M/S Sorabh Cement Ltd., Kapil Mandi, Neem Ka Thana, Distt. Sikar, Rajasthan v. Asstt. Commissioner Of Income-Tax, Circle-Sikar, Rajasthan

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 135 / 2017 M/S Sorabh Cement Ltd., Kapil Mandi, Neem Ka Thana, Distt. Sikar, Rajasthan ----Appellant Versus Asstt. Commissioner of Income-Tax, Circle-Sikar, Rajasthan ----Respondent _____________________________________________________ For Appellant(s) : Mr. Tanuj Agarwal For Respondent(s) : Mr. Daksh Pareek for Mr. Sameer Jain _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYASJudgment 05/12/2017 1.By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasallowed the departmental appeal for statistical purposes andrejected the cross-objection filed by the assessee. 2.This Court while admitting the appeal framed the followingsubstantial question of law: “(i) Whether in the facts and in thecircumstances of the case and in law, the learnedITAT has rightly upheld disallowance of servicetax expenditure amounting to Rs.1,68,000/- onfreight for transportation of goods by holding thatthe assessee is not beneficiary of such transportpayment in any manner, therefore, the assesseehas no liability to bear the respective service taxliability, whereas the provisions of the FinanceAct, 1994, relating to service tax read with Rule2(1) (d) of the Service Tax Rules, 1994, providesforpaymentofservicetaxbyconsignor/consignee on reverse charge basis oncircumstances of the case and in law, the learnedITAT has rightly upheld disallowance of servicetax expenditure amounting to Rs.1,68,000/- onfreight for transportation of goods by holding thatthe assessee is not beneficiary of such transportpayment in any manner, therefore, the assesseehas no liability to bear the respective service taxliability, whereas the provisions of the FinanceAct, 1994, relating to service tax read with Rule2(1) (d) of the Service Tax Rules, 1994, providesforpaymentofservicetaxbyconsignor/consignee on reverse charge basis on the freight for transportation of goods through agoods transport agency. (ii) Whether in the facts and circumstances of thecase and in law, the learned ITAT has rightlyupheld the rejection of entire books of account byinvocation of the provisions of section 145(3) ofthe Income Tax Act, 1961 and that too on minormistake in supplementary records, whereas,Hon’ble Rajasthan Court in the case of UttamChuna Pathar Udyog vs. ITO reported at 192 ITR56 (Raj.) has held that minor defects should notlead to rejection of books of account.” 3.On the first issue, counsel for the appellant has taken us to the order of the Tribunal wherein it has been observed as under: the freight for transportation of goods through agoods transport agency. (ii) Whether in the facts and circumstances of thecase and in law, the learned ITAT has rightlyupheld the rejection of entire books of account byinvocation of the provisions of section 145(3) ofthe Income Tax Act, 1961 and that too on minormistake in supplementary records, whereas,Hon’ble Rajasthan Court in the case of UttamChuna Pathar Udyog vs. ITO reported at 192 ITR56 (Raj.) has held that minor defects should notlead to rejection of books of account.” 3.On the first issue, counsel for the appellant has taken us to the order of the Tribunal wherein it has been observed as under: “6.4 We have heard the rival contentions andperused the materials available on record. Wefind that the AO has rightly observed that sincethe assessee is not beneficiary of such transportpayment in any manner, therefore, the assesseehas no liability to bear the respective service taxliability. Accordingly, the service tax payment ofRs.1.68 lacs was held as not incurred wholly andexclusively for the purpose of business purposesof the assessee and the same was considered asinadmissible u/s 37 of the Act which has alsobeen sustained by the ld. CIT(A) also. In view ofthe above deliberations, we feel that the ld.CIT(A) has rightly sustained the addition. ThusGround No.3 of the C.O. of the assessee isdismissed.”perused the materials available on record. Wefind that the AO has rightly observed that sincethe assessee is not beneficiary of such transportpayment in any manner, therefore, the assesseehas no liability to bear the respective service taxliability. Accordingly, the service tax payment ofRs.1.68 lacs was held as not incurred wholly andexclusively for the purpose of business purposesof the assessee and the same was considered asinadmissible u/s 37 of the Act which has alsobeen sustained by the ld. CIT(A) also. In view ofthe above deliberations, we feel that the ld.CIT(A) has rightly sustained the addition. ThusGround No.3 of the C.O. of the assessee isdismissed.” 