Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (9) TMI 442 - AT - Income TaxProfit under head "profits or gains of business or professions" for computation of deduction under section 80HHC of the Income Tax Act, 1961 - AO had made an addition of Rs.1,06,09,194/- because these expenses were unverifiable Held that:- Learned AO disregarded the expenditure to be genuine and added to the income of the assessee - When the profits are recomputed by the learned AO, obviously, it shall be considered as business profits of the assessee unless there is some materials to establish that they are nor arising out of the regular business activity of the assessee and accordingly the relevant provisions of the Act has to be applied either for granting any deduction or computation of tax liability - Revenue has not produced before us any contrary decisions on this issue. Therefore, in the present case, the revenue is directed to adopt under the head "profits or gains of business or professions" the profits declared by the assessee as well as the addition made by the revenue for Rs.1,06,09,194/- being unverifiable expenses and accordingly compute the deduction u/s 80 HHC of the Act Decided in favor of Assessee. Valuation of closing stock - Closing stock valuation, when changed, the opening stock ought to be revalued on the same basis as adopted for closing stock Held that:- Relying upon the various cases, one of which is CIT Vs Dalmia Cement (Bharat) Ltd., [1995 (5) TMI 22 - DELHI High Court], wherein it was held that two principles applicable with regard to the valuation of sock are that the assessee is entitled to value the closing stock either at cost price or market value, whichever is lower, and that the closing stock must be the value of the opening stock in the succeeding year. It is, thus, clear that irrespective of the basis adopted for valuation in the earlier years, the assessee has the option to change the method of valuation of the closing stock at cost or market price, whichever is lower, provided the change is bona fide and followed regularly thereafter. Further, in the present case no any merit in the argument of the learned AR - The learned AO had rejected the valuation of closing stock of the assessee, and in a scientific method as far as possible based on the information furnished by the assessee, had worked out the value of closing stock and made additions thereon. The valuation of the opening stock is not in dispute because the valuation of the closing stock of the preceding year is accepted to be genuine by the assessee as well as by the revenue. Further, even if, there is any error, only at that point of time when such discrepancy which is not deliberate is unearthed, such error needs a correction because only at that point of time when such discrepancy is unearthed the resultant consequence of profit and loss crystallizes. Therefore, the ground raised by Assessee is dismissed Decided against the Assessee.
|