Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding


  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2015 (11) TMI 1438

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... is allowable u/s 31 of the Act. Therefore, for allowing the claim of insurance expenditure u/s 31 of the Act, this aspect is not relevant as to whether this is capital expenditure or not as per this judgment of Hon'ble Andhra Pradesh High Court. Respectfully following this judgment of Hon'ble Andhra Pradesh High Court, we hold that the disallowance made by the Assessing Officer and confirmed by CIT(A) on account of payment of insurance premium is not proper and justified. We, therefore, delete the same. - Decided in favour of assessee. Addition in the value of closing stock - CIT(A) confirming the addition by discarding the recognized method of valuation of closing stock, namely, weighted average cost as consistently adopted by the assessee and accepted by the Department and by imposing the Fifo- Method of valuation of closing stock by the A.O. - Held that:- The addition made by the Assessing Officer is not justified because he cannot reject a recognized method of valuation of closing stock followed by the assessee and accepted by the Department in assessment year 1997-98 and 2004-05 as per assessment orders passed by the Assessing Officer in those years u/s 143(3) of the Act. .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... - - - Dated:- 9-10-2015 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER For The Appellant : Shri Pradeep Seth, C.A. For The Respondent : Shri Amit Nigam, D.R. ORDER PER A. K. GARODIA, A.M. This is assessee s appeal directed against the order passed by learned CIT(A)-I, Kanpur dated 06/02/2015 for the assessment year 2001-2002. 2. Ground No. 1 is as under: 2. That the learned C.I.T.(Appeals) has erred in law and on facts in confirming the disallowance of ₹ 5,000/- under the head General Expenses without appreciating the assessee's written submissions filed before her on the above issue and judicial pronouncements relied upon therein. 3. It was submitted by Learned A.R. of the assessee that ground No. 1 is not pressed and therefore, ground No. 1 is rejected as not pressed. 4. Ground No. 2 is as under: 2. That the learned C.I.T.(Appeals) has further erred in law and on facts in confirming the capitalization of Insurance Expenses incurred in respect two new Cars amounting to ₹ 32,112/- misinterpreting the provisions of Section 31 of the I.T. Act and without applying her mind properly to th .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... the recognized method of valuation of closing stock, namely, weighted average cost as consistently adopted by the assessee and accepted by the Department and by imposing the Fifo- Method of valuation of closing stock by the A.O. 4. That the learned C.I.T.(Appeals) has further erred in law and on facts in upholding the rejection of assessee's books by invoking the provisions of Section 145(3) without satisfying the necessary conditions laid down in the above provisions of the Act and in not properly applying her mind to the written submissions and judicial pronouncements relied upon therein by the assessee and in trying to erroneously distinguish the same. 5. That the learned C.I.T.(Appeals) has further erred in law and on facts in upholding the rejection of the method of stock valuation adopted by the assessee and the written submissions and case law filed by the assessee before her and in erroneously trying to distinguish the same. 6. That the learned C.I.T.(Appeals) has further erred in not applying her mind to the explanation filed by the assessee for fall in the gross profit rate. 7. That the learned C.I.T. (Appeals) has further failed to appreciate .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... or valuation of closing stock is not proper. It means that the method adopted by the assessee for valuation of closing stock is accepted by the Department in earlier years as well as in later years and the method adopted by the assessee is same in the present year, in earlier years and later years also. As against this, this is the case of the Assessing Officer that adopting FIFO method for valuation of closing stock is more suitable in present case. In our considered opinion, on this reasoning, an accepted and recognized method of valuation of closing stock as being adopted by the assessee cannot be discarded and another method cannot be adopted by the Assessing Officer. This is not the case of the Assessing Officer that the method adopted by the assessee for valuing closing stock in the present year, in earlier years and later years is not a recognized method of valuation of closing stock. In our considered opinion, the addition made by the Assessing Officer is not justified because he cannot reject a recognized method of valuation of closing stock followed by the assessee and accepted by the Department in assessment year 1997-98 and 2004-05 as per assessment orders passed by the .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... for tanning of raw hides to finished hides and manufacture of shoe upper on job basis as also purchase of finished hides and export thereof. He has also noted that as per schedule of fixed assets, there is shoe upper machine of ₹ 1,96,515/- and embossing plate of ₹ 4,26,293/- and wages paid are ₹ 2,25,497/-. He has also noted that the electric power expenses debited to manufacturing account relates to M/s Sunrise Tannery which is borne by the assessee. He has also given a finding that all the hides have been processed on job basis. Learned CIT(A) has also given a finding that no evidence have been brought on record to substantiate that manufacturing and production is undertaken by the assessee to justify its claim of deduction u/s 80IB of the Act. In the light of these findings of authorities below, we examine the profit loss account of the assessee appearing on page No. 5 of the paper book. As per the same, against sales of ₹ 915.52 lac, the assessee is claiming deduction on account of wages of ₹ 2,25,497/- and job work charges debited is ₹ 44,19,315/-. These two figures itself make it clear that almost entire work is get done by the assessee .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates