ASST CIT 13(2), MUMBAI V. S.V. CRANE SRVICES, MUMBAI

ITA 2924/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100941 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 27-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 16-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: SATISH R MODY
• Keywords: Cost of acquisition; Commercial expediency; Capital expenditure

Judgement Text

ITA/2924/MUM/2013 AY. SVCRANES 1 , INCOME TAX APPELLATE TRIBUNAL,MUMBAI E BENCH . . , , , BEFORE S/SH. A.D. JAIN,JUDICIAL MEMBER & RAJEND RA,ACCOUNTANT MEMBER /. ITA NO. 2924 /MUM/201 3 , / ASSESSMENT YEAR - 200 9 - 10 ACIT 13(2) ROOM NO.421, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400 020. VS M/S. S.V. CRANE SERVICES SHOP NO.5, 104, DAYAL BHAVAN KESHAVJI NAIK RO AD CHINCH BUNDER,MUMBAI 400 009. PAN: AAAFS 7203 D ( / APPELLANT ) ( / RESPONDENT ) /. ITA NO. 3000 /MUM/201 3 , / ASSESSMENT YEAR - 200 9 - 10 M/S. S.V. CRANE SERVICES MUMBAI 400 009. VS ACIT 13(2 ) MUMBAI 400 020 ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY : SHRI SATISH R. MODY / REVENUE BY : SHRI S.S. RA NA - DR / DATE OF HEARING : 29 07 2015 / DATE OF PRONOUNCEMENT : 31 0 8 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 09.01.2012 OF THE CIT(A) 24, MUMBAI,THE ASSESSING OFFICER(AO) AND THE ASSESSEE HAVE FILED CROSS APPEAL RAISING FOLLOWING GROUND S OF APPEAL: ITA NO.3000/MUM/2013 (ASSESSEES APPEAL): THE LEANED CIT(A) ERRED IN VALUING THE SCRAP AT ESTIMATED MARKET RATE AND CONFIRMING THE ADDITION OF NOTIONAL IMAGINARY INCOME OF RS 83,15,244 AND NOT CONSIDERING THE PRUDENT DECISION OF APPELLANT BAS ED ON QUALITY OF RUSTED SCRAPS AND COMMERCIAL EXPEDIENCY IN DISPOSING THE SCRAPS AT VARIOUS SITES PRACTICALLY AS PER BUSINESS EXIGENCIES SEEING THE OPERATIONS IN NAXALITE HILLY AREAS, NON AVAILIBITY OF TRANSPORTS , EXCISE ISSUES AND OTHER ENVIRONMENTAL FAC TORS. 2 THE LEARNED CIT(A) ERRED IN TAXING THE ESTIMATED INCOME OF SCRAP WHICH HAD NOT ACCRUED TO THE APPELLANT AND THEREBY BRUSHING ASIDE THE CONCEPT OF REAL INCOME. 3 THE LEARNED C I T(A) ERRED IN BRUSHING ASIDE THE PRUDENT BUSINESSMAN METHODOLOGY OF BEA RING THE BRUNT OF EXCESSIVE REPAIRS OF 30 YEARS OLD MODEL CRANES AND WHEN THE APPELLANT CONSIDERED ALL THESE HIDDEN COSTS IN QUOTING THE HIRE CHARGES OF CRANES AND MAINTAIN THE PROFITABILITY OVER 2 DECADES . THE APPELLANT RESERVES THE RIGHT TO ADD, ALTER, AMPLIFY AND DELETE ANY GROUNDS OF APPEAL ITA 2924/MUM/2013 (REVENUES APPEAL): I (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE L D. CIT (A) ERRED IN RESTRICTING THE DISALLOWANCE TO RS.83,15,244/ - AS AGAINST