TMI Blog2010 (1) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... ring and Trading Co. at Kandla (M/s. PMT). The latter was a new and 100 per cent. export unit which had begun production on July 5, 2004 and was entitled for deduction under section 10A. The assessee in the return of income claimed exemption under section 10A amounting to Rs. 54,39,375 in respect of the new unit. The Assessing Officer during the assessment proceedings after making comparison of the two units noted that cost of electricity and labour charges was lower in the case of the new unit compared to the old unit. The cost of electricity per piece came to Re. 1 in the case of M/s. PI whereas in case of M/s. PMT it was only 81 paise. Cost of labour in the case of M/s. PI was Rs. 3.60 per piece whereas in the case of M/s. PMT it was onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,000 was treated as unexplained expenditure. This was disputed by the assessee. In appeal the assessee submitted that addition had been made by the Assessing Officer purely on the basis of suspicion. There was no material that the assessee had incurred any expenditure in the new unit which had not been declared. It was also submitted that making comparison of expenses in old unit with that in new unit working in different States and having different business model was not correct. The assessee submitted that cost in the new unit was lower because of various factors submitted before the Assessing Officer. It was also pointed out that the average price per piece in the export market was Rs. 50 whereas in the domestic market it was Rs. 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared by the assessee and similarly the indirect expenses had been estimated higher of Rs. 3,50,000 in the new unit. The excess estimated expenditure has been added as income under section 69C of the Income-tax Act. The Commissioner of Income-tax (Appeals) has deleted after observing that the addition which were based on hypothetical computation and not on any evidence gathered to show that the assessee had incurred expenses in the new unit which were not accounted. We see no infirmity in the order of the Commissioner of Income-tax (Appeals). Under the provisions of section 69C addition on account of any unexplained expenditure can be made only when the assessee has incurred any expenditure about which it has offered no explanation. The bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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