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TMI Blog2011 (2) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... Name, address, balance sheet, bank statement of the shareholders and only filed ledger copy of share application money. No confirmation was filed nor PAN of the directors was given. He therefore added the amount under section 68 of the Income-tax Act. In appeal the assessee submitted that during the assessment proceedings the assessee vide letter dated 13.12.2007 and 17.12.2007 had submitted confirmation, ledger copy of account and PAN etc before the AO which was ignored. CIT (A) was satisfied by the explanation given and observed that the assessee had explained the source of investment as withdrawal from the firm in which the directors were partners. The directors were assessed with the same AO. He therefore deleted the addition aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O and the same is therefore upheld. 3. The second dispute is regarding addition of Rs.3,64,27,408/- on account of wastage shown by the assessee. The assessee is in the business of manufacture of utensils. The material used is stainless steel, patta /patti (coil). The AO noted that the assessee had made purchases of raw material weighing 2166889 kg and there was sale of scrap of 845115 kg. The AO noted that the scrap generation during the year was shown at 844008 kg which came to 41.67% of raw material consumed. It was observed by him that the assessee was purchasing patta/ patti which were rectangular in share from which circular sheets were cut of different si2es and at the time of taking out circular sheets from the rectangular patta/ pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d themselves issued a letter showing wastage of about 42%. Further the assessee was entitled to DEPB income and therefore unless the export income was correctly shown the assessee would not be entitled the DEPB or duty drawback. He also referred to the decision of the tribunal in case of JCIT Vs VXL (India) Ltd. in ITA No.54/Asr/1999 in which the tribunal in identical situation based on the letter of Excise authorities accepted wastage of 42% and allowed the claim of the assessee. CIT (A) accordingly directed the AO to delete the addition aggrieved by which the revenue is in appeal. 3.1 Before us the Learned AR for the assessee reiterated the submissions made before the CIT(A) that the patta/ patti which was the raw material was not rectan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age could be verified from the books of account which had been done by the AO and there was no dispute about the wastage shown by the assessee. The dispute was only regarding its reasonableness which was supported by the letter of the excise authorities who were closely monitoring the production process as well as export. 3.2 We have perused the records and considered the rival contentions carefully. The assessee is in the business of manufacturing of utensils by using raw material such as stainless steel patta/ patti. The assessee had shown wastage of 41.61%. The AO has allowed wastage only at 25%. As per him, the wastage was only in cutting of the square shape patta/ patti in which only the corners were lost which came to 21.5%. He has o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be held to be excessive. We therefore see no infirmity in the order of CIT (A) in allowing the relief and the same is therefore upheld. 4. The ground No.3 is regarding disallowance of Rs.46,69,615/- being freight payment to various shipping companies or their agents on the ground that no tax had deducted at source. The AO noted that all the parties except one to whom freight had been paid were Indian residents. Since no tax had been deducted at source he disallowed the claim of freight in respect of resident Indians amounting to Rs.46,69,682/- under section 40(a)(ia). In appeal the assessee submitted before the CIT (A) that payment of freight had been made to the shipping agents of nonresident. Therefore in such cases the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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