3.1It is contended that the Tribunal has not allowed the payment made for service tax which was paid to the transporter. 3.2On issue No.2, he has taken us to of the order of AO wherein it has been observed as under:- 3.3 The explanation filed by assessee, vide para3 of letter dated 27-12-2010 is as under:- “Sir, the stock summery given to you on dated1.11.2010 has same quantity of all purchases asmentioned in the details of purchases and booksof accounts. All the purchases are verifiable fromthe bills of purchases and can be verified. Youmay kindly verify the quantity of both thestatements. We are producing copy of stock registers and purchase bills and all the books foryour kind verification. 3.1It is contended that the Tribunal has not allowed the payment made for service tax which was paid to the transporter. 3.2On issue No.2, he has taken us to of the order of AO wherein it has been observed as under:- 3.3 The explanation filed by assessee, vide para3 of letter dated 27-12-2010 is as under:- “Sir, the stock summery given to you on dated1.11.2010 has same quantity of all purchases asmentioned in the details of purchases and booksof accounts. All the purchases are verifiable fromthe bills of purchases and can be verified. Youmay kindly verify the quantity of both thestatements. We are producing copy of stock registers and purchase bills and all the books foryour kind verification. It is further submitted that the assesseemaintains books of accounts in computer. Thebooks are maintained at neemkathana office andstock register, excise record, wages register andother factory records are maintained at factorysite. The stock register is also maintained atfactory in computer system. As per companyprocedure, the goods are being received atfactory and stock keeper/factory accountantenter the quantity at computer. No financialbooks are being maintained at factory exceptwhich are required. Sometimes, the stockkeeper/factory accountant enter the value of thegoods also. Since the goods are being received atfactory during the day and night. It is theresponsibility of factory staff to enter the goodsreceived at factory immediately. Whenever thegoods are received at the factory day hours ornight, the entries are made by the persons incomputer. But due to mistake or due to oversight or lack of account knowledge he also enterthe value in the computer. Even at factory, theyare suppose to maintain and control quantitativedetails. Again when bills of the parties are sent tofactory for verification whether goods arereceived or not, then it seems that factory staffare enter the value of goods. Thus thequantitative has been correctly maintained butlack of knowledge of the computer and accounts,the factory persons enter the value wrongly.When your goodself asked for factory recordrelated to quantity. We submitted the computergenerated quantitative details which alsoproduced/submitted the wrong value figure. Thewrong figure may be due to computer softwareaverage system or malfunctioning/virus incomputer system. It is further submitted that coke dust, clinker andbags are excisable items. The excise paid onthese purchases are input for payment of exciseby the assessee. We are producing copies of theexcise monthly return which is alsoaudited/checked from time to time by excisedepartment. The quantitative which the assesseehad purchased/value has been entered andexcise input has been claimed. Further we areenclosing photocopy of stock register maintainedby assessee which also tally with the purchasebills. Purchase bill are being submitted andproduced. Further we have already submitted the copy ofthe sales tax assessment order. This being theclerical mistake while feeding the computerentering by untrained computer staff who do nothave any account background at all. Thequantitative details of the statement of factoryandNeemkathanaissame.”The assessee had also filed similar explanationvide letter dated 29-12-2010 stating that someof the purchase bills were entered twice. 3.3He also taken us to the remand report which reads as under: 3.5 As regards the difference in productionfigures of 44816 MT as per audit report and45023 MT as per monthly returns of production,the assessee has explained alongwith evidencesthat by mistake, closing stock of cement ofFebruary month of 207 MT was included inproduction of March, which resulted in reflectionof excess production as per excise records. Theevidences produced by the assessee in support ofsuch submission appear to be verifiable andhence are required to be considered accordingly. 