On appeal the High Court held, there is no specific material to substantiate the finding that production cost per quintal in case of eligible unit(80IB unit) is erroneous and hence addition under Section 69C for production cost is unjustified. However, in case of packing material, in absence of inventory of packing material and clear explanation from assessee, addition under Section 69C on this count was justified.
Darshan Singh Samyal v. CIT (2018) 303 CTR 2 /166 DTR 225 / 256 Taxman 224 (J&K)(HC)
S. 69C : Unexplained expenditure – Unexplained expenditure on production is deleted as the relevant records produced by the assessee were found to be in order without any serious errors -Regarding packing material, it has been pointed out that the cost of packing material with regard to the assessee-unit as well as two other units differs, hence, addition made by AO is justified. [S. 80IB]