TMI Blog2012 (8) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... tock found at the time of survey, could not be sustained in the hands of the assessee - addition on account of excess stock found during the course of survey is restricted to Rs.5 lacs as against the addition of Rs.15,00,210/- made by the AO - appeal of the Revenue is partly allowed. - I.T.A. No.2314/Ahd/2009 - - - Dated:- 1-6-2012 - SHRI G.C.GUPTA AND SHRI A. MOHAN ALANKAMONY, JJ. Revenue by : Shri Rahul Kumar, Sr.D.R. Assessee by : Shri Sanjay R. Shah A.R. O R D E R PER SHRI G.C. GUPTA, VICE PRESIDENT (AZ): This appeal by the Revenue and the cross objection by the Assessee for Assessment Year 2005-06 are directed against the order of the ld.CIT(Appeals)-XX, Ahmedabad dated 02/06/2009. These are being disposed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment basis without payment of a single rupee and was received subject to approval only and the assessee has placed evidence to show that the creditors were paid off only after such goods received were sold by the assessee. He submitted that in the fashion business of sarees, it is a matter of common knowledge that retail sarees goes out of fashion and had become dead-stock for the assessee for which no deduction was allowed by the Department while making addition on account of so-called excess stock. He submitted that the Gross Profit rate of the assessee at 8.46% for the relevant year was better as against Gross Profit rate of 8.35% in the immediately preceding assessment year. 4. We have considered the rival submissions carefully and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these factors have not been considered by the AO while computing the value of excess stock in the hands of the assessee. We find that in the business of sarees, some stock of sarees goes out of fashion and fetches very less value which may have even less than the cost price thereof and no suitable deduction on this count was allowed by the AO while valuing the stock of the assessee. The CIT(A) has recorded that the assessee has produced copies of accounts in respect of several creditors which shows that there is already a trade cycle of 2 to 4 months from the receipt of goods to the payment made by the assessee to the creditors. In these types of cases, some elements of estimate has to be made. Under these peculiar facts and circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case and the material brought on record by the AO. 6.1. The ld.DR submitted that the assessee has incurred interest expenses on non-business purposes and the issue is covered in favour of the Revenue with the decision of Hon ble Delhi High Court in the case of Punjab Stainless Steel Inds. Vs. CIT Anr. reported at (2010) 324 ITR 396 (Del.). The ld.Counsel for the assessee has opposed the submission of the ld.DR. He submitted that the assessee has sufficient interest-free funds in the form of unpaid trade creditors to cover up the amount of interest-free advances granted by the assessee. He relied on the decision of Hon ble Bombay High Court in the case of CIT vs. Reliance Utilities Power Ltd. reported at (2009) 313 ITR 340(Bom. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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