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2016 (12) TMI 677 - ITAT BANGALOREAddition for alleged under-valuation of closing stock - Held that:- As submitted by assessee that screening & crushing expenditure was also incurred in the next year and therefore, no cost was included on that account also. This explanation of assessee was rejected by the AO, but in view of this factual position that in the tax audit report for the year ending 31.3.2008, it was reported by the auditors that assessee is valuing its closing stock at cost on FIFO basis, it has to be accepted that if closing stock at the end of the present year is without any processing such as screening, crushing etc. and without shifting; the screening, crushing and shifting charges cannot be added to the valuation of closing stock in the present year and therefore, if the total amount of cost of production in the present year after excluding plot rent is considered, it will amount to valuation of closing stock at a cost including such charges also i.e., screening, crushing and shifting charges, whereas the closing stock was without screening, crushing and shifting. Hence, we are of the considered opinion that in the facts and circumstances of the present case as discussed above, the addition made by the AO in valuation of closing stock is not proper and justified and hence we delete the same - Decided in favour of assessee Disallowance of JD Plot rent - Held that:- AO himself has accepted that the plot was used for the purpose of sister concern M/s. Obulapuram Mining Co., and goods are in fact sold by the assessee to this sister concern and delivery at this plot was an important aspect for affecting this sale as per the assessee. Hence, the facts are not in dispute and under these facts, the judgment of the Hon’ble Apex Court rendered in the case of S.A. Builders (2006 (12) TMI 82 - SUPREME COURT ) is applicable as per which, if the expense has incurred expenses for business expediency and third party also gets some benefit in the process, then also, the expenditure is allowable. Respectfully following the judgment of the Hon’ble Apex Court and considering the facts of the present case as discussed above, we are of the considered opinion that the expenses incurred by the assessee on account of rent of the plot in question is an allowable business expenditure and therefore, we delete this disallowance - Decided in favour of assessee
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