3.3He also taken us to the remand report which reads as under: 3.5 As regards the difference in productionfigures of 44816 MT as per audit report and45023 MT as per monthly returns of production,the assessee has explained alongwith evidencesthat by mistake, closing stock of cement ofFebruary month of 207 MT was included inproduction of March, which resulted in reflectionof excess production as per excise records. Theevidences produced by the assessee in support ofsuch submission appear to be verifiable andhence are required to be considered accordingly. 3.4So also the observations made by AO and contended that thebooks of accounts were wrongly rejected. 3.5He further contended that the Tribunal has seriouslycommitted an error in remanding the matter back to the AO. 3.6While considering the issue of 145(3), he relied upon thefollowing decisions: (i) Commissioner of Income Tax vs. Gotan Lime KhanijUdhyog (21.07.2001 - RAJHC) : MANU/RH/1022/ wherein ithas been held as under: 7. Both these provisions do not envisage that byresorting to best judgment assessment theassessing authority must reach to a differentfigure of income and profit than what has beendisclosed by the assessee. Best judgment is alsoto be based on the material available on record.Therefore, notwithstanding rejection of books ofaccount the material disclosed by the assesseealong with other material that may be collectedby the Income Tax Officer forms the basis of computation of income. On that basis whatconclusions are to be reached is independent ofresults shown in the books of accounts, if anymaintained by the assessee, section 145 onlyprovides the basis on which computation ofincome is to be made for the purpose ofdetermining the amount of tax payable by anassessee. The provision by itself does not dealwith additions or deletion in the income.Therefore, merely because there is somedeficiency in the books of account or merelybecause of rejection of books of account it doesnot mean that it must lead necessarily toadditions in the returned income of the assessee.What changes in either case is the basis forcomputing the income chargeable under the head"Profit and gains of business or profession" or"Income from other sources". The result woulddepend on the other principles of computing theincome. Therefore, we hold that merely changingthe basis or method of arriving at end result ofworking out the computation of taxable incomeunder the Income Tax Act, necessarily doesresult in devising at profit or gains from businessor other sources different from one returned byassessee, where he has returned his income anddifferent from the result reached by assessee asper method of accounting employed by him, byadopting different basis by the assessingauthority. (ii) Uttam Chuna Pathar Udyog vs Income-Tax Officer, 199865ITD 460 JP on 14 August, 1997 wherein it has been held asunder: 11. This brings us to as to what would constitutecorrect accounts or correct profits as envisagedin Section 145(2). Section 145(2), no doubt,refers to correctness of the books. But simply, afew clerical errors, lack of some vouchers, non-maintenance of a particular record, does notperse render the accounts incorrect. In spite ofthese defects, the profits may be deducible.Thus, before involving the provisions of Section145(2), it is the duty of the Assessing Officer toshow how, because of these defects, correctprofits are not deducible; and correct books ofaccount do not mean that it should be correct toevery pie, or, that each and every record oughtto have been maintained with zero error. It is atall order to expect such state of affairs and onlya utopist is entitled to have such expectation.Correct books of account has to be understood as fairly correct books of account. Thus a fewmissing vouchers or a few defects here andthere, strictly speaking, may render the books tobe incorrect, but yet, they may be fairly correct.In such case, it is more appropriate to makelegitimate disallowances, rather than reject thebooks whole hog. Profits deduced from suchfairly correct books are near to real income liableto tax than the income determined by wildestimates.The Indian Companies Act, 1956 alsoenvisages that the profit and loss account of acompany should reflect a true and fair view ofthe profit or loss. Thus, in case of corporatesector, which is supposed to be more organised,the taxing authorities, though unconsciously,start the computation of income from fair profitsor losses, then why that insistence of onehundred per cent accuracy and correctness incase of other assessees. 