Case Law Details
Schott Glass India Pvt. Ltd Vs. ITO (ITAT Mumbai)
We notice that assessee is in the business of manufacturing glass tubes and in the manufacturing, the melted glass has to pass thru feeder/nozzles in the furnaces. The temperature in which the melted glass is passed through feeder or nozzles at 1600 degree or more. It is not disputed that the assessee has to use the special metals like rhodium and platinum in the production process. In order to reduce the cost of utilization of precious metals, assessee entered into lease agreement to utilize the leased feeder/nozzles from the M/s Schott AG, its parent company. Assessee has accordingly utilized the machineries leased from the parent company and as per agreement, assessee has to reimburse the loss of precious metals in production process. During this AY, it was quantified and reimbursed to its parent company. There is no dispute on this account. However, assessee also purchased precious metals from M/s Ravindra Heraeus Pvt Ltd and replaced the eroded metals in the production process. We notice that AO has rejected the purchase of metals with the observation that the vendors has raised the bill as sale of precious metals rather than raising bill for refurbishment of the nozzles or feeder. Further he observed that the loss of precious metals were quantified by the assessee and as per agreement, it was reimbursed to its parent company. There is no other loss incurred by the assessee during this year. Therefore, assessee cannot claim any loss during this year.
We observe from the certificate issued by technical engineers from the company that assessee has purchased these precious metals and the internal technical department has carried out the respective work of re-fabrication of damaged feeders/nozzles. Therefore, in our considered view we do not notice anything wrong in purchasing of the precious metals and carrying on repair work of the machineries internally by the assessee. Accordingly ground No. 2 raised by the assessee is partly allowed.
FULL TEXT OF THE ITAT JUDGEMENT
The present appeal filed by the assessee is against the final order of assessment passed u/s 143(3) r.w.s. 144C(1) of I.T. Act, 1961 in pursuance of the directions issued by the Dispute Resolution Panel (in short ‘DRP’) u/s 144C(5) of the Act vide order dated 22.12.2015 for AY 2011-12.
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