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TMI Blog2015 (7) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... know has erred in law and on facts of the case in deleting the addition without appreciating the facts of Rs. 63,05,208/- on account of suppressed value of closing stock. During the assessment proceeding Assessing Officer noticed that the GP rate decline 6.55% in comparison to last year. On verification of the facts that the Assessing Officer found that the assessee has suppressed the valuation of closing stock. The assessee has taken the average sale price of sugar pertaining to period of April 2010 to August 2010 for valuation. The Assessing Officer rejected the valuation made by the assessee and valued the closing stock based on the principle in the case of CIT vs. British Paints India Ltd., reported in 188 ITR 44 (SC)." 3. Learned D.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock only at actual cost of raw material without taking into account overhead expenses. Under these facts, it was held by Hon'ble Apex Court that such a valuation is not a correct method of valuation and the Assessing Officer is entitled to add overhead expenses. In the present case, the dispute is not regarding addition or non addition of overhead expenses in valuation of closing stock and therefore, this judgment has no applicability in the present case. 6. Now, we examine the applicability of the judgment of Hon'ble Apex Court rendered in the case of Chainrup Sampatram vs. CIT (Supra). In this case, the dispute was that the assessee firm contended that part of silver stock was sold to partners of the assessee firm but the stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A.O. has correctly valued the closing stock on the basis of market price close to 31.03.2010. Hence, in the facts of the present case, this judgment of Hon'ble Apex Court rendered in the case of Chainrup Sampatram vs. CIT (Supra) is also not applicable. 7. Now, we consider the purpose of valuing the closing stock at market price if it is lower than cost. This concept is to book loss, if any, which has taken place up to the balance sheet date due to fall in price up to that date. This cannot be stretched to include future losses because of fall in price after the balance sheet date because that loss is of the next year and should be considered in that year. The only exception can be if the fall in price in future is for the reasons ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educed prices can be adopted as price on balance sheet date but in the present case, this is not a claim of the assessee that there was any defect in the goods at balance sheet date or any other factor was existing at the balance sheet date for which, the prices had fallen after 02.04.2010 and hence, this Para of AS - 2 is also not applicable in the facts of the present case. In fact, this Para supports our observations in Para 7 above. In view of the above discussion, we hold that the order of Cit (A) on this issue is not sustainable. Hence, we reverse the same and restore the order of the A.O. on this issue. 10. But before parting, we feel it proper that in the succeeding year, the opening tock of the assessee should be increased by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on estimated basis without any evidence on record and the relief allowed by the Assessing Officer is also on estimated basis. This is very relevant to note that that it is claim of the assessee that the supplier of the old plant & machinery has delivered the material to assessee's site free of cost and therefore, the assessee was not required to pay any transportation cost. In spite of this, learned CIT(A) has confirmed the addition of Rs. 50,000/- on the basis that the assessee could not adduce sufficient evidence in support of its claim that the suppliers of old plant & machinery had delivered the material to the assessee's site free of cost. Considering all these facts, we are of the considered opinion that no interference is called fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rs. 50,000/- is wholly unjustified on the facts of the case." 18. It was submitted by Learned A.R. of the assessee that in absence of any material or evidence, the finding of the Assessing Officer that the assessee has incurred expenditure on account of transportation and installation of plant & machinery, the CIT(A) was not justified in sustaining the addition of Rs. 50,000/-. 19. Learned D.R. of the Revenue supported the assessment order. 20. We have considered the rival submissions. We find that a clear finding has been given by learned CIT(A) that the assessee could not produce any evidence in support of its claim that the assessee did not incur any expenditure on transportation of old plant & machinery and the same was delivere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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