Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (10) TMI 551 - ITAT MUMBAIValuation of stock - Stock damaged due to Earthquake - Factory was closed for few years - Therefore, CIT deleted addition of valuation of stock - Held that:- The valuation adopted by the assessee is on higher side, therefore, it cannot be said that the valuation adopted by the assessee, which is on higher side than the valuation adopted by the valuation officer KFTZ, which was obtained by the bank directly. It is further noted that after earthquake business of the assessee was closed down and due to dispute between bank and assessee, the entire factory was under the lock and key of the bank. After settlement between the assessee and bank then only the factory was opened and valuation report was obtained by the bank. Thereafter after negotiation certain amount was waived of by the bank. It is further seen that whatever the receipts were received on account of sale of stocks to the sister concern, that was taken by the bank. It is a matter of fact that the stock was lying in the premises from assessment year 2001-02 to assessment year 2005-06 and the said stock was lying in premises which was damaged by the earthquake. It is further seen that the valuation report obtained was filed before the CIT(A) and the CIT(A) asked the assessee company to ascertain from the bank as to valuation of stock done at the time of settlement - CIT(A) remained uncontroverted except that that he has accepted the valuation report in contravention of Rule 46A. The findings of the learned CIT(A) are findings of fact which are given after ascertaining the factual matrix of the case - Decided against Revenue. There was no reason given by the AO as to why the income out of sale of goods was treated as income from other sources as the profit was generated out of sale of stock which was accumulated stock of the assessee out of business activity - CIT(A) was justified in holding that the income out of sale of stock as business income and rejecting the contention of the AO in reducing the value of stock - Decided against Revenue. Income from other sources - Waiver of interest - Held that:- It is not understandable as to how the amount which was waived by the bank was income from other sources as the loan was taken for the purpose of business activity only. The amount payable to various creditor were also on account of business activity. These amounts were offered under Section 41(1), therefore, there was no question of treating the same as income from other sources - Decided against Revenue. Carry forward loss - Provision for bad debts - No business for the last 5 years - Held that:- assessee has sold its old stocks and the profit has been shown as business income. On account of old stock sold; the income has to be assessed as business income. No doubt, there was no use of machinery etc. in the year under consideration and, therefore, the depreciation of the year under consideration is not allowable, however, quantified brought forward business loss and unabsorbed depreciation can be set off against the business income as the business income shown by the assessee is on account of same business activity carried out in earlier years - Decided against Revenue. Capital or Revenue receipt - Written off bank loan - Held that:- if the waiver of term loan is on account of capital asset then the amount of loan, which was waived, was capital asset and, therefore, cannot be brought to tax - Following decision of Mahindra & Mahindra Ltd. Vs. CIT [2003 (1) TMI 71 - BOMBAY High Court] - Decided against Revenue. Loan taken for trading activity (business purposes) and upon waiver amount retained in business - Assessee claimed that the said loan was the capital receipt and has not been claimed as deduction from the taxable income as expenses and therefore, did not come under section 41(1) - Held that amount had become the income of assessee; and hence assessable as business income of assessee – Following decision of SOLID CONTAINERS LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2008 (8) TMI 156 - BOMBAY HIGH COURT] - Decided in favour of Revenue.
|