TMI Blog1991 (8) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... uced the addition to Rs. 78,358 by giving an adjustment of the sum of Rs. 1,05,930, which the assessee had already disclosed as the value of the semi-finished goods. On appeal the learned CIT(A) deleted the addition by observing as below: "28. I have verified the figures as given by the learned counsel. The figures as given above are properly explained and they give no room for drawing inference that the assessee is suppressing manufacturing of certain items and selling them outside the books of account. The ITO has not brought any items of such suppressed sales, which could be reflected either from her assessment order or from the books of account maintained by the appellant company. The addition of Rs. 78,358 so modified under s. 154 also does not deserve to be sustained and it is deleted." 4. The learned Departmental Representative read through the assessment order to support the addition in question. The assessment order specifically says that the addition is in respect of the suppressed value of closing stock, but the Assessing Officer has failed to justify this assumption. He has mentioned that the value adopted by the assessee of the various items of semi-finished goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od relevant for asst. yr. 1983-84 the liabilities so created were debited in the P L A/c. It is also accepted that the company has not accepted sales-tax assessment order, therefore, no payment has been made by the company so far. In the Assessment order dt.10th March, 1986, the ITO inadvertently quotes the provisions of s. 43B. Since the liability of sales-tax do not relate for the year under consideration, the liability is disputed and no payment has been made during the year, it will be allowed when finally settled and paid by the assessee in the subsequent assessment year. Hence application of the assessee on this point is rejected." 8. In the appeal that had already been filed before the CIT(A), the assessee's plea was partly accepted in respect of a sum of Rs. 28,000 (wrongly mentioned as Rs. 2,800) and the disallowance of the balance was upheld on the ground that the demand had not been created during the year under consideration. The learned counsel for the assessee contended that the observation of the CIT(A) that the demand was not created during the year under consideration is incorrect. He pointed out that neither in the assessment order nor in the order passed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were statutory liabilities and even if the assessee was challenging the same a deduction in respect thereof could legally be claimed, in view of the law as laid down by the Hon'ble Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd. vs. CIT (1971) 82 ITR 363 (SC). In our view, therefore, the whole of the amounts in question were allowable as deduction on account of liability for sales-tax in computing the assessee's income and accepting the assessee's plea on this point we order accordingly. 10. The next item is about a disallowance of Rs. 3,550 made by the Assessing Officer under s. 80VV. The Assessing Officer has not given any details and he has merely mentioned that the disallowance is for the excess over Rs. 5,000. Before the CIT(A) it was contended that out of the two items of expenditure, the one in respect of Rs. 5,550 was about payment to Shri M.M. Kaushik for appearance in income-tax cases, while the other payment of Rs. 3,000 was to Shri Anoop Sharma only for consultation. The learned CIT(A) has observed that s. 80VV applies to payments for consultation as well. Sec. 80VV applies to expenditure incurred by an assessee in respect of any proceedings before any inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en that there was variation in the closing stock value submitted to the bank and as credited to the P L A/c. Variation was in respect of two motors of 100 HP of Rs. 21,000 and variation for Bore Hole II Stage of Rs. 4,500. Thus, a sum of Rs. 24,500 is being added back to the total income of the assessee. Addition is being substantiated by the fact that for asst. yr. 1982-83 CIT(A),Meeruthas upheld that assessee cannot submit two different valuation to the bank and to the Income-tax Department." 13. The CIT(A) deleted the addition to the extent of Rs. 4,500 in respect of Bore Hole II Stage, but he upheld the addition of Rs. 21,000 in respect of the motor. The CIT(A)'s reasoning is given in paragraph 20 of his order as below: "The learned counsel submitted that there was only one motor of 100 HP and not two motors as mentioned by the ITO. The value of this motor was shown as Rs. 25,000 in the opening stock and the same value was taken, though the value of this motor was shown at Rs. 46,000 while pledging it with the bank for obtaining overdraft. He also submitted that there was no base left of the matter during the year under consideration. This motor was purchased for Rs. 32,272 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 272 and shortly after the close of the accounting period it was sold for Rs. 36,350. Assuming that the assessee was valuing the closing stock at cost or market price, whichever is lower, we are of the view that the motor should have been valued at Rs. 32,272 and, therefore, an addition of Rs. 7,272 was required. We, therefore, reduce the addition to Rs. 7,272 only. 16. The last point raised by the assessee is about a disallowance of Rs. 4,250 out of consumable stores. This is 10 per cent of the expenditure and the disallowance was made because the assessee could not reconcile the expenses as mentioned in the ledger and the consumable stores A/c. The Assessing Officer has mentioned that on the 5th of May, the expenditure as mentioned in the consumable store a/c was Rs. 163.80, while in the store ledger the same was mentioned as Rs. 102.60 p. and that the assessee could not reconcile the same. The learned CIT(A) has upheld the disallowance. Before the learned CIT(A) it was explained that the entry dt. 5th May in the consumable store a/c represented three items of expenditure totalling Rs. 163.80p and the three items of Rs. 102.60, Rs. 27 and Rs. 34.20 P had been on 2nd May, 1982, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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