS. THE RESPONDENT-ASSESSEE HAS FURNISHED THE EXCISE RE CORDS BUT THOSE WERE IGNORED BY THE ASSESSING OFFICER ON THE GROUND THAT MERE MAINTENANCE OF EXCISE RECORDS HAVE NOT JUSTIFIED THAT HUGE BURNING LOSS. THOUGH A COMPARATIVE INSTANCE OF ASSESSEES SISTER-CONCERN W AS ALSO QUOTED TO DEMONSTRATE THAT THE BURNING LOSS IN THAT CASE WAS AT 36.46%, BUT THAT TOO WAS IGNORED BY THE ASSESSING OFFICER ON THE GROUND THAT THE COMPARABLE ITA NO.2336/AHD /2008 ITO VS. MARUTI ALUMINIUM PVT.LTD. ASST.YEAR 2005-06 - 5 - CASE OF THE SISTER-CONCERN WAS NOT AN INDEPENDENT C ONCERN, HENCE NOT A FAIR PROOF TO JUSTIFY THE CLAIM OF BURNING LOSS. T HE ASSESSING OFFICER HAS FOUND THAT IN THE SAME TYPE OF MANUFACTURING CONCER N NAMELY MARUDHAR INDUSTRIES LTD. NO BURNING LOSS WAS CLAIMED BY THE SAID ASSESSEE. HOWEVER, FINALLY THE ASSESSING OFFICER HAS CONCLUDE D THAT TO MEET THE ENDS OF THE JUSTICE, ONLY 15% BURNING LOSS WAS REAS ONABLE AND BALANCE 30.80% WAS DISALLOWED. AT THE END , A WORKING HAS B EEN GIVEN BY THE AO ACCORDING TO WHICH AN ADDITION OF RS.3,51,70,869/- WAS MADE. 6. BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS VEH EMENTLY CONTESTED THAT THE ASSESSEE IS MAINTAINING COMPLETE QUANTITAT IVE RECORDS, EXCISE RECORDS AND OTHER REQUISITE DETAILS, AS A RESULT, T HE EXCISE AUTHORITIES HAVE NOT MADE ANY ADVERSE REMARKS AND FOR THAT REASON AC CEPTED THE AUDIT REPORT WHICH WAS SUBMITTED TO EXCISE AUTHORITIES. IT HAS ALSO BEEN EXPLAINED THAT THE RAW-MATERIAL OF THE ASSESSEE WAS ALUMINIUM SCRAP WEIGHING 1084730KGS. THE FINISHED PRODUCT OF THE A SSESSEE WAS OF ALUMINIUM NOTCHBAR, ALUMINIUM INGOTS, ALUMINIUM PO WDER, ALUMINIUM CUBE, ETC. WEIGHING 668311KGS. THEREFORE , IT WAS EXPLAINED THAT THE BURNING LOSS WAS ONLY 38.39%. THE TAX AUD ITOR HAS TAKEN INTO ACCOUNT THE QUANTITY OF THE CONSUMPTION OF HARD COK E WEIGHING 148360 KGS., THEREFORE, THE COMBINED BURNING LOSS WAS WRON GLY WORKED OUT AT 45.80%. IT WAS EXPLAINED THAT HARD COKE IS USED IN THE FURNACE TO BURN THE RAW-MATERIAL I.E. ALUMINIUM SCRAP. A DETAILED NOTE HAS ALSO BEEN SUBMITTED IN RESPECT OF THE MANUFACTURING ACTIVITY OF THE ASSESSEE. CONSIDERING ALL THOSE FACTS AS ALSO CONSIDERING A C OMPARABLE CASE, I.E. METAL MAN (PROPRIETOR BALKISHAN SHAH), WHEREIN THE BURNING LOSS WAS ITA NO.2336/AHD /2008 ITO VS. MARUTI ALUMINIUM PVT.LTD. ASST.YEAR 2005-06 - 6 - SHOWN AT 36.46% , THE LEARNED CIT(APPEALS) HAS HELD THAT THERE WAS NO BASIS FOR ESTIMATION OF BURNING LOSS AT 15% BY THE ASSESSING OFFICER. IN THE RESULT, THE ADDITION WAS DELETED. 7. FROM THE SIDE OF THE REVENUE, SHRI K.MADHUSUDAN LEARNED DEPARTMENTAL REPRESENTATIVE APPEARED AND FROM THE S IDE OF THE ASSESSEE, SHRI SUNIL H.TALATI LEARNED AUTHORISED REPRESENTATI VE OF THE ASSESSEE APPEARED AND BOTH OF THEM HAVE RESPECTIVELY RELIED UPON THE JUDGEMENTS OF THE ASSESSING OFFICER AND THE LEARNED CIT(APPEA LS). 