This appeal of Revenue has been filed against order of CIT(A), Jalandhar, for asst. yr. 1998-99. first two issues raised in this appeal relate to fact that learned CIT(A) was not justified in holding that assessee had maintained complete books of account and, therefore, provisions of s. 145(3) were not applicable and consequent deletion of trading addition of Rs. 62,18,003. facts of case are that assessee was engaged in business of manufacture and sale of glue flakes, technical Gelatin, Ossein, bone tallow and by-product obtained in form of Di-Calcium Phosphate. For assessment year under reference, assessee has shown GP of Rs. 2,59,03,398 on turnover of Rs. 10,07,75,897, which worked out to 25.07 per cent. AO observed that in asst. yrs. 1996- 97 and 1997-98, assessee had shown GP rate of 32.42 per cent and 30.01 per cent, respectively. Thus, he found substantial fall in GP rate. He also observed that account books of assessee were not supported by day-to- day records of consumption of raw material and production of finished goods, by- products obtained, shortages or wastage resulting in manufacturing process. Even auditors in audit report had not mentioned that stock register had been maintained. He also observed that not even single kilogram of process loss or wastage was reflected in quantitative stock details as per column 12 of audit report in Form 3CD enclosed with return. When assessee was called upon to explain reason for fall in GP rate of 4.32 per cent as compared to last year, assessee stated that complete manufacturing, stock and production register were maintained which gave correct picture of business activities of assessee. However, AO observed that there was marginal increase in comparative cost of production, which was substantially neutralized by increase in sale deed (price) of various products. He also observed that in audit report, auditors had mentioned that method of valuation of closing stock was cost price or market price whichever was lower. However, he found substantial difference in cost price and average sale rate, which according to AO was almost static. According to AO, closing stock should have been valued by taking average sale rate and reducing therefrom margin of GP. He, therefore, found that closing stock was undervalued by Rs. 32,56,558. AO also observed that process loss wastage, etc. was not incorporated in audit report. Thus, AO observed that book results were liable to be rejected and income required to be estimated under s. 145(3) of IT Act, 1961. Accordingly, he rejected book results, invoked provisions of s. 145(3) and by applying GP rate of last year made trading addition of Rs. 62,18,003. He also made addition of Rs. 32,56,558 on account of undervaluation of closing stock. But he observed that since trading addition of Rs. 62,18,003 exceeded addition of Rs. 32,56,558, no separate addition on account of undervaluation of closing stock was made because same was covered under trading addition. Being aggrieved, assessee impugned action of AO for rejecting book results and applying provisions of s. 145(3) and also making trading addition of Rs. 62,18,003. It was stated before CIT(A) that assessee had maintained complete books of account, which were also audited, statutory audit report under s. 44AB was also filed along with return. value of semi- finished goods weighing 175.900 MT at Rs. 13,63,753 was duly reflected in closing stock. It was pointed out that observations made by AO that increase in sale rate was much higher than cost of production were not correct because while calculating sale rate, AO omitted to include amount of Rs. 37,75,330 being expenses incurred on cartage charges and packing material debited to manufacturing and trading account. It was also pointed out that GP rate was declared at 23.12 per cent, 32.42 per cent, 30.01 per cent for asst. yrs. 1995-96, 1996-97 and 1997-98, respectively. GP rate for immediately succeeding asst. yr. 1999-2000 was declared at 11.45 per cent, which was less than 14 per cent of GP rate declared in assessment year under reference. assessments for preceding assessment years and subsequent assessment year were completed under s. 143(3). Book results were accepted by AO and no addition for same had been made. Therefore, there was no justification for rejecting book results and for making trading addition for assessment year under reference. It was also pointed out that AO was not correct in observing that assessee had not maintained complete quantitative details of raw material consumed, items manufactured, process loss, etc. It was submitted that such details formed part of audit report filed with return. It was submitted that production was continuous process. Such details were duly prepared by assessee. learned CIT(A) considered these submissions and observed that facts of case were similar to facts of sister-concern, i.e., namely, M/s Protinkem, Jalandhar, where trading addition made by AO was deleted vide CIT(A) s order dt. 16th May, 2002. Therefore, for same reasons, learned CIT(A) deleted addition by observing that there was no justification in rejecting book results and invoking provisions of s. 145(3) of IT Act. Revenue is aggrieved by order of CIT(A). Hence, this appeal before us. learned Departmental Representative heavily relied on order of AO and submitted that submissions in this case were same as made in case of Protinkem [reported as