Income Tax Appellate Tribunal - Ahmedabad
Yes Fashions Pvt.Ltd.,, Surat vs Acit.,Circle-4,, Surat on 17 November, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER आयकर अपील सं./ ITA No. 1837/Ahd/2012 िनधा रण वष / Assessment Year : 2004-05 Yes Fashion Pvt Ltd, The ACIT, Floor, 703, Meridian Tower, Vs 7th Circle-4, Near Rajkumar Cinema, Udhna Surat Darwaja, Ring Road, Surat PAN: AAACY 0934 E अपीलाथ / अपीलाथ (Appellant) यथ यथ / थ (Respondent) Assessee by : Shri. R.N. Vepari, AR Revenue by : Shri Pravin Kumar, Sr. DR सुनवाई क तारीख/ Date of Hearing : 15/11/2016 घोषणा क तारीख / Date of Pronouncement: 17/11/2016 आदेश/O R D E R This appeal by the assessee is directed against the order of the Learned Commissioner of Income-Tax (Appeals)-I, Surat dated 20.07.2012 for Assessment Year 2004-05.
2. Following grounds are raised:-
1. The learned Commissioner of Income-tax (Appeals) erred in confirming the order of the Assessing Officer retaining addition of Rs.22,68,890/-.
2. The appellant submits that the learned Commissioner of Income-tax (Appeals) has misconstrued the facts and not interpreted correctly the directions given by the Hon'ble Tribunal by its order dated 28.10.2009.
3. On the facts and circumstances of the case, the addition is required to be restricted to Rs.1,65,010/-
3. The ld. Counsel for the assessee contends that in first round the AO without rejecting the assessee's audited books of accounts, made an addition of Rs. 29 lakhs qua the labour charges which was agitated by assessee in appeals and the ITAT vide its order dated 28.10.2009 in ITA SMC-ITA No. 1837/Ahd/2012 Yes Fashion Pvt Ltd vs. ACIT AY : 2004-05 2 No.141/Ahd/2008 considered the assessee's submissions and directed the AO as under:-
"43. Regarding job charges of Rs.29,00,000/-, the learned AR reiterated the submissions as made before the lower authorities and he also submitted that in the first place there is no basis of how Rs.29 lacs has been worked out. What the Assessing Officer has tried to point out is that the assesses spends more on job work in inhouse production as compared to what he has given to outsiders for weaving at Malegaon and made disallowance. The Assessing Officer has not found any expenditure incurred by the assessee without support or evidence and this is an adhoc disallowance. What the Assessing Officer has not followed was that when texturised yarn is manufactured, part of it is sold and part of it is twisted and warped and part of such twisted and warped yarn is sent to Malegon for weaving and part woven in his own factory. Now the entire expenditure on twisting, warping and texturising of yarn on entire yarn including yarn sent to Malegon is debited in the books of the appellant. He has taken all these expenses as if they are related to weaving and found them excessive. This is explained by the following chart:-
44. For the POY Purchase the process is Texturisation thereafter it segregate into sale of texturised yarn which follows the process of twisting-warping and consumption for weaving of cloth. For twisting and warping entire expenses born at Surat. Textrised and twisted yarn woven at both place Thereafter consumption for weaving of cloth comes into picture which is undertaken at Malegaon and Surat.
In the case of Malegaon following costing is to be made: ,,
1. plain weaving 100 metres per day
2. fixed electric tariff(5)Rs.1 per unit
3. weaving loom of Rs.1500
4. sellingpriceofclothRs.10/11per mtr.
In the case of Surat following costing is to be made
1. jacquard, Design fancy 25 metres per day
2. electric consumption Rs.4/5 per unit
3. Weaving loom of Rs.1 lac.
4. Selling price of cloth Rs.20/22 per metre Raymond cloth woven on weaving loom of Rs.lacs and sold at about Rs.300 per metre.
45. The Ld. AR submitted that apart from difference in weaving the pattern of weaving is required to be noted. At Malegon there are SMC-ITA No. 1837/Ahd/2012 Yes Fashion Pvt Ltd vs. ACIT AY : 2004-05 3 plain looms costing about Rs. 15,000/- without any attachment, weaving about 100 mtrs. per day as against this the weaving loom of the appellant costs about Rs.1.00 lac because of the attachment of jacquard and design and fancy. Cloth is woven of only 25 metres per day. In Maharashtra there is a special relief given to electricity to textile units with fixed electric tariff at Re.1/- per unit as against Rs.4 / Rs.5 per unit in Surat. Selling price of Malegaon cloth is about Rs.10/- to Rs.11/-; that of cloth manufactured in assessee's unit is Rs.20 / Rs.22 per mtr. These are significant differences which have not been considered while making the addition. All looms are not similar; all weaving processes are not similar. For e.g. Raymond Mills weaves cloth on looms which costs Rs.20 lacs and sells at afeout.Rs.300/- per mtr. These facts have to be considered and adhoc addition made of Rs.29 lacs without any basis is required to be deleted.
46. The learned DR narrated the facts of the case and relied on the orders of authorities below.
47. We have considered the rival submissions and perused the materials placed before us. We find from the above the assessee himself is costing Rs.6 per metre whereas the cost of production per meter is charged by assessee is Rs.1.20 meter which is less than the cost incurred by itself. After detailed analysis given by the assessee and considered by Assessing Officer, we feel that the Assessing Officer has made this on the basis of estimation and without any basis and CIT(A) has also upheld the finding of the assessing officer, therefore, we are of the view that the estimation made by Assessing Officer is on higher side. Therefore, we direct the Assessing Officer to consider it to Rs.1.10 per mtr and allow the benefit accordingly."
4. The ld. Counsel for the assessee contends that both the authorities below have failed to appreciate the correct meaning and purpose of the direction; and the AO, without hearing the assessee, and ld. CIT(A), without calling for the remand report, has confirmed the huge addition which is unwarranted and unjustified. It is contended that in the interest of justice, the issue may be set aside and restored back to the file of AO to decide the same afresh after hearing the assessee on the issue. Ld. Departmental Representative has no objection thereon.
5. I have heard the rival contentions, perused the material available on record and gone through the orders of the authorities below. It merges SMC-ITA No. 1837/Ahd/2012 Yes Fashion Pvt Ltd vs. ACIT AY : 2004-05 4 from the record that the ld. AO without hearing the assessee has made the impugned addition and prima facie it appears that the assessee's side on the scope of direction has not been considered. In the entirety of facts and circumstances of the case, the interest of justice will be served if the matter is set aside and restored back to the file of AO to give effect to the ITAT's direction after giving the assessee an opportunity of being heard.
6. In the result, assessee's appeal is allowed for statistical purposes.
Order pronounced in the Court on 17th November, 2016 at Ahmedabad.
Sd/-
R.P. TOLANI
(JUDICIAL MEMBER)
Ahmedabad; Dated 17/11/2016
*Biju T., Sr. PS
आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2.
यथ / The Respondent.
3. संबंिधत आयकर आयु / Concerned CIT
4. आयकर आयु (अपील) / The CIT(A)
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
आदेशानुसार/ BY ORDER, TRUE COPY उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad