Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Income-tax Officer, Ward-1 (1) , Baroda Versus M/s Cube Mines & Minerals (P) Ltd, Baroda.

2015 (6) TMI 712 - ITAT AHMEDABAD

Difference in valuation of closing stock - CIT(A) deleted addition - Revenue argued that the assessee company had not shown any finished or sorted material in the return of income - Held that:- The assessee has placed a paper book containing its audited annual accounts, taxaudit report, certified valuation of stock by expert Lab Technician, invoices for the purchase of raw materials @ ₹ 275/- per MT. Page 32 of the paper book describes sorting of manganese ore in four different rate-wise c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

price. We uphold the CIT(A)’s findings in these circumstances and reject the Revenue’s ground. - Decided in favour of assessee. - ITA No.1752/Ahd/2011 - Dated:- 9-6-2015 - S/Shri Pramod Kumar and S. S. Godara,JJ. For the Petitioner :Shri Dinesh Singh, Sr. DR For the Respondent :Shri S. N. Soparkar, AR ORDER PER S. S. Godara, Judicial Member. This Revenue s appeal for AY 2007-08 arises from the order of CIT(A)-I, Baroda, dated 29.4.2011, passed in the case No.CAB-I/199/09- 10, in proceedings und .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he finding under challenge before us which are as under :- 3. Next ground Of appeal is regarding addition of ₹ 18,40,920/- being difference in valuation of closing ;tock. Appellant company was in the business of purchasing Manganese Ore, sort it out in different quality and sell it accordingly. AO observe d that appellant had shown raw material stock at 35224.104 MT, value of which was shown at ₹ 78,45,708/- in schedule-16 under the head material consumed. Value of stock of ₹ 7 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cause notice was that though it purchased raw material i.e. Manganese Ore waste dump at ₹ 275/- per ton, after sorting out, it obtained different types of realizable products which were valued at lower of cost or market value. Appellant filed detailed valuation of closing stock and submitted that closing stock of 35224.104 tons included raw material without sorting and also waste material remaining after completion of sorting, due to which total quantity of 35224.104 tons could not be valu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d goods. AO proceeded to calculate value of entire closing stock as per purchase rate of ₹ 275/- per MT and made addition of difference of ₹ 18,40,920/- to the value of closing stock. 3.1 In appeal, submissions as under were made:- "The learned assessing officer has added ₹ 18, 40, 920 on account of difference in closing stock as shown in return of income and as computed by the Assessing officer. \ • Observation of the assessing officer: The assessing officer has obse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t's Submission: > Your appellant submits that it values the closing stock of raw material at lower of cost or net realizable value. This policy is in agreement with AS 2 issued by the Institute of Chartered Accountants of India. > The raw material i.e. Manganese Ore produces different realizable products after sorting. Hence the value of such stock of Manganese ore is taken at cost or market value, whichever is lower. Various realizable products obtained after sorting and their sale pr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

qualified lab technician employed by the assessee was produced before the assessing officer. He certifies that the stock of raw material and sorted material is as follows: a) Raw Material: Particulars Qty (Mts) Rate Total ( Rs; Manganese Ore waste dump 12325.39 275 33894 77/- Total(A) 12325.39 33894 77/- b) Sorted Material: Particulars Qty (Mts) Rate Total (Rs) -12%Manganese 22464.59 180 4043 >27 Manganese Ore 434.32 950 412614 Total (B) \ 22898.91 445623; Total (A+B) 35224.104 7845708/- The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r ton to different corporate. The method of valuation of stock is very much prevalent in agricultural produce like tuvar dal manufacturer, tea industry where premium quality product is sold at higher price and thereafter ABC analysis of the products are made and accordingly sale prices are determined. The remaining lowest quality of product or raw material is sold at throw away price and accordingly at the end of the year valuation is made at a cost or market value whichever is lower. In light o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lant 2) Sorting process adopted by the company: The manganese ore is collected from GMDC Ltd situated at Shivrajpur Tal. Halol Dist Panchmdhal. Manganese waste dump is lifted by trucks or tractors to the assessee 's premises and dumped at vibrating screen area. Vibrating screens separate big size particles and small size particles and dust. Then the machines separate the dump category wise and the laborers manually sort manganese contains depending on sizes like from Omm to 2mm, 20mm to 40mm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

system where manganese ore are separated. This magnetic separation system uses the normal sized magnets to separate the iron content from manganese. We attach here with photographs showing the material i.e. waste dump purchased and stored in open, crushing, separating and the manual process of sorting and the different qualities manganese ore/dust lying in stock. 3) Further we submit that normally good rated stock is sold first as it fetches more revenue and requires less efforts to sale. 4) Sub .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion of closing stock at purchase rate is incorrect since material in stock is not the same as material purchased. Considering the above facts we request your honor to delete the additiot is made on account of valuation of closing stock. " 3.1.2 Besides appellant submitted gross profit working for 2007-08 to 2010-11 to contend that GP declared was highest in AY 2007-08 at 56.96% and the valuation of closing stock was therefore justified in AY 2007-08. Appellant also filed copies of bills fo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uded unsorted material as we I as sorted material and valuation of closing stock was done after physical verification. During the year, appellant purchased 40,375.336 MT of Manganese Ore from GMDC Ltd at a price of ₹ 111,03,218/- i.e. at average rate of ₹ 275 per MT. Appellant carried out sorting of a portion of ore purchased as per the process explained and sold 5151.232 MTs of sorted good quality Manganese Ore as well as some Waste for ₹ 1,15,23,157/- i.e. at average rate of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version