Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (7) TMI 1381 - AT - Income TaxOver valuation of the closing stock - computation of opening and closing balances - HELD THAT:- We do agree on the last bit of submission of ld. AR that whatever the value of the stock has been accepted by the AO as closing stock during the impugned assessment year, the same should have been taken as the opening stock in the succeeding assessment year i.e. in A.Y 2002-03. We noted that in the succeeding assessment year, the AO has taken the opening stock to be at Rs. 2,92,49,971/- instead of Rs.2,07,38,120/-. To that extent the AO was bound to give effect in the succeeding assessment year. Whatever will be the closing stock of the impugned assessment year, the same will become the opening stock of the succeeding year. In view of this fact and in the absence of evidence being brought on record by the ld. AR, we confirm the action of the AO of reducing the closing stock by Rs.85,11,851/- during the impugned assessment year but direct the AO to reduce the opening stock in the succeeding assessment year 2002-03 and give the credit to the Assessee in accordance with law in the succeeding assessment year. We, accordingly, dismiss ground no. 2 taken by the Assessee. Deduction u/s 80HHC(1A) as a supporting manufacturer - HELD THAT:- As the section allows the supporting manufacturers to claim deduction of the profit derived by it from the sale of the goods or merchandise to the export houses or trading houses in respect of which the certificate has been issued by the export or trading house. There is no compulsion whatsoever that the export house has to necessarily export the goods only in that year in which it has purchased the goods from the supporting manufacturers. The fact that the certificate has been issued by the export houses prove that the goods purchased from the Assessee (supporting manufacturer) were ultimately exported and that should enable the supporting manufacturer to claim appropriate deduction under the section in the year of its supply to the export house. There cannot be any other interpretation of this provision. We, accordingly, set aside the order of CIT(A) and allow ground no. 3 taken by the Assessee and direct the AO to allow the claim of the Assessee u/s 80HHC(1A) during the impugned assessment year. Cessation of liability u/s 41(1) - AO noted that the sundry creditors and loans and advances taken by the Assessee are being carried forward for many year - HELD THAT:- For the addition made u/s 41(1) the onus, in our opinion, lies on the Revenue to prove that the liability has ceased during the impugned assessment year. Merely liability has become barred by limitation will not prove that the liability of the Assessee has ceased. The liability ceases when it has become barred by limitation and Assessee has unequivocally expressed its intention not to honour the liability even when demanded. Our aforesaid view is duly supported by the decision of Chase Bright Steel Ltd [1988 (12) TMI 80 - BOMBAY HIGH COURT] We, therefore, set aside the order of CIT(A) and delete the addition made by the AO as ultimately the addition which remains sustained by CIT(A) relates to the sundry creditors and the liability outstanding against the Assessee. Unrecovered balance in respect of the advances the same has already been allowed by the AO while making the net addition even though these unrecovered debtors have to be allowed, as observed by us earlier, in the year in which they have been written off. We, therefore, set aside the order of CIT(A) and delete the addition respectfully - Ground taken by the Assessee stands allowed.
|