RS.2,39,29,400/ - MADE BY THE AO OUT OF RAPAIR TO MACHINERY. (II) WHILE DOING SO, THE L D. CIT(A) HAD FAILED TO APPRECIATE THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE GENUINENESS OF THE EXPENDITURE WITH CONCRETE EVIDENCE. THE CONCLUSION OF THE AO ITA/2924/MUM/2013 AY. SVCRANES 2 GETS CREDENCE FROM THE FACT THAT ONE OF THE MAJOR SUPPLIERS OF THE ASSESSEE VIZ. M/S. C. J. STEEL CORPORATION HAD BEEN LISTED AS 'BOGUS SUPPLIER' BY THE SALES TAX DEPARTMENT. (2) THE APPELLANT PRAYS THAT THE ORDER OF CIT (A) ON THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF THE ASSESSMENT OFFICER BE RESTORED. (3)THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD ANY NEW GROUND, IF NECESSARY. ASSESSEE FIRM , ENGAGED IN THE BUSINESS OF HIRING AND OPERATING OF CRANES , FILED ITS RETURN ON 29.09. 2009, DECLARING INCO ME OF RS. 1.29CRORES. THE AO COMPLETED THE ASSESSMENT ON U/S.143(3)OF THE ACT DETERMINING ITS INCOME AT RS. 3.50 CRORES. ITA NO.3000/MUM/2013 : 2. EFFECTIVE GROUND OF APPEAL FILED BY THE AO AND THE ASSESSEE DEAL WITH SALE OF SCRAPE. DURING THE ASSESSMENT PROC EEDINGS,THE AO FOUND THAT THE ASSESSEE WAS PURC HAS ING OLD CRANES AND REPAIRING THE SAME FOR SALE ,THAT IT DEBITED AN AMOUNT OF RS.7.36 CRORES UNDER THE HEAD REPAIRS TO MACHINERY , THAT IT HAD PURCHASED 1225 TONS OF STEEL PARTS AND 2 TONS OF BRONZE PARTS F OR UNDERTAKING THE REPAIRS TO THE CRANES .HE OBSERVED THAT THE MATERIAL PURCHASED HAD NOT BEEN INCREASING TONNAGE CAPACITY AND BOOM LENGTH CAPACITY ,THAT THE EXPENSES WERE INCURRED FOR ONLY TO MAKE THE CRANES FIT FOR USE,THAT THE EXPENDITURE INCURRED HAD B EEN ON REVENUE ACCOUNT AND NOT CAPITAL ACCOUNT , THAT ONLY REPLACEMENT OF OLD PARTS HA D TAKEN PLACE, THAT IT ESULTED INTO GENERATION OF SCRAP ,THAT IT HAD ADMITTED INCOME FROM SCRAP SALES AT RS.6,88,000/ . ,THAT COMPARED TO INTAKE OF MATERIAL IN TERMS OF QUAN TITY AND COST THE GENERATION OF SCRAP AND AMOUNT RECEIVED FROM SALE OF SCRAP HAD BEEN VERY LOW. HE CONDUCTED ENQUIRIES IN THE CASE OF M/S.KAMDAR BROS. (KB) AND M/S. C.J.STEEL CORP. (CJSC) I.E. THE SUPPLIERS OF MATERIALS TO THE ASSESSEE AND HELD THAT THE TRANSA CTIONS BETWEEN THEM A ND ASSESSEE WERE NOT SUPPORTED BY THE DELIVERY CHALLANS AND/OR WEIGH BRIDGE SLIPS. HE HELD THAT THE PURCHASE OF MATERIAL ( 1225 TONS OF STEEL ) FOR REPAIRS WAS NOT BE ACCEPTABLE , THAT THE DEBIT OF AMOUNT UNDER REPAIRS TO MACHINERY WAS NO T REASONABLE AND EXCESSIVE. ACCORDIN GLY, THE ACCOUNTS OF THE ASSESSEE,TO THAT LIMITED EXTENT,WE RE REJECTED. BUT ,N O SPECIFIC ADDITION WA S MA DE TOWARDS THE SCRAP GENERATION.THE AO ALSO HELD THAT EXPENDITURE