8. BEFORE US, ONE OF THE ARGUMENT OF THE RESPONDENT -ASSESSEE WAS THAT THE ASSESSING OFFICER HAS DISTURBED THE BOOK RESULT S BY DISTURBING THE BURNING LOSS AND MAKING THE ADDITION IN THE HANDS O F THE ASSESSEE BUT WITHOUT REJECTING THE BOOKS OF ACCOUNT OF THE ASSES SEE. THEREFORE, IT WAS ARGUED THAT IF NO DEFECT WAS FOUND IN THE BOOKS OF ACCOUNT, THEN THERE WAS NO OCCASION TO DISTURB THE BOOK RESULTS OF THE ASSE SSEE, THOUGH THE ADMITTED POSITION IS THAT THE ASSESSEE IS NOT IN CR OSS-OBJECTION , BUT TO BE ADJUDICATED BECAUSE THIS GROUND HAS SUBSTANTIAL LEG AL FORCE. AS FAR AS THE POSITION OF THE BOOKS OF ACCOUNT WERE CONCERNED, IT WAS VEHEMENTLY CONTESTED THAT ALL THE SALES AND PURCHASES WERE FUL LY VOUCHED AND NO DISCREPANCY WAS FOUND DURING THE COURSE OF INVESTIG ATION. IN ADDITION TO THE ROUTINE BOOKS OF ACCOUNT, THE ASSESSEE HAS ALSO MAINTAINED QUANTITATIVE RECORD. IT HAS ALSO BEEN INFORMED THA T THE RG-1 REGISTER AS PRESCRIBED BY THE EXCISE DEPARTMENT HAS ALSO BEEN M AINTAINED BY THE ASSESSEE. IN RESPECT OF MANUFACTURING ACTIVITY IT WAS EXPLAINED THAT THE ASSESSEES RAW-MATERIAL IS IN THE FORM OF ALUMINIU M SCRAP TALDON. ITA NO.2336/AHD /2008 ITO VS. MARUTI ALUMINIUM PVT.LTD. ASST.YEAR 2005-06 - 7 - THE SAID RAW-MATERIAL CONTAINS TIN BOTTLE SCRAP, RA DIATORS OF THE CARS, AIR CONDITIONERS TERMED AS ALUMINIUM SCRAP TALDON . THE RAW- MATERIAL IS ALSO FOOD FOILS, TABLETS FOILS, ETC. TE RMED AS ALUMINIUM SCRAP TESTY THIS SCRAP CONTAINS SO MANY IMPURITIE S AND WASTE. THE ALUMINIUM SCRAP IS MELTED AT A VERY HIGH TEMPERATUR E OF ABOUT 700 TO 750 DEGREE IN A COAL BASED CRUCIBLE, A MELTING POT FOR METALS. THE SCRAP HAS SO MANY IMPURITIES, SUCH AS, PLASTIC AND OTHER NON-METALLIC WASTE WHICH GET OXIDIZED ON HEATING . BECAUSE OF SO MANY IMPURITIES AND THE PRESENCE OF NON-METALLIC ITEMS, DURING THE BURNING PROCESS, THE SUBSTANTIAL WEIGHT LOSS OUGHT TO OCCUR IN THIS TYPE OF MANUFACTURING PROCESS. THE FINAL FINISHED-PRODUCT AS PER THE ASSE SSEES PROCESS IS STATED TO BE SOLID ALUMINIUM CALLED AS ALUMINIUM INGOTS, N OTCHBAR, ETC. TO DEMONSTRATE, THE ASSESSEE HAS PRODUCED THE ITEMS OF RAW-MATERIAL AND THE ITEMS OF THE FINISHED PRODUCT IN PHYSICAL FORM TO E STABLISH THAT THE PRESENCE OF THE WASTE MATERIAL IS VERY HIGH IN PERC ENTAGE WHICH HAD TO BE DISCARDED OR REMOVED THROUGH BURNING PROCESS. 8.1. THEREAFTER, THE ASSESSEE HAS ALSO EXPLAINED TH AT M/S.MARUDHAR INDUSTRIES LTD. WAS USING SOLID ALUMINIUM MATERIAL AS THEIR RAW-MATERIAL WHICH WAS THE FINAL FINISHED-PRODUCTS OF THE ASSESS EE. IT WAS FURTHER ELABORATED THAT THERE ARE SEVERAL TYPE OF ALUMINIUM MANUFACTURING INDUSTRIES BASED UPON THE TYPE OF ALUMINIUM TO BE U SED FOR A PARTICULAR INDUSTRY. SUCH AS, FOR MANUFACTURING OF AUTOMOBILE PARTS, CONDUCTOR CABLE, EXTRUSION PLANT, CABLE PLANTS, FOIL PLANTS, UTENSIL PLANTS, ETC. A FINE QUALITY OF THE ALUMINIUM IS THE RAW-MATERIAL. M/S.MARUDHAR INDUSTRIES LTD. IS ONE OF THE SAID INDUSTRIES USING HEAVY SOLID SCRAP OF ITA NO.2336/AHD /2008 ITO VS. MARUTI ALUMINIUM PVT.LTD. ASST.YEAR 2005-06 - 8 - METAL TO MANUFACTURE THAT QUALITY OF ALUMINIUM SO IS TO BE USED IN THAT PARTICULAR TYPE OF INDUSTRIES. THEREFORE, THE RAW- MATERIAL IN THE HANDS OF THE M/S.MARUDHAR INDUSTRIES LTD. IS THE FINAL PRODU CE OF THE ASSESSEE BECAUSE THE ASSESSEE PRODUCES INGOTS, NOTCHBAR, ETC . ALUMINIUM WHICH IS BEING USED FOR MANUFACTURING OF FINE QUALITY OF AL UMINIUM. SINCE SUCH TYPE OF ADVANCED MANUFACTURING INDUSTRIES, ONE OF T HEM IS M/S.MARUDHAR INDUSTRIES LTD., THE RAW-MATERIAL IS FREE OF IMPURI TY, THEREFORE, THE BURNING LOSS IS ONLY 8 TO 10%. IN SHORT, THE ARGU MENT OF LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE BEFORE US WAS THAT THE UNCOMPARABLES MUST NOT BE COMPARED. FURTHER EXTEND ING THIS ARGUMENT, IT WAS MENTIONED THAT IN A SIMILAR TYPE OF INDUSTRY IN THE CASE OF M/S.METAL MAN, THE BURNING LOSS SHOWN AT 36.46% WHI CH WAS STATED TO BE VERY NEAR TO THE BURNING LOSS OF THE ASSESSEE AS PER BOOKS AT 38.39%. EVEN AT THIS JUNCTURE WE CAN COMMENT THAT THIS EXPL ANATION AS WELL AS THE DISTINCTION MAKE SENSE , WHICH WAS NOT PROPERLY CON SIDERED BY THE A.O. 9. APART FROM THE ABOVE FACTUAL DETAILS ON ENQUIRY FROM THE BENCH, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESS EE HAS PLACED ON RECORD THE FIGURES OF BURNING LOSS OF SUBSEQUENT YEARS. FOR ASSESSMENT YEAR 2006-07 THE BURNING LOSS INCLUDING HARD COKE W AS COMPUTED AT 50.46% BY THE AUDITOR AND EXCLUDING HARD COKE IT WA S 42.73%. IT WAS CLARIFIED BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE THAT FOR ASSESSMENT YEAR 2006-07, THE ASSESSMENT WAS COM PLETED U/S.143(1) OF THE I.T. ACT, 1961. FOR THE NEXT ASSESSMENT YE AR 2007-08, THE ASSESSMENT WAS MADE U/S.143(3) OF THE I.T. ACT, 196 1 ORDER DATED 11/12/2009 AND IN THAT ASSESSMENT YEAR, THERE WAS N O ADDITION ON ACCOUNT ITA NO.2336/AHD /2008 ITO VS. MARUTI ALUMINIUM PVT.LTD. ASST.YEAR 2005-06 - 9 - OF BURNING LOSS THOUGH THE LOSS AS PER BOOKS WAS 29 .78%. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS, THER EFORE, COMPARED THAT FOR ASSESSMENT YEAR 2005-06, THE BURNING LOSS WITHO UT TAKING INTO ACCOUNT HARD COKE WAS 38.39%, FOR ASSESSMENT YEAR 2 006-07 IT WAS 42.73% AND FOR ASSESSMENT YEAR 2007-08 IT WAS 29.78 %. IT HAS ALSO BEEN EXPLAINED THAT THE YEAR UNDER CONSIDERATION WA S THE FIRST YEAR AND THE START OF THE MANUFACTURING BUSINESS. 