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2021 (2) TMI 886 - AT - Income TaxDisallowance on account of excess shortage/ breakage to 30% - exceptional inventory loss - disallowance of write off excess shortage of the inventory by the assessee - As argued expenditure incurred by the appellant due to pulling back of inventory from the market on account of expiry of product are normal business expenditure allowable as deduction - assessee is a company engaged in the business of trading of non-alcoholic beverage - HELD THAT:- Assessee furnished the details in respect of loss of finished goods. The BDD policy necessarily applies to the finished goods only. The ld CIT (A) further accepted that possibility of having the inventory loss in the business of the appellant cannot be ruled out. He further considered annual turnover of the assessee and stated that claim of inventory loss is not significant. It was further noted that the ld AO has not brought on record any adverse evidence still he reached at a conclusion to allow only 70% of such loss. Even otherwise, the assessee has claimed such loss on account of passing of the of the expiry date of the finished product of the assessee. The value of such goods is as such Nil as having became non-marketable. It is not the case of the revenue that the assessee has derived any revenue from sale of such goods. Even otherwise, it is not possible. It is also not the case of the ld AO that such losses are claimed by the distributors. Naturally, the distributors will never make such claim on their account when they are clearly distributing stock only. Naturally, that is the risk of marketing company. Therefore, there is no reason to restrict it at an adhoc figure. In view of this, we do not find any justification to restrict allowance of such claim to the extent of 70%. According to us, it should be allowed in its entirety. Such loss is neither stated to be contingent or non-existent. In view of this, we reverse the order of the ld CIT (A) and direct the ld AO to delete the additions/ disallowances being loss on account of passing of the expiry date of the product - Decided in favour of assessee.
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