WORKED OUT TO 51.85% OF THE REVENUE GENERATED ,THAT IT WAS IS NOT IN TUNE WITH THE STANDARDS OF OTHER PERSONS ENGAGED IN SIMILAR BUSINESS ACTIVITY ,THAT HE WAS LEFT WITH NO CHOICE BUT TO ESTIMATE THE REASONABLE AND ALLOWABLE EXPENDITURE ON TH AT ACCOUNT.FINALLY,HE HELD THAT 35% OF THE REVENUE COULD BE ALLO W ED AS EXPENDITURE ON REPAIR TO MACHINERY .HE R ESTRICTED THE CLAIM OF EXPEN DITURE TO RS.4,97,00, 350/ OUT OF RS.7,36,29,750/ AND MADE AN ADDITION OF RS.2,39,29,400/ . 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST A PPELLATE AUTHORITY(FAA). BEFORE HIM,IT WAS ARGUED THAT THE AO HAD WRONGLY STATED THERE WA S NOT SUFFICIENT GENERATION OF SCRAP SO AS TO WARRANT CONSUMPTION OF 1250 TONS OF MATERIAL DURING THE YEAR ,THAT 1250 TONS OF MATERIAL WOULD GENERATE AROUND 750 TONS OF DISPOSABLE SCRAP. IN TH AT REGARD, A COPY OF CERTIFICATE FROM CHARTERED ENGINEER WAS SUBMITTED BEFORE THE FAA AND IT WAS STATED THAT THE CERTIFICATE EXPLAINED THE QU ALI TY, QUANTITY AND THE REALIZABLE VALUE OF THE SCRAP GENERATED BY THE ASSESSEE ,THAT THE NET REALIZABLE VALUE OF THE SC RAP WA S RS. 15,81,420/ ,THAT O UT OF THE AFORESAID AMOUNT THE ASSESSEE HAD BEEN ABLE TO REALIZE RS.6,88, 750/ ONLY ON ACCOUNT OF VARIOUS FACTORS LIKE EXORBITANT TRANSPORT COSTS TO BRING THE S CRAP TO NEARBY CITIES FOR SALE, NA XALITES PREVENTING REMOVAL OF SCRAP AND IN SOME CASES THE CUSTOMERS PROHIBITING REMOVAL OF SCRAP DUE TO EXCISE COMPLICATIONS. IT WAS FURTHER STATED THAT IT WA S NOT THE CASE OF NO N GENERATION OF SCRAP , THAT THE AO HAD MERELY CONSIDERED THE RUPEE EQUIVALENT OF SCRAP REALIS ATION AS PER PROFIT AND LOSS ACCOUNT ,THAT THE AO HAD FAILED TO CONSIDER THE ABOVE FACTORS WHICH EXPLAIN ED AS TO WHY THE ITA/2924/MUM/2013 AY. SVCRANES 3 REALIS ATION VALUE WAS RS.6,88,756/ ONLY ,THAT HE HAD ALSO CONSIDERED THE STEEL SCRAP REALIZA TION VALUE @ RS.18,000 TO R S.20, 000 PER TON WITHOUT APPRECIATING THE QUALITY OF SCRAP DUE TO ENVIRONMENTAL AND OPERATIONAL USAGE ,THAT HE HAD NOT CONSIDERED THE IMPORTANT FACTOR BEING HUGE TRANSPORT COSTS FOR LOADING AND UNLOADING OF SCRAP AND BRING IT TO NEARBY CITIES FOR DISPOSA L ,THAT THE SCRAP GENERATED WAS DULY EXPLAIN ED, ,THAT D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAD CALLED FOR INVOICES OF PURCHASE OF STEEL ITEMS WHICH WERE PRODUCED BEFORE HIM BY THE ASSESSEE ,THAT D UE TO OVERSIGHT, ONE OF THE DELIVERY CHALLAN ISSUED BY KB WAS UNSIGNED , THAT T HE A O PICKED UP THAT PARTICULAR DELIVERY CHALLAN AND CONCLUDED THAT THE PURCHASE S FROM KB WERE NOT GENUINE ,THAT WITH REGARD TO PURCHASE FROM CJSC THAT AO HAD STATED THAT THE