9911796707
TMI Blog2014 (3) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008-09 vide his order dated 24.09.2010. 2. The first issue in this appeal of revenue is against the order of CIT(A) deleting the addition made by AO on account of shortage of stock declared by the assessee at 4.42% of the purchases and 5.02% of sales. For this, revenue has raised following ground no.1: "1. Whether on the facts and in the circumstances of the case, Ld. CIT(A) is justified in deleting the addition on account of shortage of stock of Rs.12,50,000/- despite the failure on the part of the assessee to offer satisfactory explanation to justify its claim." 3. We have heard rival submissions and gone through facts and circumstances of the case. Briefly stated facts are that the assessee company is a trader in dyes and chemicals, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the appellant and the argument placed by the A.R. Ground Nos.1 and 2 are against the additions of Rs.12,50,000 made by the Assessing Officer on account of shortage of stock. The assessee is into the business of trading of dyes and chemicals and export of iron ore and the turnover is Rs.122,26,96,358/- and the export turnover as per Schedule 13 amounted to Rs.110.78 crores consisting of export of iron ore. In the previous year relevant to Assessment Year 2007-08, the total turnover of the assessee was Rs.61.02 crores and export turnover was Rs.46.02 crores and therefore, there has been a substantial rise in the turnove of the company in respect of export sales more than twice the figure. From the quantitative ìnformation along wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the process of transportation of the iron ore from the mines to the railway siding and from the railway to the port, there is a loss of approx. 2 to 3% and sometimes even more where when the goods remain in the plots waiting for allotment of rake for loading During the transit it was explained there is loss of another 2 to 3% and when the materials are kept in the port, there is loss on account of theft, ground loss, moisture loss which cumulatively be around 5 to 6%. The Assessing Officer has failed to establish any nexus of such loss claimed by the assessee to be sales outside the books of assessee and/or any defect in the Books of Accounts. There cannot be a straight jacket formula in case of such type of materials for determing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f CIT(A) that loss cannot increase to 5% to 6% from 1 to 2% as declared in earlier years. Since revenue could not bring out any discrepancy and this is a factual matter, we feel that CIT(A) has rightly deleted the addition and we confirm the same. 4. The next common issue in this appeal of revenue as well as Cross Objection of assessee is as regards to the order of CIT(A) in restricting the disallowance made by AO at Rs.1,70,790/- as against Rs.4,76,842/-. Revenue preferred the following ground no.2 and assessee in its CO raised following grounds: "2. Of Revenue's ground: Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in restricting the disallowance of Rs.4,76,842/- u/s. 14A to Rs.1,70,719/- by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formula as per Rule 8D applied by the Assessing Officer is modified and the disallowance u/s. 14A is resgtricted as under: A= an amount of interest Rs.48,24,909/- B= average value of investment Rs.53,00,742/- C= average value of assets Rs.17,73,43,295/- Therefore AxB/C= Rs.1,44,215/- An amount = 0.25% of investment Rs.26,504/-Rs.1,70,719/- The addition made by the AO u/s. 14A is to be restricted to Rs.1,70,719/- and Ground Nos. 3 and 4 are partly allowed as indicated above." We find from the above that the CIT(A) has considered that the AO has not recorded any satisfaction or proved any link to extablish that borrowed funds were utilised for the purpose of investment in shares, therefore, he has rightly restricted the addition at Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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