12. Thus, in the instant case, none of the reasonsmentioned by the Assessing Officer are suchwhich could have shaken the confidence of aperson with average wisdom, in the booksmaintained by the assessee. The provisions ofSection 145(2)are wrongly invoked.mentioned by the Assessing Officer are suchwhich could have shaken the confidence of aperson with average wisdom, in the booksmaintained by the assessee. The provisions ofSection 145(2)are wrongly invoked. (iii) The aforesaid view was confirmed by this Court in CITVs.UttamChunaPatharUdyog,[2001]116TAXMAN524(RAJ) wherein it has been held asunder:- 2. We are satisfied that there is no error in theorder passed by the Tribunal, Jaipur, in rejectingthe application under section 256(1) of theIncome Tax Act, 1961 and holding that whetherin a particular facts and circumstances, books ofaccount could have been rejected or not is afinding of fact and does not call for interferenceand no question of law arises. This is more sowhen no perversity has been shown in reachingsuch finding so as to raise the question of lawrelating to the findings of facts by pointing outthat finding of fact stands vitiated and not bindinon this court in reference application. The otherconclusions are being subordinate to rejection ofbooks also fall in the same category. (iv) Malani Ramjivan Jagannath vs. Assistant Commissionerof Income Tax(2007)207 CTR Raj 19 (26.10.2006 -RAJHC) : MANU/RH/0436/ Wherein it has been held as under: 10. In the face of these undisputed facts andcircumstances, the Tribunal in our opinion couldnot have interfered with the order of CIT(A). Indoing so, it had ignored all admitted facts noticedby us above, in the face of which there was nooccasion for the AO to have resorted to estimatemethod. The GP is primarily result of excess ofsales over purchases, opening stock, closingstock, the unsold stock at two terminals is onlybalancing factor. Admittedly out of this fourcomponents of trading result, there could nothave been any ground for the Revenue to arriveat different result. So far as closing stock isconcerned, inventories of existing stock were notfound to be incorrect by the AO i.e. that positionof stock as shown in the account books was notincorrect. There being no dispute about the salesand purchases, non-maintenance of stockregister lost its significance so far as arriving atGP is concerned. Therefore, the CIT(A) was rightin his reasoning about admitted state of affairs.Resorting to estimate of GP rate was founded onno material. It was merely a case of makingcertain additions on the basis of certain defectspointed out by the AO and which he has shown indifferent account by giving margin of unvouchedexpenses. He has disallowed certain expenses. 11. The Tribunal committed basic error in notappreciating the reasoning given, by the CIT(A).It is trite to say that in the facts andcircumstances of present case, account books aremaintained as they were ordinarily maintainedyears after years and which were found to yield afair result. Mere deviation in GP rate cannot be aground for rejecting books of account andentering realm of estimate and guesswork. LowerGP rate shown in the books of account duringcurrent year and fall in GP rate was justified andalso admitted by the AO as well as CIT(A) as wellas the Tribunal. Therefore, fall in GP rate lost itssignificance. Having accepted the reason for fallin GP rate, namely, stiff competition in marketand also that huge loss caused in particulartransaction, neither the rejection of books ofaccount was justified nor resort to substitution ofestimated GP by rule of thumb merely for makingcertain additions. We are, therefore, of theopinion that the findings arrived at by theTribunal suffers from basic defect of not applyingits mind to the existing material which wererelevant and went to the root of the matter.When all the data and entries made in thetrading account were not found to be incorrect in any manner, there could not have been any otherresult except what has been shown by theassessee in the books of account. We are,therefore, unable to sustain the order of theTribunal. (v) Commissioner of Income-Tax, West.. Vs. PadamchandRamgopal AIR 1970 SC 1575, 1970 76 ITR 719 SC Wherein ithas been held as under: 1. These appeals by certificate arise from thedecision given by the High Court of Calcutta