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2015 (11) TMI 1309 - PUNJAB & HARYANA HIGH COURT

2015 (11) TMI 1309 - PUNJAB & HARYANA HIGH COURT - TMI - Addition on account of closing work in progress - ITAT deleted the addition - Held that:- Nothing has been brought by the AO or nothing has been demonstrated by the AO that the method adopted by the assessee is different as required by the revenue and how the profit has been under estimated has not been worked out properly. The AO has relied upon the measurement book of Jalandhar Improvement Trust and the same has been applied on the other .....

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appellant-revenue warranting interference by this Court. - Decided against revenue - ITA No. 356 of 2014 - Dated:- 14-10-2015 - Ajay Kumar Mittal And Ramendra Jain, JJ. For the Appellant : Mr. Vivek Sethi, Advocate, Adv For the Respondent : Mr. S. K. Mukhi, Adv JUDGMENT Ajay Kumar Mittal, J. 1. This appeal has been filed by the revenue under Section 260A of the Income Tax Act, 1961 (in short, "the Act") against the order dated 27.12.2012, Annexure-3 passed by the Income Tax Appellate .....

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d CIT vs. British Paints India Limited (1990) 91 CTR (SC) 108 :(1991) 188 ITR 44 (SC)? ii) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was justified in deleting addition of ₹ 38,000/- on account of disallowance of interest on interest free loans ignoring the decisions of Hon'ble P&H High Court in the cases of CIT vs. Varinder Agro Chemicals Limited (2006) 205 CTR (P&H) 334, CIT vs. Avery Cycle Industries Limited, (2006) 206 CTR (O&H) .....

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s, the Assessing Officer noted that the assessee had not shown any closing stock or closing Working in Progress (WIP) in the profit and loss account/balance sheet for the year ending 31.3.2007. The assessee had not maintained stock register. The method of valuation of closing stock was stated to be at cost or market value whichever was lower. The Assessing Officer made the following additions on account of closing stock/WIP:- a) Material : ₹ 22,27,607/- as per the details furnished by the .....

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sing Officer also made addition of ₹ 78,000/- on account of disallowance of interest on interest free loans. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 21.12.2010, Annexure 2, the CIT(A) partly allowed the appeal confirming the following additions:- i) Closing work in progress ₹ 36,41,702/- ii)Disallowance of interest on interest free loans ₹ 38,000/-. The assessee filed second appeal before the T .....

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With regard to question No.(i), the Assessing Officer made certain additions on account of closing Stock/WIP. The CIT(A) on appeal gave partial relief to the assessee but confirmed the additions on account of closing work in progress and disallowance of ₹ 38,000/- on account of interest on interest free loans. The Tribunal on considering the matter recorded that since the assessee had been following the same method of accounting consistently for many years, in the absence of any justificat .....

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the Tribunal read thus:- "8. We have heard the rival contentions and perused facts of the case. There is no dispute to the fact that the assessee has been following the same method of accounting consistently for many years as pointed out at PB-12. This fact has not been rebutted by the revenue. Therefore, it is undisputed fact that when method of accounting has been followed consistently and in the absence of any justification by the lower authorities in their orders, a different methodolo .....

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