Asstt. CIT vs. Protinkem (2006) 102 TTJ (Asr) 604 Ed.] heard on same date. learned Authorised Representative also heavily relied on order of t h e CIT(A) and reiterated submissions, which were made before authorities below. He further submitted that facts of present case are same as in case of Protinkem (supra), heard simultaneously. submissions made therein may also be taken into account while deciding present appeal. We have heard both parties and carefully considered rival submissions, gone through material and evidence placed on record and also orders of authorities below. We find that facts of present case are absolutely similar to facts in case of Protinkem (supra), which was also heard along with this case. For detailed reasons recorded in our order dt. 15th Sept., 2005 in case of Protinkem (supra), we have held that AO was not justified in rejecting book results, invoking provisions of s. 145(3) and making trading addition. relevant findings recorded in case of Protinkem, (supra) (ITA No. 283/Asr/2002) in paras 7 and 7.1 are as under: "7. We have heard both parties at some length and given our thoughtful consideration to rival contentions, examined facts, evidence and material placed on record. We have also gone through orders of authorities below. From facts discussed above, it is obvious that AO rejected book results mainly on ground that assessee had not maintained day-to- day details of consumption of raw material, items manufactured and quantity of closing stock, GP rate for assessment years was low as compared to earlier assessment years, increase in comparative cost of production was marginal vis-a-vis increase in sale rate and there was no basis for showing process loss. These findings of AO have not been found correct by CIT(A). CIT(A) has clearly mentioned in impugned order that assessee had maintained stock register and quantitative details of consumption of raw material along with production of finished goods were made part of audit report filed with return of income. Nowhere AO has mentioned that assessee was asked to produce stock register and assessee failed to produce same. On contrary, statements placed at pp. 20A to 20F clearly show that quantitative details, working of cost, valuation of closing stock furnished before AO were part of return itself. However, no defects therein have been pointed out by Revenue. Besides, method of valuation of closing stock has not been doubted by Revenue. As regards fall in GP rate, assessee has given proper explanation. Besides facts placed on record do show that GP rate was 25.29 per cent, 31.93 per cent and 25.60 per cent for preceding asst. yrs. 1995-96, 1996-97 and 1997-98, respectively. This again shows variation in GP rate. For immediately succeeding asst. yr. 1999-2000, GP rate shown was 12.13 per cent which was lower than GP rate of assessment year under reference at 20.79 per cent and assessments for all assessment years were completed under s. 143(3). Neither books results were rejected nor any trading addition was made. This fact is very important because in subsequent assessment year, i.e., 1999-2000, fall in GP rate was more than 8 per cent and even process loss was higher at 42 per cent than 40 per cent in assessment year under reference. Still no trading addition was made by rejecting book results. As regards process loss, it is fact that process loss is part of assessee s business. In fact, for assessment year under reference, such loss has been shown at 40 per cent. Such process loss was shown at 42 per cent in asst. yr. 1999-2000 and 43 per cent in asst. yr. 1995-96. assessee has submitted that such loss varied from 38 per cent to 43 per cent in spite of fact that process loss for other years was higher than process loss of assessment year under reference. Still, neither book results were rejected nor any trading addition was made. It is pertinent to mention that AO very well knew that substantial trading addition was made for asst. yr. 1998-99 by rejecting book results and by applying GP rate of 25.60 per cent. In subsequent assessment years, not only GP rate was lower at 12.13 per cent, even process loss was much higher at 43 per cent. Neither book results were rejected nor any trading addition was made. In fact, apart from assessment year under reference, book results have always been accepted by Revenue. Thus, even on merits, we find that book results were not liable to be rejected. Even otherwise, we are of view that principle of consistency demands that similar treatment should be accorded for all assessment years. Reliance i s placed on judgment of Hon ble apex Court in case of Berger Paints India Ltd. vs. CIT (2004) 187 CTR (SC) 193: (2004) 266 ITR 99 (SC), Hon ble Delhi High Court in case of Director of IT vs. Lovely Bal Shiksha Parishad (2004) 186 CTR (Del) 384: (2004) 266 ITR 349 (Del), decision of Tribunal, Chandigarh Bench in case of Dy. CIT vs. United Vanaspati Ltd. (2004) 83 TTJ (Chd)(TM) 201: (2005) 275 ITR 124 (Chd)(TM)(AT). In case of CIT vs. Vikas Chemi Gum India (2005) 196 CTR (P&H) 123: (2005) 276 ITR 32 (P&H), Hon ble Punjab & Haryana High Court has held that if Department did not contest decision of CIT(A) for deleting addition for earlier asst. yr. 1986-87, it could not challenge similar order passed in relation to asst. yr. 1988- 89. No doubt in this case, order was passed by CIT(A), but fact remains that Department has not made any addition