infive references made by the Income-taxAppellate Tribunal, Bench 'B', Calcutta underSection 66(2)of the Indian Income-tax Act,1922. The High Court has answered thequestions referred to it in favour of the assessee.In support of the return made by him, theassessee, a Hindu Undivided Family carrying onbusiness in various items including moneylending produced his account books. The Income-tax Officer rejected those accounts as unreliableand assessed the assessee on the basis of bestjudgment by adding to the income returned byhim various sums ranging from Rs. 17,951 forthe assessment year 1956-57, to Rs. 21,536 forthe assessment year 1954-55. The fiveassessment years with which we are concernedin this case are 1953-54, 1954-55, 1955-56,1956-57 and 1957-58. The Income-tax Officer inhis order did not give any reason for not relyingon the accounts submitted. On appeal, theAppellate Assistant Commissioner after goingthrough the notes prepared by the Income-taxOfficer found that in his investigation, theIncome-tax Officer had found that one of theitems of interest received by the assessee duringthe accounting year relating to the assessmentyear 1953-54 had not been brought to accountand another entry relating to the receipt ofincome during that year was not correct. Neitherthe Appellate Assistant Commissioner nor theIncome-tax Officer found any mistake in theaccounts relating to other accounting years. Thetwo mistakes noticed by the Appellate AssistantCommissioner are insignificant mistakes. Furtherthey afforded no basis for rejecting the accountsfor the other years. Both the Income-tax Officeras well as the Appellate Assistant Commissionerarbitrarily added to the total income returned halfthe amount of gross receipts shown by theassessee under the head "interest" during eachyear as escaped income. The tribunal did not examine the facts of the case afresh. It justadopted the findings of the Appellate AssistantCommissioner. The questions referred to the HighCourt was whether upon the facts admitted orfound by the Appellate Tribunal, it was justified inholding that the Income-tax Officer had rightlyadded an income of Rs. 18050 in the assessmentyear 1953-54, Rs. 21536 in the assessment year1954-55, Rs. 18321 in the assessment year1955-56 and Rs. 17951 in the assessment year1956-57 and Rs. 20547 in the assessment year1957-58. (vi) Pr. CIT Vs. Handmade Paper & Board Industries D.B.ITA No.237/2016 (RAJHC) decided on 23.10.2017 wherein ithas been held as under: 5. Counsel has also sought our attention to theorder of the Tribunal, wherein t has beenobserved as under:- 4. Now the revenue is in appeal before us. The ldDR has vehemently supported the order of theAssessing Officer. At the outset, the ld AR of theassessee has reiterated the arguments madebefore the ld CIT(A). He has further argued thatthe assessee had not maintained the stockregister and manufacturing process of productsmanufactured by the assessee are socomplicated and number of items manufacturedare in number of quantities and there aredifferences, finished process and also the size,length and width of production is different, whichcannot be possible to maintain stock register,therefore, the assessee has not ACIT Vs. M/sHandmand Paper & Board maintainedquantitative and qualitative stock register, butthe assessee had recorded purchase and sale andother expenses on the basis of bills vouchers andclosing stock was taken on the last of theprevious date, which has been verified andvalued property and disclosed in the P&L accountand balance sheet. He further argued thatwhatever defects pointed out by the AssessingOfficer are not sufficient to justify the rejection ofbooks of account U/s 145(3) of the Act. The ldAssessing Officer made the addition on theground that in preceding year, the GP was higherthan the GP disclosed during the year underconsideration but in the business line, thenumber of internal and external factors affect theperformance of the business. Some of them arebeyond the control of the assessee. The market competitive, there is recession in other countries,which affects the assessee, demand and supplyand also price. The ld Assessing Officer applied33% GP without pointed out any specific defectsin the books of account or bringing out anymaterial on record. He further relied on thedecision of Hon'ble Rajasthan High Court in thecase of Gotan Lime Khanij Udhyog (supra)wherein it has been held that rejection of booksof account U/s 145(3) does not always lead to anaddition in every such circumstances, even ifthere is fall in GP ratio asACIT Vs. M/s HandmandPaper & Board such. Considering these case laws,the ld CIT(A) restricted the addition, therefore,he prayed to uphold the order of the ld CIT(A). 