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 →

I.T.O Ward 35 (4) , Kolkata Versus M/s. Mahendra Traders

2016 (1) TMI 361 - ITAT KOLKATA

Addition made towards valuation of stock of scrap - Held that:- There is no scope for valuation of stock at market price as worked out by the Learned AO. The valuation of stock at cost or net realizable price whichever is lower is an accepted and established rule of commercial practice as was held by the Hon’ble Supreme Court in the case of Chainrup Sampatram vs CIT reported in (1953 (10) TMI 2 - SUPREME Court). Even otherwise, we find that the Learned AO had taken the last realized selling pric .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

realizable value had automatically come down and the assessee had valued the stocks applying that rate after deducting direct expenses incurred for realizing the sale and hence we find no infirmity in the valuation method adopted by the assessee. We find that the assessee had valued the closing stock by the method that it has regularly and consistently followed for valuation of stock. - Decided against revenue

Addition towards commission - non deduction of tds - CIT(A) deleted the add .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s . Hence we do not find any reason to interfere with the order of the Learned CIT(A) in this regard. - Decided against revenue - I.T.A No.1673/Kol/2009 - Dated:- 18-11-2015 - Shri Mahavir Singh,Judicial Member, and Shri M. Balaganesh, Accountant Member For The Appellant : Shri Snehatpal Datta, JCIT, ld.Sr.DR For The Respondent : None ORDER SHRI M.BALAGANESH, AM This appeal of the revenue arises out of the order of the Learned CIT(A)-XX, Kolkata in Appeal No. 325/CIT(A)-XX/Ward-35(4)/08-09/Kol d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd Steel and Commission Income. The partnership firm was dissolved on 30.6.2005. Hence the return of income in the name of the firm was filed by considering the transactions in the firm for the period 1.4.2005 to 30.6.2005. This partnership firm was converted into proprietorship concern with effect from 1.7.20005 and accounts for the period 1.7.2005 to 31.3.2006 are prepared separately. The main product traded by the assessee is M.S.Round and Scrap. The assessee had stated in the tax audit repor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee was ₹ 18470 per MT and final purchase price made by assessee was ₹ 18611 per MT. Accordingly, the Learned AO chose to substitute the value of closing stock in accordance with valuation method of cost of net realizable value whichever is higher and proposed an addition of ₹ 12,54,947/-. In response to this, the assesee replied that it was erroneously stated in tax audit report by inadvertence that the valuation of stocks are done at the higher of cost of net realizable value .....

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 with effect from 1.7.2005 and brought down the rate per MT substantially. Taking into account the same, the closing stock as on 30.6.2005 was valued by the assessee at ₹ 85,11,544/- being the lower of cost or net realizable value. The Learned AO did not appreciate the contentions of the assessee and made an addition of ₹ 12,54,947/- ( being the arrived value of ₹ 97,66,491/- by Learned AO and declared value of ₹ 85,11,544/- by assessee) towards difference in valuation 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

ed the order of the Learned AO. 2.3. We have heard the Learned DR and perused the materials available on record. We find that the assessee had filed a detailed paper book numbering from pages 1 to 111 containing various documents and submissions. We find from the notes on accounts to the audited accounts, the assessee had clearly stated that the valuation of inventories have been made at the lower of cost or net realizable value. Hence his plea that a typographical error had crept in in the Form .....

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 was held that :- As the entry for stock which appears in a trading account is merely intended to cancel the charges for the goods purchased which have not been sold, it should necessarily represent the cost of the goods. If it is more or less than the cost, then the effect is to state the profit on the goods which actually have been sold at the incorrect figure. From this rigid doctrine one exception is very generally recognized on prudential grounds and is now fully sanctioned by custom, viz. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

shape of appreciated value of the closing stock is not brought into account, as no prudent trader would care to show increased profit before its actual realization. This is the theory underlying the rule that closing stock is to be valued at cost or market price whichever is lower, and it is now generally accepted as an established rule or commercial practice and accountancy. Even otherwise, we find that the Learned AO had taken the last realized selling price of M.S.Scrap whereas the closing s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e down and the assessee had valued the stocks applying that rate after deducting direct expenses incurred for realizing the sale and hence we find no infirmity in the valuation method adopted by the assessee. We find that the assessee had valued the closing stock by the method that it has regularly and consistently followed for valuation of stock. Accordingly, the ground no.1 raised by the revenue is dismissed. 3. The next issue to be decided in this appeal is as to whether an addition 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

he genuineness of the claim issued summons u/s. 131 of the Act to the aforesaid two parties. No response was received from one party and in respect of another party the notice had returned unserved. The Learned AO doubted the nature of services, if any, rendered by the aforesaid commission agents. The assessee merely submitted the copy of income tax returns together with its workings of two parties wherein the commission receipts from the assesses were reflected by the payees before the Learned .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

CITA from the Learned AO. In remand proceedings, the assessee produced the two parties and stated that the concerns run by two parties i.e M/s Tirupati Industries and M/s Roto Flux Printings & Laminates Co pvt Ltd were run by the family members of the assessee and both the concerns had filed their returns showing income under the head commission . The Learned CITA observed that the assessee had discharged its complete onus by proving the genuineness of the claim of payment of commission with .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on commission payment and therefore the same was not allowable as per the provisions of section 40(a)(ia). The Ld. AR argued before me that the firm was dissolved and was taken over as going concern by one of the partners with effect from 01-07-2005. The appellant has accounted for the amount of ₹ 23,00,000/- payable to the said parties to determine the actual income of the appellant relevant to the period of its existence. The appellant has neither credited the accounts of the said partie .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

it is observed that M/s. Tirupati Industries has received commission payment of ₹ 25,00,000/- and M/s. Roto Flux Printings & Laminates Co Pvt. Ltd received commission payment of ₹ 35,00,000/-. The business of the appellant firm was taken over by the proprietary concern as going on concern with effect from 01-07-2005 along with all the assets and liabilities. The appellant firm has not made any payment of commission to the aforesaid two parties, but the entire payment on account 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

 

 

 

 

 

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