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2022 (5) TMI 156 - ITAT DELHIAddition on account of Repair and Maintenance of Plant and Machinery on estimate basis - sale of scrap - HELD THAT:- The assessee is a Society registered under the U.P. Cooperative Society Act. Therefore, it has to act within the parameters laid down therein. Before the Ld. AO the assessee explained that it has to take permission of the Administrator of the Society for the sale of scrap. The case of the assessee has all along been that the assessee is adopting the method of accounting on cash basis meaning thereby that as and when the sale of scrap is held in two-three years the same is accounted for. Before the Ld. CIT(A) also it was explained by the assessee that when the scrap is generated out of stores consumption the same is sold with the permission of District Magistrate after inviting tenders and sale of scrap is shown in the year of sale of scrap in the accounts. CIT(A) has accepted it as a matter of fact that the practice of not showing the amount of scrap in its books in the year of generation but accounts for the same as sale in the year scrap generated is sold, is being followed by the assessee since long. The assessee brought on record a chart of sale made of scrap in last years and subsequent year which revealed that during the financial year 2014-15 it accounted for sale of scrap in its books of account. We are, therefore, of the view that there is no valid justification for estimating the value of scrap and making the impugned addition by discarding the method of accounting regularly employed by the assessee - Decided in favour of assessee.
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