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6.2.3 The assessee before the Ld. AO further submitted that during the year under consideration, the assessee has claimed total expenses of Rs. 34,55,98,856/- out of which expenses of Rs. 28,16,21,522/- were incurred in respect of freight and clearing charges as detailed under:

a. Expenses incurred in respect of freight and forwarding and handling charges Rs. 5,89,62,327/- for the Goods Transported from Indian port to work site.
b. Expenses incurred in respect of freight and Clearing Charges of Rs. 22,26,59,195/- only for the Goods Transported from China port to Indian Port 6.2.4 However, the revenue was recognized from the activity of freight forwarding, clearing, and handling is only of Rs. 21,84,48,388/-, therefore, the loss of Rs. 6,31,73,134/- was incurred due to the activity of freight forwarding and handling service and ocean freight.
The AO both in the order as well as remand report stated that the appellant had failed to explain huge losses incurred, Further it was stated that the variation in oil prices had a limited impact on losses which was quantified at Rs42.10 lacs (approx.) by the AO. The appellant submitted before me that it had matched all expenses incurred towards ocean freight and forwarding and handling with corresponding income on APL. In this respect the appellant company extensively placed reliance on the chart, submitted during the course of the assessment proceedings. This chart is attached as Annexure-1 forming part to this order. Details of revenues and expenses for the aforementioned activities are summarized in tabular format as under: 
        Revenue from Operations:       Amount (Rs.)              Total (Rs.)

        Forwarding & Handling          21,84,48,388              26,57,45,191
        Charges (Including Freight &
        Clearing Charges)

        Operating Expenses:

        Forwarding & Handling          28,16,21,522
        Charges
        (Including Freight &
        Clearing Charges)
                                                                 34,55,98,856
The appellant company is in fact responsible for transportation of equipments from China to India, custom clearance. The appellant was further responsible for unloading the goods and transporting the cargos to project site. Part of the contract for l.e. for port handling and transporting the cargos to the job site was awarded to J.M Baxi.& Co. Contract between the J.M baxi and the ITA nos.1129/AHD/2014 Asstt. Year 2008-09 wih 6 others appellant was also produced before me along with all the invoices and worksheets (on sample basis.). The appellant also produced all the invoices raised on the APL against forwarding and handling Income. These invoices were sent to the AO for his verification and comments; however no deficiencies have been pointed out by the AO. Appellant company raised a consolidated invoice for all the above services l.e. transportation of equipments, custom clearance and transferring the cargos to the project site. This also become abundantly dear from the narration given in the copy of invoice raised on the appellant company on APL. The description used in each invoice is " Transportation of Goods from the port in China to Port in India, Clearance, Port Handling and Forwarding the goods to Mundra Power Station site The AO has observed vide para 8.1 of the order that the appellant company could explain/justify only Rs 42,10,807 / of losses on account of oil price variation which mainly impacts ocean freight charges. I am of the opinion that the quantification of Rs 42.10 lacs arrived is completely unjustifiable. In doing so the AO has conveniently ignored the fact that the appellant was raising composite invoices. While the invoices rose on APL is a composite invoice as discussed above, the AO has considered only ocean freight expenses incurred for shipping cargos from China to India. The AO completely disregarded Rs. 5,89,62,327/- incurred for port clearance, and forwarding the goods from Mundra Port to the power site. The above expenses have been paid to parties like J.M.Baxi& Co. and Aditya Marine copies of contract, invoices, vouchers etc. have been compiled in the paper book and verified as well. No discrepancies have been pointed out by the AO either in the body of the order or in his remand report in this respect. Therefore the finding of the AO that the appellant company did not elaborate as to how variation in oil prices had impacted the loss is completely misplaced and not Justifiable.

in this order in para above against which the appellant-company has filed detailed submissions. I shall, therefore, proceed to deal with the reasons cited by the AO for rejecting the books of account.

(1) Huge gap in Income and Expense, limited impact of ocean freight expenses.

The AO in the order has stated that, time and again the appellant company has failed to explain the reason for huge losses incurred. Further, the AO has stated that the oil price at a limited impact in the loss and that the appellant company had not submitted any evidence with respect to the impact of oil price of ocean freight. In this respect, the appellant company extensively placed reliance on the submissions made by it during the assessment proceedings. The appellant-company had also submitted that the break-up of revenues and expenses for each and every activity i.e. forwarding and handling freight as well as erection, commissioning and installation. The revenue from forwarding and handling including freight and clearing charges is substantially less than the related expenses. Thus it becomes abundantly clear that the losses have been incurred mainly due to incurrence of huge ocean freight expenses and lesser realization by the appellant-company from its employer. It is also not disputed that the appellant-company is in fact responsible for transportation of equipment from China to India, clearing them and thereafter unloading them and then transport the Cargos to the project site. Part of the contract i.e. port handling, transportation of cargos has been awarded to the sub-contractor viz. J.M. Baxi & Co and other sub-contractors. The appellant company submitted copy of the contract as well as copy of the invoice and ledger copy of sub-contractors before me. No specific deficiency has been pointed out by the AO in respect of the above expenses. The appellant-company has raised a consolidated invoice for all the above services viz. transportation of equipment, custom clearance and transferring goods to the project site.