DESCRIPTION OF GOODS ON THE INVOICE WAS NOT SUFFICIENTLY DETAILED AND IT ONLY G A VE INFORMATION ABOUT BRIEF DESCRIPTION QUANTITY RATE ETC ,THAT THE ASSESSEE HAD BEEN DEALING WITH THE ABOVE PARTIES SINCE LAST 10 YEARS ,THAT BECAUSE OF LONG ASSOCIATION THE QUALITY STYLE, GRADE AND SPECIFICATIONS OF MA TERIALS REQUIRED BY THE ASSESSEE WERE WELL KNOWN TO THEM ,THAT THE ASSESSEE WOULD PLACE VERBAL ORDERS AS PER THEIR REQU IREMENTS , THAT THE OWNERS WERE THEMSELVES OPERATING THE CRANES AT VARIOUS SITES ACROSS THE COUNTRY,THAT PREPARING AND SUBMITTING A PHYSIC AL PURCHASE ORDER FOR EVERYDAY PURCHASE S WAS NOT FEASIBLE FOR THEM ,THAT BOTH THE SUPPLIERS WOULD SUPPLY THE GOODS FROM THEIR GODOWN AT KALAMBILI/TALOJA ,THAT THE ASSESSEE OWNED A GARAGE NEAR KALAMBOLI AND THE SUPPLIES FROM THOSE PARTIES WE RE TRANSPORTED IN TEMPOS AND TRUCKS TO ITS GARAGE WHICH WAS 5 KMS.F ROM THE DELIVERY PLACE ,THAT FOR THAT PURPOSE IT HAD INCURRED EXPENDITURE OF RS.7,04,548 DURING THE YEAR ,THAT THE ABOVE MODUS OPERANDI WAS DULY SUP PORTED BY THE AFFIDAVITS GIVEN BY KB AND CJSC ALONG WITH CONFIRMATION OF ACCOUNTS .WITH REGARD TO THE WEIGH BRIDGE SLIPS IT WAS STATED THAT THERE WA S NO RELIABLE WEIGHT BRIDGE IN KALAMBOLI AREA ,THAT THE WEIGHMENT SHOWN IN THE PURCHASE S OF KB WAS TAKEN TO BE CORRECT SINCE IT WA S MADE AT THE MANUFACTURING UNIT OF M/S. UTTAM GALVA OR M/S.JINDAL STEEL OR THEIR DISTRIBUTORS ,THAT SIMILAR WA S THE CASE CJSC,THAT A STATEMENT ON OATH OF ONE OF THE PARTNER S CONFIRMING THE ABOVE WAS RECORDED BY THE A O ON 16/ 12/2011 .S AMPLE COPIES OF INVOICES OF BOTH THE SUPPLIERS WERE P RODUCED BEFORE THE FAA.WITH REGARD TO THE EXCESSIVENESS OF THE EXPENDITURE IT WAS ARGUED THAT THE EXPENDITURE INCURRED BY IT WA AS PER THE COMMERCIAL EXPEDIENCY THE REASONABLENESS ,THAT THE EXPENDITURE HAD TO BE JUDGED F ROM THE POINT OF VIEW OF THE BU SI NESSMAN AND NOT OF THE REVENUE ,THAT THE BUSINESS MODEL OF THE ASSESSEE WAS SUCH THAT IT WOULD NOT PURCHASE NEW CRANES IN ORDER TO SAVE INTEREST COSTS ,THAT THE AREA OF OPERATIONS OF CRANES WAS HILLY AND STONY ,THAT AREA OF OPERATIONS RESULT ED IN HEAVY WEAR AND TEAR ,THAT PLYING OF CRANES ON ROADS WA S NOT PERMISSIBLE IN INDIA ,THAT THE CRANES HA D TO BE FREQUENTLY ASSEMBLED AND DISMANTLED TO MOVE THEM FROM ONE SITE TO ANOTHER SITE ,THAT ALL THOSE FACTORS RESULT ED IN HEAVY EXPENDITURE ON REPAIRS AND MAINTENANCE OF CRANES ,THAT THE AO HAD DISALLOWED 35% OF THE EXPENDITURE ON AD HOC BASIS WITHOUT ASSIGNING ANY VALID REASON . AFTER CONSIDER ING THE SUBMISSIONS MADE BY THE ASSESSEE AND THE ASSESSMENT ORDER,THE FAA HELD THAT THE AS SESSEE