Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (7) TMI 1031 - AT - Income TaxRestriction of Labour charges – Held that:- A reasonable rate should have been applied by CIT(A) - it would be fair and reasonable to allow labour charges as claimed by the assessee - the short comings of the assessee shall also be addressed - an average rate can be allowed instead as claimed by the assessee – The decision in Dy. Commissioner of Income-Tax Versus M/s. M. Kantilal Exports [2014 (7) TMI 819 - ITAT AHMEDABAD] followed - thus, the order of the CIT(A) is modified in respect of an adhoc disallowance– Decided partly in favour of Revenue. Under valuation of closing stock of polished diamonds – Held that:- This year can be treated as a demarcating year from the past years; hence, without disturbing the value of the opening stock, the AO is authorized to change the method of valuation for valuing the closing stock - an average of the two valuations is the right solution - The average of the two valuations - To resolve this long pending issue is a reasonable and fair approach to compute the value of the stock of the polished diamond at an average value of the closing stock - Closing stock of the diamond was and by applying the rate - The decision in Dy. Commissioner of Income-Tax Versus M/s. M. Kantilal Exports [2014 (7) TMI 819 - ITAT AHMEDABAD] followed - the AO is directed to re-calculate the valuation of the polished diamond by adopting the average rate of the two figures and accordingly compute the under valuation of the polished diamonds – Decided partly in favour of Revenue. Valuation of closing stock of polished diamonds - Valuation made without any method – Valuation made at average rate of purchases – Held that:- The valuation of the stock is to be made at the market price or the cost price, whichever is lower - when the complete information about the quality of the stock is not made available then to resolve the issue a middle path is to be adopted - the assessee was in possession of the rough diamond; hence, the difference of the two, i.e., purchase cost (- minus) sale cost is the correct method for determining the valuation of the rough diamond - The decision in Dy. Commissioner of Income-Tax Versus M/s. M. Kantilal Exports [2014 (7) TMI 819 - ITAT AHMEDABAD] followed - the AO is directed to re-compute the valuation of the closing stock of the rough diamonds by adopting an average rate on the same guidelines – Decided partly in favour of Revenue. Admission of additional evidence – Deduction u/s 80HHC – Export realization during extended period – Held that:- The assessee has received approval from the R.B.I, and the realising Bank for extension of period for realisation in terms of section 80HHC (2)(a) of the Act – there was no reasons for not allowing deduction u/s 80HHC of the Act on this realization - The AO is directed to include the said late realisation in export sale proceeds and allow deduction u/s 80HHC of the Act on this amount also – Decided against Revenue. Defects in Labour payment expenses – Held that:- The labour charges are different from lot to lot depending upon the quality of the diamond manufactured - while explaining the correctness of the valuation of the stock in the past year, the assessee himself had taken a plea that the diamonds are of two qualities, a superior quality and inferior quality - the valuation of such type of diamonds effect the overall valuation of the closing stock - it was impractical to pay an identical rate of job charges to all the job workers - Certain other doubts have also been raised such as a huge amount of labour charges remain outstanding at the end of the financial year- the AO is directed to re-compute the disallowance – an average is to be taken for the purpose of disallowance of labour expenses – Decided partly in favour of Assessee.
|