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The meat is processed as per the availability of animals and is exported as per the requirements of the customers. There is a time lag between the processing and actual export, between which the processed meat is preserved in cold storage. The export needs custom and other clearances and there may be delays on account of non- availability of space in ships to the required destinations. The turnover cannot form the basis of requirement of preservation facilities. There may be times, when there are continuous orders supported by ready availability of animals and space on ships then preservation facilities may not be required. Similarly when there is disproportionate supply of animals vis a vis export orders the processed meat may have to be refrigerated for a longer period of time. The manufacturing activity cannot be closed in case the inventory is piled up. The plant has to run at the appropriate capacity at all times. The premises required for storage does not depend on the quantity sold but the level of stock maintained as per the availability of stocks and requirement of business. Also, the space at the cold storage may not be readily available on a short notice and has to be booked in advance The quantitative details of the opening and closing stock and meat processed are as under:

                                     A. Y. 2011-12           A. Y. 2010-11

Opening Stock                                    11,66,115             8,86,447

Finished      Goods
Purchased                                                              2,29,944





                           I.T.A. No. 4595/Del/2015



 Meat processed                                  175,38,271     172,85,554

 Goods returned                                      1,40,000

                                                 188,44,386     184,01,945
 Sale                                            168,43,496     172,35,830

        Closing Stock :                          20,00,890      11,66,115

Comparative details of total meat processed and closing stock for two years:-

                 A. Y. 2011-12              A. Y. 2010-11

Meat Processed
Muzaffarnagar       1.13.36,007                 1,31,98,066
Mumbai           Rs.62,02,264/-               Rs.40,87,488/-

    Total           1,75,38,271                 1,72,85,554

 Closing Stock         20,00,890                  11,66,115

It can be seen that the processing of meat has from Kg. in the immediately preceding year to 62,02,264 Kg. in the current year at Mumbai. Moreover, the closing stock of meat has also almost doubled in comparison to the immediately preceding year. The meat which has been processed at Mumbai had to be preserved and stored in Mumbai only. For preserving the additional quantity of meat, extra space was required for which additional chamber was taken on hire.

The processing of meat has slightly decreased at Muzaffarnagar but the firm had to maintain an adequate level of storage facilities depending on the peak level of stock.

Due to inadequate supply of meat, additional storage facility was taken on rent at Meerut @ Rs.1 lac per month. The meat is processed as per the availability of animals and is exported as per the requirements of the customers. There is a time lag between the processing and actual export, between which the processed meat is preserved in cold storage. The export needs custom and other clearances and I.T.A. No. 4595/Del/2015 there may be delays on account of non- availability of space in ships to the required destinations. The turnover cannot form the basis of requirement of preservation facilities. There may be times when there are continuous orders supported by ready availability of animals and space on ships then preservation facilities may not be required. Similarly when there is disproportionate supply of animals vis a vis export orders the processed meat may have to be refrigerated for a longer period of time. The manufacturing activity cannot be closed in case the inventory is piled up. The plant has to run at the appropriate capacity at all times. The premises required for storage does not depend on the quantity sold but the level of stock maintained as per the availability of stocks and requirement of business. Also the space at the cold storage may not be readily available on a short notice and has to be booked in advance. The amount of preservation charges have increased because of increase in the storage space taken on rent during the year. The requirement of preservation facilities is the prerogative of the assessee and the assessing officer cannot step into the shoes of the assessee to judge the business expediency of incurring an expenditure i.e. hiring additional chambers. Had additional chambers not been hire it would have resulted in loss of production resulting in more loss the additional cost of chambers.