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TMI Blog2013 (9) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... ge and recovery from the ship. 3.1.On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting amount of Rs. 1,75,15,601/- in respect of non ferrous metal claimed to have been recovered from the ship as per the A.O." 3.2."On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting amount of Rs. 15,00,000/- in respect of sale of main engine claimed to have been recovered from the ship as per the A.O." 3.3."On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting amount of Rs. 40,00,000/- in respect of sale of cranes claimed to have been recovered from the ship as per the A.O." 3.4."On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting amount of Rs. 36,00,000/- in respect of generator claimed to have been recovered from the ship as per the A.O." 3.5."On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restriciting addition on account of electrical cable to Rs. 1,76,000/-as against Rs. 14,00,000/- made by the A.O." ITA No. 7522/Mum/2007 Assessee-company has raised below-mentioned grounds of appeal: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43.7 lacs in respect of suppression sale of oil recovered from the two ships and of Rs. 3.04 Crores with regard to undisclosed sale of various scrap items. The details of disallowance, made by the AO, in respect of certain items is as under: Sr. No. Item Description Estimated Quantity Estimated Sale Value Rs. Basis of estimation 1 Scrap Loss (mixed scrap) 148 MT 15,39,777 Lowest purchase priced [9459.32]+1-%assessee 10405.25 2 Non-Ferrous Metal 124,743 MT 1,75,15,601.23 [140413.5] [Average sale rate for non-ferrous metals in sale bills 3 Main Engine 3 No. 15,00,000 5,00,000 each 4 Cranes 17 No. 40,00,000 4x2 +1x4 + 1x5 + 1x8 + 4x2.25 + 6x1 assessee 8+4+5+8+9+6 40,00,00 5 Generator Sets 9 No. 36,00,000 4,00,000 each [average price] 6 Anchor 40 MT 4,00,000 10,000 per ton 7 Furniture & Other Wood 5,00,000 Difference in rates shown 8 Electric Cables/Wires 10 MT 14,00,000 140 TOTAL 3,04,55,578 2.1. The first ground of appeal is about addition made on account of suppressed sale of oil. As per the AO from the bills of entry prepared by the custom authorities, the ships were having 301 MT oil an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... craps (Rs. 40 lacs), sale of generator (Rs. 36 lacs) and sale of electrical cables(Rs. 12.24 lacs). Additions made by the AO were challenged by the assessee before the FAA. He deleted most of the additions, but confirmed the additions in part. AO is aggrieved by the deletion or part deletion, whereas assessee has filed appeal against the confirmation of the additions made. Ground no 2 of the AO is of general nature. Grounds no.3to3.5 filed by the AO deal with various deleted additions. Ground no.1to 3 filed by the assesse are about confirmation of additions by the FAA. 3.1.During the assessment proceedings, AO held that the shortage, wastage and non-recovery in the case of assessee company was 1% more than the accepted norms, that the wastage in the case of assessee was 12.5%, that recovery shown by the assessee was 87.5%. He was the opinion that recovery should have been more than 87.5%.Therefore, he made an addition of 148 MT in respect of shortage in recovery. He estimated lowest purchase price at Rs. 9459.32 per MT and added 10% margin to it. Finally, he made an addition of Rs. 15,39,977 (148 MT x 10,40,525 Rs.). 3.1.a. After considering the submissions of the assessee and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounting to Rs. 1.75 Crores. 3.2.a. Before us, DR supported the order of the AO and AR relied upon the order of the FAA. We have heard the rival submissions and perused the material before us. We find that FAA has, while deciding the issue, taken into consideration the findings of High Power Committee on ship breaking industry established by Government of India as well as report of leading international surveyors. He has also considered the order of the Tribunal in the case of Haryana Steel Company (supra). We find that AO has not taken into consideration sale of 81.925 MT non-ferrous metal which was sold by the assessee company and that finds place in Annexure-2 prepared by the AO himself. We find that AO has not brought anything on record to prove that recovery of non-ferrous metal by the assessee was more than shown in the books of accounts. Therefore, we are of the opinion that such a huge addition should have been made by the AO without bringing some positive evidence on record. Upholding the order of the FAA, we decide ground no.3.1 against the AO. 3.3. Next ground of appeal is about sale of main engines amounting to Rs. 15 lacs. While finalizing the order, AO has mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on made in this regard. 3.5.a. After hearing the DR and the AR we are of the opinion that the AO has made addition of Rs. 36 lacs without any basis. The assessee company had sold all the eight generators sets and showed sale value in its books of accounts. Therefore, upholding the order of the FAA, we decide ground no3.4.against the AO. 3.6. Last Ground of appeal pertains to addition made by the AO, on account of sale of electric cable and wires estimated at 10 MT @ 1,40,000/- per MT. Ground no.3 of the appeal of the assessee is also about the same head. While finalising the assessment order, AO stated that no sale of electric cable had been shown by the assessee in its books, though lot of such cable was bound to be recovered from the ship, that the entire ship was connected electrically and same were served by the electric generators. He made an addition of Rs.14 lacs on account of alleged suppressed sale of cable. In the appellant proceedings, FAA held that the appellant had sold cable in subsequent year but that was only 250 Kg, that some of electrical cables would go along with D.G. Sets, Panel Boards, Electric Switches and Electric Motors, that there were about 15 bills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the AO and FAA. We have heard the rival submissions and perused the material on record. We find that assessee had not challenged the ownership of anchors. We agree with the FAA that anchors would have some realisable value. No ship will take a risk of not having a proper anchor, till it is dismatanled. In our opinion, FAA was very fair in his approach while deciding the appeal filed by the assessee. He has granted partial relief to the assessee and confirmed the addition that appears to be reasonable. Therefore, without disturbing the estimation made by the FAA we decide Ground no. 1 against the assessee. 5. Second ground of appeal is about not allowing relief of Rs. 5 Lacs on account of furnitures and other wood. During the assessment proceedings AO held that normally the furniture in a ship would be in good working condition and it would fetch much better price than the fire wood, but the assessee had shown the sale price of fire wood only. Assessee preferred an appeal before the FAA. After considering the submissions of the assessee, he held that certain items of the ships would be in good condition, that they would bring better price, that the AO was justified in es ..... X X X X Extracts X X X X X X X X Extracts X X X X
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