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2013 (1) TMI 84 - AT - Income TaxAdditional income toward additional value of WIP - Revised return - AO stated that there was no provision in the Act for allowing deduction for additional income offered for earlier years(s) to cover up the deficiencies in the books of account - Held that:- There is no question in the said Statement of Shri C.Sivarama Prasad, Director, either in relation to any discrepancy in accounts, including WIP or its valuation, or inadequacy of profits disclosed, or share application money, or the question also alluding to land purchased by the assessee company, in the said Statement. In fact, even the assessee referred only to this part of the Statement. There is no whisper of the WIP or its valuation, much less of any discrepancy therein, in the said Statement. As such, the CIT(A) is correct in stating so, holding that the disclosure during survey - implying thus to be for both the years - was not made on account of difference in WIP or stock. The assessee’s claim of the said aspect having attained finality in view of its revised return for AY 2005-06, offering additional income (of Rs.75 lakhs) toward additional value of WIP is without merit. This is as the same (revised return) is only based on, or in terms of (or ought to be so), the declaration made during the Survey, and which is de hors and without reference to any material or evidence as to WIP. The revised return, thus, to the extent it is inconsistent with the same cannot be considered as in pursuance thereto or arising therefrom. The same would therefore require a finding by the AO, accepting the increased value of the closing WIP for that year, to claim for its inclusion as a part of the WIP for the current year. No evidence to substantiate its said claim stood adduced by the assessee either in the assessment proceedings or before the first appellate authority - The increase in the closing stock, is only on account of admission of the corresponding expenditure thereon, which, where not adjusted against the income for the year, gets carried forward in the form of unbilled expenditure. However, as the expenditure is not admissible, there is no question of it being adjusted either against the income for the current or any subsequent year, i.e., by being carried over as unbilled expenditure, so that it would result in a net increase in the income for the year of expenditure, with no implication for any other year. The appellate order by the CIT(A), holding that the disclosure of Rs.50 lakhs for the current year as toward reconciling all differences, while rejecting an attempt by the AO to disturb the assessee’s valuation method, thus, has to be viewed as correcting this anomaly. No infirmity therein. Method of valuation - Held that:- Nothing on record to hold it as inadequate. Further, there is also nothing on record to show that the changed/enhanced allocation has been insisted upon and applied by the Revenue for the succeeding years as well, as any change has necessarily to be regularly followed, or else would lead to a distortion in profits across different years. As such, confirm the assessee’s valuation method for the current year, so that no interference therewith, as made by the AO, is called for. Disallowance for Rs. 2 lakhs qua ‘Entry Tax’ - CIT(A) deleted the addition - Held that:- While the AO presumes that entry tax is only for fresh purchase, the CIT(A) admits and accepts assessee’s explanation at face value, i.e., de hors any material. The question is not if the machinery is old or new, as the assessee could well have purchased some old machinery, but whether it is a purchase or acquisition of a capital asset or not, from where to where, and for what purpose, is the machinery being moved - the matter is restored back to the AO for proper examination and a decision in accordance with law, consistent with the facts of the case Disallowance of fees paid to the Registrar of Companies - same is paid toward increase in share capital - Held that:- As clarified by the assessee, with reference to the various forms for which the filing fees stands paid, and to which reference was also made by the during hearing, it is only in respect of registration of charges, appointments of Directors, etc. No case for disallowance, under the circumstances, is made out, and the same stands rightly deleted by the ld. CIT(A).
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