for any of assessment years, even though GP rate was low and process loss was higher in respect of many other assessment years as compared to assessment year under reference. Therefore, there is no justification for taking different view for assessment year under reference. Taking into account these facts and circumstances of case and legal position discussed above, we are of considered opinion that CIT(A) was justified in holding that provisions of s. 145(3) were not applicable and consequently trading addition has been rightly deleted. We confirm his order and reject both grounds of appeal of Revenue." facts of present case being identical to facts of abovesaid facts of present case being identical to facts of abovesaid case, decision in case of Protinkem (supra) would equally apply to facts of present case. Respectfully following same, we confirm order of CIT(A) for deleting trading addition and finding that book results were not liable to be rejected and reject first two grounds of appeal of Revenue. next ground relates to addition of Rs. 32,56,558 made by AO on account of undervaluation of closing stock. Briefly stated, facts of case are that AO observed that assessee had valued closing stock at cost price or market price whichever was less. He observed that sale price was uniform throughout year. Accordingly, AO reduced GP rate of 25.70 per cent from average sale price and valued closing stock of Ossien and Gelatine resulting in addition of Rs. 32,56,558. However, no separate addition on this account was made because trading addition of Rs. 62,18,003 covered same. Aggrieved assessee carried matter in appeal before CIT(A). It w s submitted before CIT(A) that assessee had followed same method of accounting, which was consistently followed for valuing closing stock in past and in future. It was argued that while valuing closing stock, AO erroneously reduced average GP rate of 25.70 per cent from sale price, which was defective method to arrive at cost of each product because GP rate varied from item to item. It was explained that GP rate in Ossien was 15.48 per cent, Glue TG 27.83 per cent, but AO reduced it by average GP rate of 25.70 per cent. It was pointed out that if AO had valued correct method instead of reducing average GP from sales, actual figure would have worked out to lesser amount. Accepting contentions of assessee, learned CIT(A) deleted addition by recording following findings in para 3.5 of impugned order: "3.5 I have considered submissions of learned Authorised Representative, heard AO and gone through case records to verify rival contentions. method of valuation adopted by appellant is recognized method, which has been consistently followed, and there is no c h n g e during relevant assessment year. Further, appellant is manufacturing various items and for valuation, average GP earned in that item have to be applied than overall GP which was adopted by AO to work out value of closing stock under these items. By adopting gross margin figure actually earned by appellant under these two products it becomes clear that there is no case of undervaluation of closing stock as made out by AO. calculation of cost of production were enclosed in form of schedules with return of income and same being in consonance with method of valuation of stock regularly followed by appellant, therefore, addition of Rs. 32,56,558 made by AO which is without any basis is deleted. There will be no separate relief to appellant as it is part of trading addition of Rs. 62,18,003 decided in favour of appellant." Revenue is aggrieved by order of CIT(A). Hence, this appeal before us. learned Departmental Representative heavily relied on order of AO. learned Authorised Representative, on other hand, relied on order of CIT(A). Having considered rival contentions, we find no merit in ground of appeal of assessee (sic-Revenue). It is not in dispute that assessee had consistently followed same method of valuation of closing stock, i.e., at cost or market price, whichever is less. This is accepted method of accounting for purpose of income-tax assessments. factual position stated by learned CIT(A) that AO erroneously reduced average GP rate of 25.70 per cent in respect of both items though GP rate varied from item to item is not disputed by Revenue. Moreover, method of valuation of closing stock has been accepted in past and in subsequent assessment years. Thus, in light of these facts and in absence of any material or evidence to show that assessee had undervalued closing stock, we are of opinion that learned CIT(A) was justified in deleting addition. We confirm his order and reject this ground of appeal. last ground of appeal relates to reducing disallowance out of repairs and replacement expenses from Rs. 14,12,100 to Rs. 35,000. facts of case are that AO observed that assessee had claimed expenses amounting to Rs. 28,24,195 (excluding car repairs) for repairs and replacement. He observed that considering WDV of assets at Rs. 55,15,396, expenses claimed on account of current repairs were excessive. assessee was, therefore, asked to furnish details of such expenses. assessee could furnish only combined information of entire expenses of repairs and replacement. However, AO observed that assessee had claimed expenses of Rs. 4,58,728 on account of repair of building, which was beyond his comprehension. Thus, AO disallowed 50 per cent of such expenses and made