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2022 (7) TMI 551 - AT - Income TaxDisallowance of provision for Inventory obsolescence - assessee Company has also written off the obsolete inventory on actual basis to create the provision for inventory obsolescence - HELD THAT:- The accounting standard 2 on valuation of inventory issued by the ICAI which clarified that, inventories are required to be valued at lower cost or net realizable value. As per the statement showing details of inventory obsolescence for the assessment year under consideration, the goods have been already expired and is not marketable or saleable condition. The Hon'ble High Court in the case of CIT Vs. Woodward Governor India Pvt. Ltd. [2009 (4) TMI 4 - SUPREME COURT] held that the amount to provide and loss account debited to profit and loss account in accordance with applicable accounting standard issued by ICAI should be allowed for the purpose of the Act. Also in the case of HOTLINE TELE TUBE & COMPONENTS LTD. [2008 (8) TMI 6 - HIGH COURT DELHI] held that the provisions for diminution in value of stock was allowable as deduction. The similar view has also been taken by the Jurisdictional High Court in CIT Vs. Huges Communication India Ltd. [2013 (3) TMI 352 - DELHI HIGH COURT] - Thus we are of the opinion that provision for inventory obsolescence for the year under consideration is allowable deduction. Accordingly, we allow the Grounds of Appeal No. 1, 4 & 5 of the assessee. Nature of receipt - treating the excise duty subsidy as capital receipt - HELD THAT:- The said unit due to their presence in the notified area have availed the benefit in the form of excises duty subsidy - Therefore, the Ld. A.O and the CIT (A) should have allowed the claim of the assessee by treating the excise duty, subsidy as capital receipt. The similar issue has been arose for consideration in the case of Modern Papers [2021 (6) TMI 620 - ITAT DELHI] wherein by relying on the decision of the Co-ordinate Bench in the case of Crystal Coal Protection Pvt. Ltd. [2019 (12) TMI 980 - ITAT DELHI] allowed the claim of the assessee therein by treating the excise duties subsidy as capital receipt. Appeal of assessee allowed.
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