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2018 (1) TMI 803 - AT - Income TaxAddition u/s 68 on account of low yield percentage and impractical rate of burning loss - Held that:- As explained by the assessee that yield depends on various factors and it cannot be constant. The assessee has maintained quantitative records of raw material consumed and finished product produced. The books of account were subject to tax audit which was produced before the Assessing Officer. The assessee has explained the reasons for variation in percentage of burning loss and consumption pattern. The observation o f the CIT(A) that there is no finding by the Assessing Officer that the accounts were not correct and complete or income could not be deduced from the accounts maintained by the assessee was not controverted by DR. No reason to interfere with the order of the CIT(A), which is hereby confirmed and ground of appeal of revenue is dismissed. Addition on account of commission paid on purchase - Held that:- The copies of bills which were furnished before the CIT(A), were not furnished before the Assessing Officer to take a view that the commission payment was actually paid to them. As regards to the findings of the Assessing Officer that most of the parties were relatives to the assessee, CIT(A) was of the view that AO has not properly enquired into the matter to prove that commission payment made to the parties, ultimately flown to the assessee. Looking into the facts and circumstances of the case, we set aside the order of the CIT(A) and restore the matter back to the file of the Assessing Officer to re-adjudicate the payment of commission after conducting a thorough enquiry into the matter. Disallowance u/s. 40A(3) - Held that:- We find that the freight payment is an advance which is subsequently reimbursed to the assessee company. Hence, the provisions of section 40A(3) are not applicable in this case. Hence, we confirm the order of the CIT(A) and dismiss this ground of appeal of the revenue. Addition on account of under valuation of closing stock - Held that:- In the instant case, the appellant has valued the inventory at cost being lower than the net realizable value. It is equally settled that the A.O does not have the power to recompute the cost using any other method in disregard to the method adopted by the appellant which is not only recognised but also consistently followed by the appellant. It is not the case of the A.O that the appellant has undervalued the cost to reduce the value of closing stock. As the valuation has been made as per the prescribed norms, there is no merit in the addition made by the AO. Hence, the additions are deleted.
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