addition of Rs. 14,12,100. It is worthwhile to mention that AO did not treat expenses of capital in nature. Aggrieved, assessee carried matter in appeal before CIT(A). It was submitted before CIT(A) that expenditure incurred under head repair, replacement and maintenance related to 26 heads like building, boiler, plant and machinery, pipe fittings, tubewell, electrical, scooter, cars, furniture, electric motors, etc. and head-wise details of such expenses were furnished before AO during course of assessment proceedings. Books of account were produced which contained separate ledger account in respect of each head of such expenses. Even copies of certain vouchers called for by AO were furnished. AO has not pointed out any specific items, which were not allowable. reasons for incurring heavy expenses on repair and replacement were also explained due to fact that hydrochloric acid had k corrosive action and it slowly eats iron metal. It was also submitted that in asst. yrs. 1995-96, 1996-97, 1997-98 and subsequent asst. yr. 1999-2000, similar expenses of Rs. 31,22,610, Rs. 24,38,692, Rs. 29,98,869 and Rs. 21,40,692, respectively, were claimed and allowed while completing assessments for these assessment years under s. 143(3) of IT Act. learned CIT(A) considered submissions and restricted claim (sic-disallowance) of assessee to Rs. 35,000 by relying on his order in case of sister-concern, namely, M/s Protinkem. Revenue is aggrieved by order of CIT(A). Hence, this appeal before us. learned Departmental Representative heavily relied on order of learned Departmental Representative heavily relied on order of AO and referred to reasons given for making disallowance on pp. 6 and 7 of assessment order. learned Authorised Representative, on other hand, heavily relied o n order of CIT(A) and reiterated submissions made before CIT(A). He also drew our attention to p. 20 of paper book, which contained head-wise details of expenses claimed on account of repairs, replacement and maintenance. He further drew our attention to pp. 21 to 113 of paper book, which contained complete details of repairs and maintenance expenses, consolidated at p. 20 of paper book. He further submitted that on identical facts, AO had made disallowance @ 50 per cent in case of sister- concern, namely M/s Protinkem. learned CIT(A) deleted disallowance; Revenue has not even filed appeal against order of CIT(A). Thus, he submitted that CIT(A) has rightly deleted addition. We have heard both parties and given our thoughtful consideration to rival contentions, examined facts, evidence and material on record. From facts discussed above, it is obvious that AO has disallowed claim of assessee without examining specific details of expenses. It is not his case that expenditure incurred was capital in nature because no depreciation on same has been allowed. His finding is that 50 per cent of expenses incurred are beyond genuine needs of assessee. Such finding is not supported by any evidence, and material on record. It is claim of assessee, which has not been rebutted by AO that entire expenses were supported by bills and vouchers. genuineness of same has not been disputed by Revenue. Therefore, it is not understood as to how claim of assessee for repairs and maintenance expenses could be disallowed on ad hoc basis because it is not case where it could be said that assessee had incurred such expenses for personal use or has diverted payments to some of its associate concerns. It is also fact that even in past substantial expenses varying from Rs. 24.38 lakhs to Rs. 31.22 lakhs and expenses of Rs. 21.40 lakhs for subsequent year had been claimed and allowed by AO at time of completing assessment for these assessment years under s. 143(3). Therefore, rationale and logic of making disallowance in isolated assessment year is n o t clear to us. In any case, similar disallowance of 50 per cent of such expenses incurred in case of sister-concern, i.e., M/s Protinkem was made where similar expenses at rate of 50 per cent amounting to Rs. 6,12,880 were disallowed. Such disallowance was deleted by CIT(A). Revenue has not even filed appeal against order of CIT(A) on this issue. Therefore, principle of consistency demands that Revenue should have not contested this issue on identical facts in present case also. Reliance in this regard is placed on decision of Hon ble Supreme Court in case of Berger Paints India Ltd. vs. CIT (2004) 187 CTR (SC) 193: (2004) 266 ITR 99 (SC), where it was held that if Department had accepted decision in case of one assessee, Department could not challenge same in case of other assessee without valid reason. Reliance is also placed on judgment of Hon ble Punjab & Haryana High Court in case of CIT vs. Vikas Chemi Gum India (2005) 196 CTR (P&H) 123: (2005) 276 ITR 32 (P&H), judgment of Hon ble Delhi High Court in case of Director of IT vs. Lovely Bal Shiksha Parishad (2004) 186 CTR (Del) 384: (2004) 266 ITR 349 (Del) and decision o f Tribunal Chandigarh Bench in case of Dy. CIT vs. United Vanaspati Ltd. (2004) 83 TTJ (Chd)(TM) 201: (2005) 275 ITR 124 (Chd)(TM)(AT). In light of these facts and circumstances of case, we are of considered opinion that learned CIT(A) was justified in deleting impugned disallowance. We confirm his order and reject this ground of appeal of Revenue. In result, appeal of Revenue is dismissed. *** ASSISTANT COMMISSIONER OF INCOME TAX v. PUNJAB BONE MILLS