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2011 (10) TMI 153 - AT - Income TaxDisallowance of future estimated losses - mercantile system of accounting - AS-7 issued by ICAI - AS-1 and AS-2 notified under Income Tax Act - lower of cost or the Net Realisable Value (NRV) - method of valuation of work in progress. - Held that:- the claim of the assessee has been strongly disputed and therefore, in our view, the issue has to be decided under the provisions of law and not as per Accounting Standard AS-7 which has not been notified by the Government. The cases cited by the assessee are, therefore, of no help. The assessee had also not pressed the application of AS-7 before CIT(A), as the same has not been notified by the government. Even before us emphasis was placed only on AS-1 as notified by the government. - we do not see any infirmity, in the order of CIT(A) in allowing the loss only to the extent, it related to the WIP at the end of the relevant year. The order of CIT(A) is accordingly upheld. Addition on account of sale of TDR - the sale value of TDR in excess of the corresponding estimated value of TDR considered for the purpose of computation of anticipated loss or sale value of TDR received in excess of the TDR entitlement considered in the estimate is required to be added and in case sale value or entitlement is lower than the estimated rate, deduction has to be allowed. The expenses have already been considered in computation of anticipated losses. However, if actual expenditure is in excess of the estimated expenditure, the excess expenditure has to be allowed. - matter remanded back for fresh consideration. Addition under section 115JB - any addition on account of disallowance of prior period expenses while computing book profit is not permitted in view of the judgment of Hon'ble Supreme Court in the case of Apollo Tyres Ltd. [2002 (5) TMI 5 - SUPREME Court].
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