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TMI Blog2015 (6) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... ference in valuation of closing stock . The assessee is a company in the business of purchasing manganese ore. The said mineral is sorted out in different qualitative categories and sold. We find that the CIT(A)'s order comprises AO's findings, assessee's submissions in the lower appellate proceedings as well as the finding under challenge before us which are as under :- "3. Next ground Of appeal is regarding addition of Rs. 18,40,920/- being difference in valuation of closing ;tock. Appellant company was in the business of purchasing Manganese Ore, sort it out in different quality and sell it accordingly. AO observe d that appellant had shown raw material stock at 35224.104 MT, value of which was shown at Rs. 78,45,708/- in schedule-16 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lect any sorted material or finished goods. AO proceeded to calculate value of entire closing stock as per purchase rate of Rs. 275/- per MT and made addition of difference of Rs. 18,40,920/- to the value of closing stock. 3.1 In appeal, submissions as under were made:- "The learned assessing officer has added Rs. 18, 40, 920 on account of difference in closing stock as shown in return of income and as computed by the Assessing officer. \ * Observation of the assessing officer: The assessing officer has observed that the assessee has shown only the closing stock of raw material in the return of income filled by it. Since only the raw material stock is shown, the value of such stock should be the purchase price i.e. Rs. 27 5/-. Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ore waste dump 12325.39 275 33894 77/- Total(A) 12325.39 33894 77/- b) Sorted Material: Particulars Qty (Mts) Rate Total (Rs) -12%Manganese 22464.59 180 4043 >27 Manganese Ore 434.32 950 412614 Total (B) \ 22898.91 445623; Total (A+B) 35224.104 7845708/- The copy of above certificate is enclosed for your verification. The stock shown by the appellant includes raw material quantity q, 12325.39 Mts valued at Rs. 2 75 per ML It also includes sorted material like 12% manganese and Manganese ore dust which is valued at its realizable value since such value is lower of cost price. We enclose the copy of the invoices raised by the assesee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dust. Then the machines separate the dump category wise and the laborers manually sort manganese contains depending on sizes like from Omm to 2mm, 20mm to 40mm, etc. and colour. After that they start manually jigging and wash the materials to remove impurities from it like sand. Depending upon the manganese contents material's are separated by ABC approach where good quality material fetches the highest price then B category fetches the medium rates and the remaining is C category which is waste which fetches Rs. 50- 100 per metric ton because the same material is used for refilling the land. The materials are separated by magnetic separation system where manganese ore are separated. This magnetic separation system uses the normal sized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and appellant's submissions. AO has not accepted appellant's valuation of closing stock only on the ground that sorted material or finished goods were not shown as closing stock in the return of income and the audit report. AO valued entire closing stock at the average purchase rate of material from GMDC i.e. Rs. 275 per MT. AO did not accept appellant's explanation that closing stock included unsorted material as we I as sorted material and valuation of closing stock was done after physical verification. During the year, appellant purchased 40,375.336 MT of Manganese Ore from GMDC Ltd at a price of Rs. 111,03,218/- i.e. at average rate of Rs. 275 per MT. Appellant carried out sorting of a portion of ore purchased as per t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or sorted material in the return of income. The assessee has placed a paper book containing its audited annual accounts, taxaudit report, certified valuation of stock by expert Lab Technician, invoices for the purchase of raw materials @ Rs. 275/- per MT. Page 32 of the paper book describes sorting of manganese ore in four different rate-wise categories. The assessee has also placed on record all details of raw and sorted material at page 34 of the paper book with all due certificates. There is also due matching of the quantity of the manganese ore before and after being sorted out. The Revenue fails to dispute contents thereof. We draw support from the above said record and hold that the assessee has placed overwhelming material in support ..... X X X X Extracts X X X X X X X X Extracts X X X X
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