10. CONSIDERING ALL THESE FACTS AND THE EXPLANATION OFFERED THAT THE RAW-MATERIAL IN THE MANUFACTURING PROCESS OF THE AS SESSEE WAS ALUMINIUM SCRAP CONTAINING METALLIC AND NON-METAL LIC IMPURITIES AND ALSO TAKING INTO ACCOUNT THE FACT THAT THE BOOK RES ULTS HAVE NOT BEEN DISTURBED BY THE ASSESSEE AND QUANTITATIVE MANUFACT URING DETAILS AS PER RG-1 REGISTER HAVE BEEN ACCEPTED BY THE EXCISE DEPA RTMENT, THE EXPLANATION OF THE ASSESSEE HAS SOME LOGIC AND CANN OT BE SAID TO BE DEVOID OF MERITS. BUT THIS FACT CAN ALSO NOT BE D ENIED THAT THE ASSESSEES OWN BOOK RESULTS ARE NOT CONSISTENT AND THE BURNING LOSS HAS VARIED FROM 38.39% TO 42.73% AND THEN GONE DOWN TO 29.78%. THI S BURNING LOSS IS CALCULATED AFTER EXCLUDING THE QUANTITY OF HARD COK E AND THIS CALCULATION IS THE CORRECT CALCULATION BECAUSE THE HARD-COKE IS USED FOR HEATING UP OF THE CRUCIBLE/ FURNACE AND NOT AN INGREDIENT OF THE RAW-MATERIAL PURCHASED FOR MANUFACTURING OF FINISHED-GOODS. OUT OF SUCH ALUMINIUM SCRAP WHICH IS FULL OF IMPURITIES, THE FINISHED-GOOD AS P ER ASSESSEES MANUFACTURING PROCESS IS ALUMINIUM METAL IN VARIOUS SHAPES. THEREFORE, THE HARD-COKE CANNOT BE SAID TO BE THE RAW-MATERIAL USED FOR THE DIRECT PRODUCTION OF METALLIC FINISHED-GOODS. THE WEIGHT WISE CONSUMPTION OF ITA NO.2336/AHD /2008 ITO VS. MARUTI ALUMINIUM PVT.LTD. ASST.YEAR 2005-06 - 10 - HARD-COKE CAN ALTOGETHER BE A SEPARATE AREA OF INV ESTIGATION TO BE ADJUDGED SEPARATELY BUT NOT TO BE MIXED-UP WITH THE PRODUCTION ACTIVITY. AS A RESULT AND FOR THE REASONS EXAMINED HEREIN ABO VE SO AS TO MAINTAIN THE CONSISTENCY IN THE BOOK RESULTS OF THIS VERY AS SESSEE, AS ALSO TO KEEP IN MIND THE PILFERAGE, WHICH CAN NOT BE TOTALLY RULED OUT, WE DEEM IT PROPER, FAIR AND JUSTIFIABLE TO MEET THE ENDS OF JUSTICE TO ALLOW THE BURNING LOSS AT AN ESTIMATED FIGURE OF 30% FOR THE YEAR UNDER CO NSIDERATION AS AGAINST 38.39% CLAIMED BY THE ASSESSEE. IN THE RESULT, TH E AUTHORITIES BELOW ARE DIRECTED TO DISALLOW THE BURNING LOSS AT 8.39%, THE RESULTANT PERCENTAGE, AS ARRIVED AT AFTER THE DISCUSSION MADE HEREINABOVE . WITH THE RESULT, REVENUES GROUND IS PARTLY ALLOWED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS PARTL Y ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 30/ 07 /2010. SD/- SD/- ( D.C. AGRAWAL) ( MUKUL KR. SH RAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30 / 07 /2010 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPAR TMENT. 3. THE CIT CONCERNED. 4. THE LD. CIT(AP PEALS)-VIII, AHMEDABAD 5. THE DR, AHMEDABAD BENCH.6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD