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2014 (3) TMI 70 - AT - Income TaxAddition made u/s 40(a)(ia) of the Act - Disallowance of transport expenses Held that:- The assessee had produced a Xerox copy of the certificate evidencing payment of TDS during the remand report proceedings, that FAA declined to admit it as the assessee had not furnished any reasonable cause for not producing it before the AO, that he had not doubted the genuineness of the document the assessee should produce all the available evidences before the AO, but if FAA was of the opinion that Remand Report was required in this regard he should have directed the AO to make complete inquiries-either from the bank or from JTS - original TDS certificate can never remain with the person who deducts Tax-he has to hand it over to the person who is entitled to claim credit of such deduction thus, it was not proper to invoke provision of section 40(a)(ia) of the Act thus, the matter is remitted back to the AO for fresh adjudication Decided partly in favour of Assessee. Addition on account of difference in valuation of closing stock Held that:- The difference in valuation was treated under-valuation of closing stock by the AO and same was added to the income of assessee - As per the assessee it was following the FIFO method for valuation of closing stock - AO had adopted the average cost price of POY for arriving at the closing stock for the year under consideration - while finalising the assessment, AO had not challenged the method of valuation of closing stock adopted by the assessee i.e. the FIFO method - As per the settled principles of tax jurisprudence when the assessing authority does not accept the assessee's method of accounting/valuation then he can exercise power under section 145 of the Act to make such computation in such method as he determines fit for deducing the correct profits and gains, but the power of the AO to choose the basis and manner of computation of income is not an arbitrary power to assess the income-he must exercise his discretion and judgment judicially - From the orders of the AO and the FAA it transpires that they have decided the issue of valuation of stock without considering the method of valuation adopted by the assessee thus, the order of the FAA is set aside Decided in favour of Assessee.
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