5. We have heard the rival contentions of boththe parties and perused the material available onthe record. Whatever defects pointed out by theAssessing Officer is not justified, the rejection ofbooks of account U/s 145(3) of the Act. Theassessee's manufacturing processes are socomplexed that at every stage, the size, lengthand width of products changed and also thenumber of process in the manufacturing ofhandmade papers but the assessee hasmaintained proper purchase, sale and otherexpenses on the basis of bill/vouchers.Therefore, we uphold the order of the ld CIT(A).” 6. Counsel for the respondent has relied uponthe decision of Gujarat High Court in D.B. IncomeTax Appeal No.1249/2017,wherein it has beenobserved as under:- 5. We have heard the rival contentions of boththe parties and perused the material available onthe record. Whatever defects pointed out by theAssessing Officer is not justified, the rejection ofbooks of account U/s 145(3) of the Act. Theassessee's manufacturing processes are socomplexed that at every stage, the size, lengthand width of products changed and also thenumber of process in the manufacturing ofhandmade papers but the assessee hasmaintained proper purchase, sale and otherexpenses on the basis of bill/vouchers.Therefore, we uphold the order of the ld CIT(A).” 6. Counsel for the respondent has relied uponthe decision of Gujarat High Court in D.B. IncomeTax Appeal No.1249/2017,wherein it has beenobserved as under:- 6. Insofar as the question raised in Tax AppealNo. 1249 of 2007 is concerned, it is a matter ofrecord that the assessee did maintain all theRegisters, verification of which had duly beenmade by the A.O. The books of accounts of theassessee were periodically checked by therevenue authorities. It appears that in thesubsequent year i.e. in assessment year 1995-96, the same G.P. rate has been accepted by theDepartment. It is a fact that the cost of rawmaterials has increased. It is also seen that100% goods are sold to its sister concern andtherefore the question of GP does not arise. TheA.O. could not find that the assessee had soldfinished goods at a lesser price to its sisterconcern. In our opinion, low profits and absenceof regular stock register are not sufficientreasons for rejection of the accounts of assessee.Hence, the CIT (A) and Tribunal were justified indeleting the addition. Both the authorities below have considered the materials placed beforethem and we see no reason to interfere with thesame. Accordingly, we answer the issue raised inTax Appeal No. 1249 of 2007 in favour of theassessee and against the Department. 7. Now, insofar as, the questions raised in TaxAppeal No. 1250 of 2007 and Tax Appeal No.1253 of 2007 are concerned, in paragraph No. 14of its judgment, the Tribunal has observed asunder: "14. Now coming to the second aspect thatworkers engaged by labour contractors are to becounted while counting number of workers. Theanswer is in affirmative and it is supported by thedecision of Jurisdictional High Court in the case ofCIT vs. Prithviraj Bhoorachand (supra) whereintheir Lordships have observed as under:- have considered the materials placed beforethem and we see no reason to interfere with thesame. Accordingly, we answer the issue raised inTax Appeal No. 1249 of 2007 in favour of theassessee and against the Department. 7. Now, insofar as, the questions raised in TaxAppeal No. 1250 of 2007 and Tax Appeal No.1253 of 2007 are concerned, in paragraph No. 14of its judgment, the Tribunal has observed asunder: "14. Now coming to the second aspect thatworkers engaged by labour contractors are to becounted while counting number of workers. Theanswer is in affirmative and it is supported by thedecision of Jurisdictional High Court in the case ofCIT vs. Prithviraj Bhoorachand (supra) whereintheir Lordships have observed as under:- "As can be seen, the term employed by thestatute is, "employs" twenty or more workers.The plain dictionary meaning of the said term'employ' is to use the services of a person inreturn for payment. Clause (iv) of s. 80I(2) ofthe Act does not contemplate the additionalrequirements – which have been read into thesame by the CIT. As long as the industrialundertaking manufacturers articles or things; andwhere the manufacturing process is carried onwithout the aid of power, it employs twenty ormore workers, the requirements