HAD BEEN PURCHAS ING OLD CRANES A ND REPAIRING THE SAME FOR SALE ,THAT THE AO HAD TREATED THE EXPENDITURE OF CAPITAL NATURE,THAT THE ASSESSEE HAD ADMITTED INCOME FROM SCRAP SALES AT RS.6,88,000/ .AS PER THE FAA,TWO QUESTIONS WERE TO BE ANSWERED I.E.L OW QUANTITY OF GENERATION OF SCRAP/LOWER INCO ME DECLARED FROM SCRAP SALE AND GENUINENESS OF PURCHASE OF RAW MATERIAL FOR REPAIRING OF CRANES. HE OBSERVED THAT THE ASSESSI NG OFFICER HAD NOT CONCLUSIVELY PROVED THE INFLATION IN PURCHASE S AND MATERIAL USED FOR REPAIRS TO THE CRANES ,HE LAID EMPHASIS ON DELIVERY CHALLANS AND WEIGH BRIDGE SLIPS,THAT HE HAD NOT GONE IN TO THE DETAILS OF ANALYSIS OF STOCK, RECEIPT OF MATERIAL, MODE OF PAYMENT ETC. ,THAT THE ASSESSEE HAD SUBMITTED SUPPORTIN G EVIDENCE BY GIVING COPY OF THE RETURNS OF THE SUPPLIERS, THAT A FFI DAVITS OF KB AND C JS C AND ITA/2924/MUM/2013 AY. SVCRANES 4 SWORN STATEMENT BY THE PARTNER S WERE NOT CONSIDERED,THAT AOS OBSERVATION IN TH AT REGARD WAS NOT CORRECT , TH AT THE GENERATION OF SCRAP OF RS .6.88 LAKHS FROM THE EXPEND ITURE OF RS .7.36 CRORES UNDER REPAIRS TO MACHINERY BY ANY STAN DARDS WAS ABYSMALLY LOW,THAT T HE REASONS GIVEN BY THE ASSESSEE THAT IT WAS OPERATING IN HILLY AND STONY, NAXALITE INFESTED AREA ETC. WOULD NOT BE ADEQUATE REASONS FOR GENERATION OF LOW SCRAP , THAT CERTIFICATE PRODUCED BY THE AS SESSEE FROM CHARTERED ENGINEE R WA S OF NO HELP BECAUSE SAME WAS GIVEN ON 12/12/2011 ,THAT THE SCRAP WAS NOT INSPECTED DURING THE RELEVANT PERIOD ,THAT THE VALUE MENTIONED BY THE ENGINEER C OULD NOT BE TAKEN INTO COGNIG ANCE ,THAT THE OBSERVATION OF THE AO WITH RESPECT TO LOW GENERATION OF SCRAP WAS APPEARED TO BE CORRECT. HOWEVER, THE FAA WAS OF THE OPINION THAT THE CONCLUSION DRAWN BY THE AO IN ESTIMATING 35% OF THE RE VENUE GENERATED AS EXPENDITURE INCURRED FOR REPAIRS TO MACHINERY WAS NOT ACCEPTABLE.HE HELD THAT THE CONCLUSION OF THE AO W AS NOT SUPPORTED BY ANY CORROBORATIVE EVIDENCE NOR WAS SUPPORTED BY ANY COMPARABLE CASES IN SIMILAR BUSINESS ACTIVITY , THAT THE CORRECT METHOD OF ARRIVING AT THE PROBABLE INCOME ON ACCOUNT OF SALE OF SCRAP EARNED BY THE ASSESSEE WAS ASCERTAINING THE AVER AGE PURCHASE COST OF THE MATERIAL USED FOR REPAIRS AND THE VALUE OF SCRAP AT A PERCENTAGE OF AVERAGE PURCHASE COST OF THE MATERIAL WHICH WOULD FETCH IN THE MARKET,THAT O UT OF TOTAL REPAIR AND MAINTENANCE EXPEND ITURE OF RS.7,36,29,350/ ,RS. 6 . 