Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (5) TMI 750 - AT - Income TaxDiminution in value of inventory - A.O. was of the view that in the case of talc and marble lumps the value adopted by the assessee for certain locations was Rs.400/- per Mt. ton. & could not substantiate the claim that it was landed cost - CIT(A) deleted the addition - Held that:- CIT (A) apart from considering the submission of assessee that he had explored the possibility of removing the fungus as informed by one of the major customers so that it could be used but the cost of removal of impurity was very costly and further it was not possible to completely remove fungal growth also considered the documentary evidence like lab report, correspondence from customers, report of independent expert has given a finding that the stock was contaminated by fungal microbacterial growth which necessitated for revaluation of stock duly supported by sound technical and commercial reasons. The aforesaid finding of CIT(A) could not be controverted by Revenue by bringing any contrary material on record. Thus considering the totality of facts and relying on decisions of CIT vs. Bharat Commerce & Industries Ltd., [1999 (8) TMI 41 - DELHI High Court] wherein held that in the case of slow moving items which did not have a ready market, it was permissible for the assessee to adopt a lower value - issue decided against revenue. Expenditure on repairs of plant and machinery - revenue v/s capital - AO observed that assessee had debited these expenses as an Extra ordinary items in its profit and loss account - Held that:- It is an undisputed fact that the machinery was damaged due to earthquake and expenses were incurred for its repairs. It is also a fact that no new asset have come into existence. In the present case what was replaced was only a part of the machinery and not the entire machinery. Nothing has been brought on record by the Revenue to prove that the entire machinery was replaced and the replacement was not a part of the existing machinery. Thus cosedring totality of fact & CIT vs. Tanjavore Textile Mills [2001 (1) TMI 14 - MADRAS High Court] wherein held that expenditure on replacement of worn out parts of machinery is expenditure of revenue character as it is meant to keep the business without break down of machinery and not expenditure incurred for starting a new business. Against assessee. Disallowance of bad debts - CIT(A) deleted the addition - Held that:- CIT (A) while deleting the addition has held that the debt had become bad & considering the nature of the receivable which was long overdue and the difficulties associated with the recovery, the assessee was reasonable in concluding that the amount was not realizable and therefore, it was written off. CIT (A) has also placed reliance on the decision of Tribunal in the case of Oman International Bank Ltd.(2006 (5) TMI 117 - ITAT BOMBAY-H) & Dhall Engineers Enterprise [2006 (11) TMI 99 - HIGH COURT, GUJARAT] - Against revenue.
|