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2023 (4) TMI 1113 - ITAT CHENNAIClaim of excessive manufacturing loss on converting old gold into new gold - estimated addition representing the manufacturing loss to the extent of 1060.738 grams for the conversion of old gold into new gold - addition @ 15% applied for making the impugned addition - HELD THAT:- It is an admitted fact that when the old jewellery is converted into new jewellery there are certain inherent impurities in the old jewellery which are cleaned or washed out during the course of conversion. Though, the facts are not clear to the extent that whether old jewellery is first converted into pure gold and then new jewellery is made or that only the old jewellery is cleaned and polish into new jewellery. Looking at the nature of business are inclined to uphold that atleast that there is a manufacturing loss of 7.5% on such conversion. We therefore, direct the AO to sustain the addition applying the rate of 7.5% as against 15% applied for making the impugned addition. We therefore, set aside the findings of the ld. CIT(A) and the issue raised by the assessee in ground no. 3, 4 & 5 is partly allowed. Valuation of excess stock of gold jewellery found during the course of survey - Difference in stock based on the survey report - at course of survey u/s. 133A stock verification was carried out - Excess stock of 13262 grams of gold jewellery was found and the same was accepted by the assessee but in the return of income assessee disclosed the excess stock of 12810.920 grams of gold jewellery only - HELD THAT:- AO has not found any discrepancy in the books of accounts nor has he rejected the book results. The addition made by the Assessing Officer is purely based on the statement given by the assessee during the course of survey but the same does not have any evidentiary value as consistently held by Hon’ble courts. The alleged addition is only on account of the rates applied by the AO which is higher to the rate adopted by the assessee. From perusal of the calculation of AO, we notice that he has totally ignored the cost of the precious and semi- precious stones and other metals which are necessary to make gold jewellery. Under this given facts and circumstances of the case, the details filed by the assessee based on the records, books of accounts maintained cannot be ignored and therefore, alleged addition made by the Assessing Officer deserves to be deleted - Decided in favour of assessee.
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