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2018 (6) TMI 414 - AT - Income TaxAddition on account of shortage of stock - Held that:- Explanation given by the assessee is not strong enough to justify the fact of theft specially taking into consideration the conduct of the assessee in not taking proper steps to control the situation. The assessee ought to have taken proper/adequate measure to save the loss of the company, as claimed. No proper explanation is forthcoming form the assessee in this respect. We think it fit to delete 10% of the addition in the total income as undisclosed stock of MS Scrap (wrong cut) as ordered by the AO - Decided partly in favour of assessee. Addition towards undervaluation of closing stock - method of accounting to be followed - Held that:- We find that the assessee has followed FIFO method while determining the cost of inventories. The raw materials were correctly valued following the Accounting Standard at cost or market value which ever is lower as shown by the assessee. The ld. CIT(A) without taking into consideration this particular aspect of the matter followed the observations made by the ld. AO which is unjust and we therefore deleted the addition of ₹ 5,58,525/- to the total income of the assessee on the ground of under valuation of stock of raw material - Decided in favour of assessee. Addition u/s 40(A)(2) - remuneration given to lady directors - Held that:- If the lady directors are not involved in pure managerial or supervising work of the assessee company their contribution to some extent cannot be brushed aside. Both the AO as well as the CIT(A) indirectly accepted that to certain extent the women directors are rendering services to the benefit of the assessee company. Furthermore, taking into consideration the return of income of these lady directors it can also not be said that the income has escaped taxation. We, therefore, think it fit to allow 30% of the remuneration given to these lady directors. - Decided partly in favour of assessee. Disallowance of depreciation - Held that:- The assets acquired by the assessee company on lease were ready to use though not used in the business for whatever reason the assessee is entitled to get relief of deprecation as charged on these assets and we therefore quash the order passed by the ld. CIT(A) and delete the addition made by the ld. AO - Decided in favour of assessee.
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