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2015 (5) TMI 586 - AT - Income TaxValuation of closing stock of Sugar - appellant being covered under Sampat Incentive Scheme - closing stock of levy sugar and work in progress (WIP) were directed to be taken at the same as in force for free sugar by CIT(A) - Held that:- A relying on case of CIT, Coimbatore vs. M/s Bannari Amman Sugars Ltd. [2012 (9) TMI 848 - SUPREME COURT] wherein following the judgment of this Court in Ponni Sugars & Chemicals Ltd.(2008 (9) TMI 14 - SUPREME COURT ) held that the closing stock of incentive sugar should be allowed to be valued at levy price, which on facts, is found to be less than the cost of manufacture of sugar (cost price). We find merit in this contention. In Ponni Sugars & Chemicals Ltd. (supra), this Court, on examination of the Scheme, held that, the excess realization was a capital receipt, not liable to be taxed and in view of the said judgment, thus the assessee is right in valuing the closing stock at levy price. The stock valuation of incentive sugar has a direct impact on the manufacturer's revenue or business profits. If to accept the case of the Department that the excess amount realized by the manufacturer(s) over the levy price was a revenue receipt taxable under the Act then the very purpose of the Incentive Scheme formulated by Sampat Committee would have been defeated. One cannot have a stock valuation which converts a capital receipt into revenue income - thus remit the issues in dispute to the file of AO with the directions to decide the issues in dispute, in accordance with the law laid down in the case M/s. Bannari Amman Sugars Ltd(Supra) - Decided in favour of assessee for statistical purpose.
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