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2012 (7) TMI 622 - ITAT, AHMEDABADAddition made on account of excess process loss - Consumption of gold casted - Held that:- Comparing to AY 2006-07, the consumption of gold casted items went down in assessment year 2007-08 and the percentage of process loss has gone up. In the present year even the percentage of consumption of gold casted items was almost at par with such percentage in assessment year 2006-07 but percentage of process loss in the present year is more than 1.5 times of the process loss in assessment year 2006- 07. This working goes to show that when the consumption of casted gold items is more in total consumption, the percentage of process loss goes down when we compare the same for assessment year 2006-07 and 2007- 08 but in the present year, even when consumption of gold casted items is at par with such consumption in assessment year 2006-07, the percentage of process loss is very high. For this reason the A.O. was justified in making disallowance of excess process loss declared by the assessee. Even if this addition is upheld then the assessee is eligible for exemption u/s 10A - Held that:- Section 10A (4) states that the claim to be allowed u/s 10A should be worked out on the basis of total profit to the extent of proportion of export turnover to total turnover of the assessee. In the present case, the export turnover of the assessee is Rs.4,68,34,166/- and domestic turnover has been worked out by the A.O. at Rs.7,52,740/- being the addition made by him on account of alleged sale outside the books. After inclusion of this amount of domestic sale, total turnover comes to Rs.4,75,86,906/-. Total profit from business assessed by the A.O. is Rs.12,24,878 - thus as per the provisions Section 10A(4) the exemption allowable u/s 10A comes to Rs.12,50,503/- and net taxable income stands at Rs.19,375 - direction to AO to recompute the liability - quantum appeal partly in favour of assessee Penalty u/s 271(1)(c) - Held that:- Penalty levy is not justified because the entire addition was made by the A.O. on the basis of assumption without bringing any concrete material on record in support of any outside books sale made by the assessee and hence, penalty is not justified even for this part addition upheld - in favour of assessee.
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