of the provisionare fulfilled. When the provision is clear andunambiguous, there is no need to read anythingmore into the same, as is sought to be done bythe Revenue. This Court in the case of CIT v. V.B.Narania & Co. MANU/GJ/0339/2001 : 171 CTR(Guj) 416 : 252 ITR 884 (Guj), where in the factsof the said case, the ITO has disallowed the claimfor deduction under Ss. 80HH and 80J of the Act,on the ground that the assessee got certainprocesses done from outsiders on the piecemealbasis and that the assessee had not providedregular employment to any person in itsmanufacturing process, held that the Tribunalwas right in coming to the conclusion that thepersons doing the work were employed by theassessee because the assessee was controllingnot only the work to be done by those personsbut also the manner of doing of the work. TheCourt further held that the Assessing Officer andthe AAC were not right in holding that theconcerned persons were not employees becausethey were being paid on piecerate basis or jobwork basis. In the present case, the Tribunal has found that the assessee has the ultimate controlover the affairs of the establishment and that theindustrial undertaking of the assessee wasemploying more than 20 workers through thecontractor. Applying the principles laid down bythe aforesaid decision to the facts of the presentcase it cannot be said that the Tribunal was notjustified in holding that the assessee isemploying 20 workers in its industrialundertaking as contemplated by the provisions ofcl. (iv) of sub-s.(2) of s. 80-I of the Act." There isno dispute to the extent that if number ofworkers employed by labour contractors isincluded then the number of workers employedby see is sufficient for fulfillment of the conditionlaid down in this regard. In our view of thesituation, we hold that assessee has fulfilled therequirement of minimum number workersemployed in the manufacturing process for thepurpose of eligibility of deduction under section80IA. The grant of depreciation on the itemsexcluded by CIT (A) from plant and machinerybecome irrelevant in view of the decision of Hon.Jurisdictional High Court in the case of CIT vs.Prabhudas Kishordas Tobacco Products (P) Ltd.(supra) as depreciation on the relevant asset hasto be allowed as per provisions of IT Actirrespective of the fact that what constitute"plant and machinery" for the purpose ofdetermining whether a unit is small scaleindustrial undertaking eligible for deductionunder section 80IA. Thus there is no force in thesaid contention of Revenue that it has beenwrongly held by CIT (A) that the excluded itemsare eligible for depreciation at different rate. Inview of above discussion, grounds No. 4 & 5 areallowed for statistical purposes." (vii) Mehar Chand Jain And Sons Vs. CIT Jaipur & Ors. D.B.ITA No. 191/2010 (RAJHC) Decided on 29.5.2017 Wherein ithas been held as under: 3. This court while admitting the appeal on 5.5.2010 framed following substantial question oflaw:- "Whether the revenue authorities are permittedto invoke Section 145(3) of the Income Tax Acteven in the cases where varacity and correctnessof the books of accounts is substantially acceptedby them?" 5. We are of the opinion that the issue is requiredto be answered in favour of the assessee. 5.1 However, it will not be treated as a precedentfor the subsequent year. It will be open for thedepartment to consider assessment ofsubsequent year independently. The appeal stands allowed. 4.We have heard learned counsel for the parties. 5.On first issue, contention raised by the appellant is required to be accepted inasmuch as the cement industry whentransportation is made by the manufacturer and transporter hasdone service on behalf of appellant assessee. In that view of thematter, he has to realize all expenses of the transporters includingtax paid by the transporter. In that view of the matter, issue No.1is required to be answered in favour of assessee and against theDepartment. 6.However, on issue No.2, in view of observations made by AOthat there are serious discrepancies in the stock register, the viewtaken by the AO as well as CIT (A) is required to be accepted.However, it will be open for the appellant assessee to rely uponthe decision of this Court in the case of books of accounts wherethis Court has taken a view of average GP or NP on the basis oflast five years. 7.Thus, the issue No.2 is answered in favour of Departmentand against the assessee. The appeal stands partly allowed to the extent as indicated above. (VIJAY KUMAR VYAS) J. (K.S. JHAVERI)J.