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TMI Blog2012 (11) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... loss at all - the disallowance made by the assessing officer cannot be sustained. - Decided in favor of assessee. - I.T.A No. 162, 163 & 409/Coch/2010 and I.T.A No. 557 & 558/Coch/2011 - - - Dated:- 27-7-2012 - Shri N.R.S. Ganesan and Shri B.R. Baskaran, JJ. Assessee by : Shri R Krishna Iyer Revenue by : Smt. S Vijayaprabha ORDER Per N.R.S. Ganesan (JM) The assessee filed the appeals for the assessment years 2004-05 and 2005- 06 against the order of the Administrative Commissioner passed u/s 263 of the Act. The department has filed the appeals for the assessment years 2004-05, 2005-06 2008-09 against the orders of the Commissioner of Income-tax(A). Since common issues arise for consideration in all the appeals we heard the same together and dispose of them by this common order. 2. Let us first take the departmental appeals for the assessment years 2004- 05, 2005-06 2008-09 arising out of the orders of the Commissioner of Incometax( A). 3. Smt. Vijayaprabha, the ld.DR submitted that the assessee claimed deduction u/s 80IB of the Act. The assessing officer disallowed the claim of the assessee on the ground that the assessee has not emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yer s Asia Ltd (1980) 122 ITR 259 (Bom) and Commissioner of Incometax vs Ormerods (I)(P) Ltd (1989) 176 ITR 470 (Bom) and the decision of the Bangalore bench of this Tribunal in Sreekrishna Plastic Industries Pvt Ltd vs ITO 14 ITD 121 (Bang). 6. We have carefully gone through the decision of this Tribunal in assessee s own case for the assessment years 2002-03 and 2005-06 in ITA Nos 811 812/Coch/2008 (supra). This Tribunal, after considering the judgment of the Karnataka High Court in Commissioner of Income-tax vs K.G. Yediurappa Co 152 ITR 152 (Bang) and the judgment of the Gujarat High Court in Commissioner of Income-tax vs V.B. Naraina Co 252 ITR 884 (Guj) as also the judgment of the Andhra Pradesh High Court in the case of Commissioner of Income-tax vs Abhirami Cotton Mills P Ltd 220 ITR 84 (AP) found that payment of wages by the employer directly to the labourer was not the paramount criteria for establishing employer employee relationship and what is required is the ultimate control over the forces. The Tribunal found that even though the assessee has employed casual and contract labourers the ultimate control was rested with the assessee, therefore, the casual and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R, the assessee is using imported scrap and therefore, the assessee would get a better yield when compared to other industrial undertaking and therefore, the burning loss would be less than the industrial average. Therefore, according to the ld.DR 10% industrial average adopted by the assessing officer as the burning loss is justified. Therefore, the Commissioner of Income-tax(A) is not correct in fixing the burning loss as claimed by the assessee. According to the ld.DR, the burning loss claimed by the assessee at 16% for the assessment year 2004-05 is highly excessive, therefore, the order of the Commissioner of Income-tax(A) cannot be sustained. 9.1. For the assessment year 2005-06 the assessee himself has claimed burning loss at 10.53%. However, the assessing officer fixed the burning loss at 5.5%. Therefore, the excess burning loss claimed by the assessee at 5.03% was added to the iron ingots produced for the year under consideration. By following the order of Commissioner of Income-tax(A) for assessment year 2004-05 he deleted the addition made by the assessing officer. 9.2 For the assessment year 2008-09, the assessee claimed burning loss at 10.89%. The assessing offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he universities. It is common knowledge that when the scrap iron is burnt for the purpose of producing iron ingots there will be a loss due to impurity. This loss would depend upon the raw material used and the process of conversion adopted by the assessee. The contention of the ld.DR is that the assessee is mainly using imported scrap; therefore, the loss should be bare minimum. We are unable to accept the contention of the ld.DR. Merely because the scrap was imported from foreign country, there cannot be any guarantee that the burning loss would be less. There is no such presumption that the raw materials imported from foreign country will have less impurity. Impurity would depend upon the nature of the scrap used by the assessee. Unfortunately, no material is available on record to point out the percentage of impurity in the scrap imported by the assessee. It is also practically impossible to find out the exact impurity at this stage. The assessee has filed the burning loss claimed by the Kerala Government company, viz. M/s Steel Complex Ltd, Kozhikode. The government company claimed burning loss for the assessment year 2004-05 at 12.45%; for the assessment year 2005-06 at 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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