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TMI Blog2012 (7) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... even if this addition is upheld then the assessee is eligible for exemption u/s 10A in this regard. Brief facts of the case till the assessment stage are noted by Ld. CIT(A) in para 2.1 of his order which is reproduced below: "1 This is regarding addition of Rs.7,52,740/-. In the assessment order, the A,O. has stated that the assessee is engaged in the business of manufacturing and export of jewellery. During the year, the assessee has shown turnover of Rs.4,68 crores but the profit shown is only Rs.4.72 lacs, which is just about one percent. The assessee unit is located in SEZ at Sachin. Surat- The account of stock report submitted by the assessee for F.Y. 04-05 is reproduced as under:- Gold Purchase - Raw Pure Gold In 24 Carats 24 carats In grams 24 carats In grams Opening stock 0.00 Issued for Mfg. 10431.43 Purchase 10551.00 Closing stock 119.57 total 10551.00 10551.00 Gold purchase -Casted Items in Grams in 24 carats 24 Carats In grams 24 Carats In grams Opening stock 0.00 Sales-Export 9751.60 Purchase 13044.48 Closing Stock 6316.52 Total 13044.48 10551.00 Jewellery Manufacturing Process A/c In Grams In 24 Carats 24 Carats I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision rendered in the case of Samtex Fashions Ltd. Vs ACIT 92 TTJ 59 (Del.) Reliance was also placed on the following Tribunal decisions: (i) Tayub Mohamed Hajee Moosa & Co. Vs ITO 40 TTJ 217 (Mad.) (ii) Parkar Cycle Industries Vs ITO 91 TTJ 436 (Chd.) (iii) Rajsons Jewelers Vs ITO 86 TTJ 1106 (Del.) He also placed reliance on the following judgements of various High Courts: (i) Arooram Sugars Ltd. Vs CIT 239 ITSR 16 (Guj.) (ii) CIT Vs Poonam Rani 326 ITR 223 (Del.) (iii) CIT Vs K K Rice Mills 319 ITR 173 (P&H) 5. He also submitted that the books were not rejected and hence, there is no case for making any estimation of income. He also submitted that in letter dated 20.12.2008 submitted by Ld. A.R. before the A.O., it was pointed out that the assessee has also undergone audit conducted by the office of the Principal Accountant General Commercial and Receipt Audit (Gujarat) and the said authority has carried out review of the books of accounts and they have also accepted the book results of the assessee. 6. As against this, Ld. D.R. supported the orders of authorities below. He further submitted that process loss is to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tow years. Process loss worked out by the assessee on the entire amount of consumption of raw gold as well as casted items is at 12.6% in the present year as against 8.30% in the next year and 10.43% in assessment year 2006-07. It goes to show that even in the case of the assessee also, the process loss claimed in the present year is higher as compared to the subsequent two years. In all these three years, process loss has been worked out by considering both raw gold and casted items as input. We find that in assessment year 2006-07, the percentage of casted items out of total consumption of raw gold and gold casted items is higher and the process loss in percentage terms is lowest in this year out of total consumption of raw gold and gold casted items of 39243grams. Consumption of gold casted items was 15869.81 grams. The percentage of gold casted items to the total consumption of raw gold and gold casted items comes to 40.44% whereas the same was @ 39.21% in the present year and 19.81% in assessment year 2007-08. In the present year, the loss worked out by the assessee on total consumption is 12.51% whereas, it was 8.30% in assessment year 2006-07 and 10.43% in assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r things or computer software shall be the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried on by the undertaking." 10. From the above sub-section (4) of Section 10A, it is seen that the claim to be allowed u/s 10A should be worked out on the basis of total profit to the extent of proportion of export turnover to total turnover of the assessee. In the present case, the export turnover of the assessee is Rs.4,68,34,166/- and domestic turnover has been worked out by the A.O. at Rs.7,52,740/- being the addition made by him on account of alleged sale outside the books. After inclusion of this amount of domestic sale, total turnover comes to Rs.4,75,86,906/-. Total profit from business assessed by the A.O. is Rs.12,24,878/-. As per the provisions of subsection (4) of Section 10A as reproduced above, the exemption allowable u/s 10A comes to Rs.12,50,503/- and net taxable income stands at Rs.19,375/-. In our considered opinion, even after making addition about this alleged sale outside books, the A.O. should have re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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