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2012 (3) TMI 528 - AT - Income TaxDisallowance of business loss - Held that:- It shall be in the interest of justice to set aside this issue to the file of the Assessing Officer with direction to verify the facts and allow the claim of the assessee in the assessment year 2000-2001 in appeal before the Tribunal, provided, any similar claim has not been made by the assessee in any of the subsequent assessment years and the claim of the “Mekor” has been allowed by the Hon’ble Bombay High Court and the assessee has in fact complied with and has paid the compensation subsequently on account of loss for non-fulfillment of the contract for purchase of imported news print. Disallowance of bad debts - Held that:- We find that the debts pertained to non-trade parties have not been allowed by the CIT(A) as bad debts. It is not necessary to take any legal steps in order to justify the claim of the bad debts. The amount has been written off in the books of accounts of the assessee and this fact has not been disputed by the Revenue. The CIT(A) has passed a well reasoned order while allowing the claim of the assessee. The CIT(A) has given a finding that the assessee is in the business of dealing in shares and securities and finance and in business various debts had arisen in the past. Method of valuation - Held that:- We hold that there is no mistake in the order of the CIT(A) in holding that such non-existing assets cannot be considered in the valuation of the stock of the assessee and the assessee has justifiably revalued the stock in terms of the method of valuation adopted by it in the year under consideration. The CIT(A) has recorded that it is not the case of the AO that the value shown by the assessee on the basis of net realisable value is not correct. In these facts of the case, we hold that the third objection of the Revenue regarding method of valuation is also not sustainable and there is no mistake in the order of the CIT(A) in deleting the addition made by the AO on this issue Non accepting the assessee’s claim of reduction from sales in this year - Held that:- The assessee has filed its return of income on that basis alone. Even in the revised return of income filed subsequently by the assessee, the sale entries were not reversed by the assessee. The assessee has put forward its claim by filing a letter dated 21-3-2003. The assessee could not state that whether fresh sales were made of the same in the subsequent year or years and have found place in the books of accounts of the subsequent years. In these facts of the case, we are of the considered view that the amount has been rightly taxed in the year under appeal before us and there is no mistake in the order of the CIT(A) in holding that the AO has rightly taxed in the relevant assessment year. Penalty under section 271(1)(c) - disallowance of excess capital loss - Held that:- We find that it is a case of bona fide mistake in calculating the long term capital loss in applying the cost of indexation by the accountant. The CIT(A) has given a finding that complete facts relating thereof were given by the assessee in its return of income filed with the department. In these facts, since the mistake was bona fide in calculation only and the material facts were disclosed at the time of assessment itself, we hold that there is no mistake in the order of the CIT(A) in holding that no penalty was leviable on this issue. Accordingly, the order of the CIT(A) in canceling the penalty is confirmed and this ground of the Revenue’s appeal is dismissed. Penalty u/s 271(1)(c) - depreciation disallowance - Held that:- The depreciation was claimed by the assessee on its business assets. Merely because the assessee was not entitled to double deduction of depreciation as well as deduction under Section 24 of the Act in accordance with the scheme of the IT Act, 1961, it cannot be said that the assessee was guilty of concealment of income or filing of inaccurate particulars of income. The conduct of the assessee was bona fide and it is a case of honest difference of opinion between the assessee and the department regarding the allowability of certain claim of deduction made by the assessee.The assessee has agitated the disallowance in the quantum appeal before the CIT(A) for the relevant year and the deduction being not allowable as per the law, was not allowed to the assessee. There is no material brought on record to suggest that the explanation of the assessee was not bona fide and since the assessee has disclosed all the material facts relating to the claim of the assessee, we hold that it is not a fit case for levy of penalty under Section 271(1)(c) of the Act which is accordingly cancelled and the ground of the assessee is allowed.
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