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18. On the basis of the above, he noted that after reducing the weight of empty packets, actual weight of biscuits exceeds the declared weight. He accordingly directed the Assessing Officer to allow adjustment for the excess weight of biscuits on the basis of these results. He further directed the Assessing Officer to get the packets weighed again in case he requires the same and allow adjustment accordingly.

19. As far as the biscuits produced by the contract manufacturers, he agreed with the contention of the learned counsel for the assessee that if the input-output ratio of the own factory is applied to the CMUs also then adjustments which have been allowed in respect of own factory should also be allowed in respect of CMUs. Since the figures of exact wastage are not available, he directed the Assessing Officer to allow the wastage in the same proportion in which it has been allowed in respect of Parle-G production in own factory. He noted that the assessee has worked out the figure of excess/short consumption after taking into account the adjustments 9 ITA 5318 & 5319/M/06 & 447/M/09 ITA 5540 & 5541/M/06 & 683/M/09 M/s. Parle Biscuits Pvt. Ltd.

32. Ground No. 3 in assessee appeal pertain to the disallowance of long term capital loss of `35,58,718/- on account of redemption of preference shares.

33. The facts in brief are that assessee claimed capital loss of `35,58,718/- on account of redemption of preference shares. The total consideration received by assessee on redemption of preference shares has two categories. The preference shares are of SFR Ltd. and Himachal Futuristics Communications Ltd. Both these preference shares were allotted to the assessee company in the month of July 1995 at a face value of `1,000/- and were redeemed in July 1997 at a value of `1,000/-, i.e. same value. In the notes attached to the statement of Income assessee stated that redemption of preference shares amounts to transfer within the meaning of section 2(47) relying on the decision of the Hon'ble Supreme Court in the case of Anarkali Sarabhai vs. CIT 224 ITR 422. Assessee claimed indexation benefit on cost of acquisition of `2 crores thereby arriving at the cost of acquisition at `2,35,58,718/-. The resultant difference was claimed as capital loss on redemption of preference shares. The A.O. did not agree with the above and stated that the receipt of money on redemption has to be treated as dividend within the meaning of section 2(22)(d) relying on the judgement of the Hon'ble Supreme Court in the case of CIT vs. G. Narasimham & Others 236 ITR 327. He held that since the amount was to be covered within the provisions of section 2(22)(d) the question of claiming capital loss does not arise and since redemption has taken place after 30.06.1997 the dividend was not taxable as such. Therefore long term capital loss pertaining to redemption of preference shares at `35,58,718/- was disallowed. Assessee contested the same before the CIT(A). The CIT(A) vide para 9.2 considered that similar issue had come up in A.Y. 1998-99 before the CIT(A) in the case of assessee's holding company Parle Products 16 ITA 5318 & 5319/M/06 & 447/M/09 ITA 5540 & 5541/M/06 & 683/M/09 M/s. Parle Biscuits Pvt. Ltd.

Pvt. Ltd. in which the issue was decided against the assessee. Following the same, on identical facts the ground was rejected. There is no discussion about the issues contested by assessee in the order of CIT(A)..

34. The learned counsel for the assessee placed on record the order of the CIT(A) in the case of Parle Products Pvt. Ltd. for A.Y. 1998-99 wherein the loss in that year was only `41,200/- but most of the discussion of the CIT(A) pertain to sale of 12% preferential shares which are sold through a broker in the market for which loss of `25,54,923/- was claimed but disallowed. He referred to the finding of the CIT(A) in para 10.5 and submitted that this issue was not discussed by the CIT(A) on contentions but rejected only on the reason that the nature of preference shares are not on record. It was further submitted that the appeal of A.Y. 1998-99 in Parle Product Pvt. Ltd. on this issue was still pending but the issue can be decided on merits as there is no discussion on the contentions raised by the assessee. The learned counsel submitted that: -