3 6 CRORES RELA TED TO PURCHASE OF MAJOR ITEMS LIKE PATRA, IRON ANGLES AND BUSHINGS ,THAT B ALANCE AMOUNT OF RS.99, 69, 848/ PERTAINED TO OTHER SMALL ITEMS AND LABOUR COSTS FOR REPAIRS , THAT THE QUANTITY OF SCRAP GENERATED AND THE NET REALIZABLE VALUE OF THE SCRAP C OULD BE WOR KED OUT BY TAKING A REASON ABLE PERCENTAGE OF AVERAGE PURCHASE PRICE OF THE MATERIAL ,THAT IN THE MANUFACTURING AND PRODUCTION ACTIVITIES CERTAIN ACCOUNT OF SCRAP WAS GENERATED ,THAT SAME IS USED IN RECYCLIN G, THAT STEEL AND IRON SCRAP WER E HAVING HIGH DEMA ND AND FAST MOVING MATERIAL ,THAT NO PRUDENT BUSINESS MAN WOULD ABANDON THE SCRAP WHEN IT FETCHE D CONSIDERABLE AMOUNT IN THE MARKET ,THAT IT WAS PROPER AND JUST TO ARRIVE AT THE VALUE INSTEAD OF ESTIMATING THE VALUE BASED ON OTHER FACTS , THAT OUT OF 1225 TONS OF MATERIAL PURCHASED 750 TONS OF SCRAP WAS GENERATED ,THAT GENERATION OF SCRAP WAS MORE THAN 50% ON ITE MS EXCEPT IN THE CASE OF BUSHES , THAT TH E SCRAP OF IRON & STEEL FETCHED 25 TO 30% IN THE MARKET .AFTER CONSIDERING VARIOUS FACTORS INCLUDING THE LOCA TION OF OPERATION AND DIFFICULTIES OF TRANSPORTATION,HE HELD THAT 25% OF THE AVERAGE PURCHASE COST OF THE ITEMS WAS REASONABLE.HE ESTIMATED THAT THE ASSESSEE MUST HAVE REALISED RS.90,04, 000 / FROM SALE OF SCRAP. HE FURTHER MENTIONED THAT IF THE TOTAL EXPE NDITURE INCURRED BY THE ASSESSEE I.E.7.39 CRORES, WAS COMPARED WITH THE ESTIMATED SCARP THE INCOME FROM SCRAP SALE OF RS.90,04, 000/ IT WORKED OUT TO 12.2% O F EXPENDITURE IN QUESTION.HE DIRECTED THE AO TO ADD RS.83,15,244/ ON ACCOUNT OF I NCOME FROM SALE OF SC RAP INSTEAD OF RS.2,39,29,400/ . 4. BEFORE US, THE AUTHORISED REPRESENTATIVE ( AR) STATED THAT THERE WAS NO EVIDENCE THAT THE A SSESSEE HAD RECEIVED MONEY OUT OF THE BOO KS ON ACCOUNT OF SALE OF SCRAP, THAT PURCHASE BILLS AND TRANSPORTATION VOUCHERS ALONG WITH TH E DELIVERY CHALLANS WERE PRODUCED DURING THE ASSESSMENT PROCEEDINGS , THAT THE A SSESSEE WAS CARRYING OUT OPERATIONS IN NAXALITE AREAS, THAT IT WAS DIFFICULT TO BRING SCARP GENERATED FROM THOSE AREAS, THAT THE A SSESSEE WAS DEALING WIT H OLD CRANES BY REPAIRING THEM, THAT AO HAD WITHOUT ANY BASIS MADE THE ADDITIONS OF RS.2.39 CRORES, THAT COPY OF AFFIDAVIT AND PRINTOUT FROM SALES TAX WEBSITE IN CASE OF CJSC AND KB WERE FILED BEFORE THE AO . HE REFERRED TO PAGE NO.41,42,37, 35 OF THE PB AND STATED THAT WHILE COMPLET ING THE ASSESSMENT FOR THE AY . 2004 05 THE AO HAD MADE NO ADDITION IN THAT REGARD . ALTERNATIVELY IT WAS ARGUED THAT THE ADDITION CONFIRMED BY THE FAA WAS ON THE HIGHER SIDE. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE AO. HE CONTENDED THAT THE ASSES SEE HAD CLAIMED 51% OF THE GROSS RECEIPTS TOWARDS REPAIRIN G EXPENSES, THAT ONE OF THE BILLS PRODUCED BY IT DID NOT BEAR ANYBODYS SIGNATURE, ITA/2924/MUM/2013 AY. SVCRANES 5 THAT THE VALUATION WAS DONE BY THE CHARTERED ENGINEER AFTER THREE YEARS, THAT THERE WAS NO PROOF OF DELIVERY OF GOOD S FROM KB AND CJSC. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE AO HAD MADE AN ADDITION OF RS.2.39 CRORES TO THE INCOME OF THE ASSESSEE , THAT THE F AA REDUCED IT TO RS.90.04 LACS, THAT THE ASSESSEE WAS DOING ITS BUSINESS IN HILLY AND NAXALITE AREAS ALSO, THAT IT HAD PRODUCED NECESSARY DOCUMENTARY EVIDENCES LIKE DELIVERY CHALLANS AND TRANSPORTATION OF GOODS BEFORE THE AO. THE FACT OF ASSESSEE CARRYING OUT ITS BUSINESS OPERATIONS IN NAXAL AREA IS PROVED BY THE DOCU MENTS SUBMITTED IN THE PAPER BOOK.WE HAVE GONE THROUGH THE COMPARISON OF HIRING CHARGE RECEIVED VIS A VIS SCRAP GENERATED AND REPAIRS CLAIMED BY IT FOR THE AY .S. 03 04, 06 07 AND 07 08 RESPECTIVELY. FROM THE STAT A STIC S (PG NO.41 AND 42 OF THE PAPER BOOK) IT IS FOUND THAT THE REPAIRS CLAIMED BY THE ASSESSEE AMOUNTED TO 47.02%, 51%, 52.62% RESPECTIVELY IN THE ABOVE MENTIONED AY.S. WITH REGARD TO CRANE HIRING CHARGES RECEIVED BY IT .WE HAVE ALSO LOOKED INTO THE BREAKUP OF HIRE CHARGES RECEIVED FROM NAXALITE AREA ,EXTREMELY REMOTE AREA AND NON NAXALITE AREA. W ITH REGARD TO VALUATION MADE BY THE CHARTERED ENGINEER ,WE ARE OF THE OPINION THAT THE FAA HAD CORRECTLY HELD THAT THE CERTIFICATE OF THE ENGINEER WAS OF NO HELP AS IT WAS PREPARED AFTER A LONG TIME OF GENERATIO N OF SCRAP .WE FIND THAT THE FAA HAS CONSIDERED ALL THE RELEVANT FACTORS BEFORE DECIDING THE ISSUE AND HAS RIGHTLY HELD THAT THE SALE OF SCRAP SHOWN BY THE ASSESSEE WAS ON THE LOWER SIDE. COMPARATIVE ANALYSIS OF THE INCOME GENERATED AND SCRAP SOLD AND THE FI GURES OF SCRAP LOST/ ABANDONED ALSO PROVE THAT THE STAND OF THE FAA WITH REGARD TO LESSER GENERATION OF SCRAP DURING THE YEAR UNDER APPEAL WAS JUSTIFIED . HOWEVER,WE ARE INCLINED TO ACCEPT THE ALTERNATE ARGUMENT OF THE ASSESSEE. AFTER CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE,WE ARE OF THE OPINION THAT TO MEET THE END OF JUSTICE THE ESTIMATED ADDITION SHOULD BE RESTRICTED TO RS. 5 0,00,000/ IN PLACE OF RS.83,15,244/ .E FFECTIVE GROUNDS OF APPEAL RAISED BY THE ASSESSEE AND THE AO ARE ALLOWED ,IN P ART . AS A RESULT,APPEAL S FILED BY THE AO AND THE ASSESSEE STAND PARTLY ALLOWED . . ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST ,2015. 31 ST , 2015 SD/ - SD/ - ( . . /A.D. JAIN) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 31 .08. 2015 . . . JV . SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONC ERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COP Y// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.