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2. The first common issue, in appeal of Revenue and assessee's CO, is against the order of CIT(A) in restricting the addition made by Assessing Officer on account of sawing labour expenses, postage, angadia expenses and factory expenses. For this, Revenue has raised the following ground No.1:-
"[1] On the facts and in the circumstances of the case and in Law, the Ld. CIT(A)-III, Surat has erred in restricting the addition of Rs.8,25,483/- to Rs.1,00,000/- made by the Assessing Officer on account of Sawing labour expenses, postage and Angadia Expenses and Factory Expenses."

And assessee has raised the following ground No.1 in CO against the order of CIT(A) in confirming the addition on account of showing labour expenses, postage and angadia expenses and factory expenses made by Assessing Officer.

"1) The learned CIT(A) grossly erred in confirming addition of Rs.1,00,000/- out of showing labour expenses, postage and angadia expenses and factory expenses."

3. The brief facts leading to the above issue are that assessee-company has carried out on two types of business activity i.e. manufacturing, trading and export of diamond and generating of power through wind mills. The assessee-firm has filed its return of income declaring total income of Rs.16,85,54,275/- on 30-10-2005 along with audit report in Form No.3CA and 3CD, profit and loss account, balance sheet and audited accounts. The case was selected for scrutiny and the notice u/s.143(2) and 142(1) were issued and served upon the assessee-firm. During the course of assessment proceedings, Assessing Officer noticed that disallowance of Rs.75,74,742/- being 50% of bogus labour charges paid to four parties, who in their statements, recorded u/s.131 admitted that they were merely name lenders and they had not done any job work for the assessee. Aggrieved, assessee preferred appeal before CIT(A). The CIT(A) restricted the disallowance at Rs.1 lakh by stating that the Assessing Officer failed to point out any defects and ACIT Cir-5, SRT v. M/s. JB Brother Page 3 the disallowance was made only for the sake of making some addition. Aggrieved, now Revenue and assessee came in cross appeal before Tribunal.

4. At the outset Ld. Counsel for the assessee, Shri K.K.Shah stated that in earlier year in assessee's own case in ITA No.3687/Ahd/2007 dated 05-02- 2010 for assessment year 2004-05, wherein the Tribunal confirmed the order of CIT(A) in para-13:-

"13. The Assessing Officer has merely observed that personal use expenses cannot be ruled out and, hence, 10% of the expenses are disallowable. The assessee has been exporting diamond. In connection with export, the foreign travel was undertaken and complete details were find in this regard. Out of the total expenses incurred on account of sewing labour, postage and angadia, factory expenses and foreign traveling expenses, 10% expenses are disallowed on adhoc basis. The vouchers in this regard have been produced. When the major expenses is in relation to factory expenses, sit cannot be said that, they have any personal element. Similarly, for postage and angadia expense also, there cannot be any personal element. Foreign expenses are exclusively for the purpose of business. When the assessee filed the details, it is the duty of Assessing Officer to find out which expenses are not incurred for the purpose of business. In absence of any such finding, the disallowance was rightly deleted by the Learned CIT(Appeals) has also upheld disallowance of Rs.1 lac for the possible personal use out of all these expenses, the same being reasonable did not call for any interference."