TMI Blog2012 (3) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... allowing the claim of the assessee. The CIT(A) has given a finding that the assessee is in the business of dealing in shares and securities and finance and in business various debts had arisen in the past. Method of valuation - Held that:- We hold that there is no mistake in the order of the CIT(A) in holding that such non-existing assets cannot be considered in the valuation of the stock of the assessee and the assessee has justifiably revalued the stock in terms of the method of valuation adopted by it in the year under consideration. The CIT(A) has recorded that it is not the case of the AO that the value shown by the assessee on the basis of net realisable value is not correct. In these facts of the case, we hold that the third objection of the Revenue regarding method of valuation is also not sustainable and there is no mistake in the order of the CIT(A) in deleting the addition made by the AO on this issue Non accepting the assessee’s claim of reduction from sales in this year - Held that:- The assessee has filed its return of income on that basis alone. Even in the revised return of income filed subsequently by the assessee, the sale entries were not reversed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act which is accordingly cancelled and the ground of the assessee is allowed. - ITA No.802/Ahd/2004 With CO No.148/Ahd/2007, ITA No.843/Ahd/2006 , ITA No.1209/Ahd/2006 - - - Dated:- 2-3-2012 - S/SHRI G.C. GUPTA, VICE-PRESIDENT AND B.P. JAIN, ACCOUNTANT MEMBER) For the Respondent : Shri S.N. Soparkar For the Appellant : Shri S.K. Gupta, CIT-DR O R D E R PER G.C. GUPTA, VICE-PRESIDENT: These are two Revenue s appeals and one assessee s appeal and also one assessee s CO for assessment year 2000-2001 directed against the orders of the Commissioner of Income-Tax (Appeals)-XI, Ahmedabad. These are being disposed of with this consolidated order. ITA No.802/Ahd/2004 (A.Y 2000-2001 : Revenue s appeal) 2. The first ground of the Revenue s appeal reads as under: 1. The ld.CIT(A) has erred in law and on facts in deleting the disallowance of ₹ 48,62,405/- being the loss claimed by the assessee as business loss. 3. The learned CIT-DR submitted that the assessee has not accepted the claim filed by M/s.Mekor International Consortium ( Mekor for short) for non-fulfillment of the contract for purchase of imported news print and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was decided in favour of the Mekor and against the assessee-company and in which year the actual payment was made by the assessee on account of non-fulfillment of the contract for purchase of imported news print and whether the claim in the subsequent year was made by the assessee-company. In these facts of the case, we hold that it shall be in the interest of justice to set aside this issue to the file of the Assessing Officer with direction to verify the facts and allow the claim of the assessee in the assessment year 2000-2001 in appeal before the Tribunal, provided, any similar claim has not been made by the assessee in any of the subsequent assessment years and the claim of the Mekor has been allowed by the Hon ble Bombay High Court and the assessee has in fact complied with and has paid the compensation subsequently on account of loss for non-fulfillment of the contract for purchase of imported news print. We direct accordingly. 5. The ground no.2 of the Revenue s appeal reads as under: 2. The ld.CIT(A)has also erred in law and on facts in deleting the disallowance of bad debts amounting to ₹ 54,59,000/- 6. The learned CIT-DR relied on the order of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to write off its work-in-progress of the said wind mills power project, the same does not become allowable as revenue expenditure. He referred to the relevant portions of the assessment order in support of the case of the Revenue and he submitted that valuation of work-in-progress of wind power plant, method has been changed without any valid reason. The assessee was constantly following the cost method of valuation which was conveniently changed to net realizable value . He submitted that this distorted picture of the valuation does not reflect the true state of affairs of the business of the assessee. He relied on the order of the Assessing Officer. The learned counsel for the assessee has opposed the submissions of the learned CIT-DR. He submitted that the loss pertained to the relevant period and the assessee was hopeful in the earlier years and it was in the relevant accounting period that the assessee-company has deiced to close down its energy division. He referred to 10th Annual Report of the Board of Directors wherein under the head Operations During the Year it was specifically mentioned that the Government of Gujarat not coming out with any long term policy for d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opy of which has been filed in the compilation by the assessee showed the same under the head increase/decrease in stock . In these facts of the case, we hold that the loss being as a result of the business operation of wind mill project of the assessee, which was treated as stock-in-trade by the assessee was not a capital loss and accordingly the second objection of the Revenue is not sustainable. The third objection of the Revenue is that the assessee has wrongly changed the method of valuation of wind mill project is not sustainable. We find that the assessee has purchased the wind mill from M/s.REPL and the same did not remain in the possession of the assessee as per the order of the Hon ble Bombay High Court and as such the asset was not existing in the hands of the assessee after the possession thereof was taken away by the bank in terms of the order of the High Court. These facts could not be controverted on behalf of the Revenue. The assessee having found that the wind mill project has no realisable value, the valuation method was changed so as to adopt cost or its realisable value whichever is less . This method of valuation of stock at cost or market value whichever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of ₹ 7,51,125/- represents debts not pertaining to trade debts of the assessee. The learned CIT-DR has relied on the orders of the AO and the CIT(A). 16. We have considered rival submissions and perused the orders of the AO and the CIT(A). We find that the amount of ₹ 7,51,125/- does not represent trade debts of the assessee and accordingly are not allowed as bad debts and deduction to the assessee. The CIT(A) has passed a well reasoned order on this issue, which is accordingly confirmed and the ground nos.2 and 3 of the assessee s CO are dismissed. 17. The Ground No.6 of the assessee s CO reads as under: 6. On the facts and in the circumstances of the case, the CIT(A) erred in not accepting the assessee s claim of reduction of ₹ 2,40,00,000/- from sales in this year. 18. The learned counsel for the assessee submitted that the profit shown on sale of wind turbine generators to Besto Tradelink Pvt. Ltd. was conditional sales and assessee company did not effect sale on nonfulfillment of conditions and therefore the transfer could not be materialized and there was no existence of sales and the figure thereof should be reduced from the total i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year before the AO at the time of filing of the return itself. It is a case of honest difference of opinion regarding the allowability of certain deductions claimed by the assessee. It is not the case of the Revenue that the assessee has withheld some information and its conduct was not bona fide. In these facts of the case, we confirm the order of the CIT(A) in cancelling the penalty on this issue. 22. The other issues on which the penalty under section 271(1)(c) of the Act was levied was regarding the disallowance of excess capital loss of ₹ 75,097/-. 23. We have heard both the parties. We find that it is a case of bona fide mistake in calculating the long term capital loss in applying the cost of indexation by the accountant. The CIT(A) has given a finding that complete facts relating thereof were given by the assessee in its return of income filed with the department. In these facts, since the mistake was bona fide in calculation only and the material facts were disclosed at the time of assessment itself, we hold that there is no mistake in the order of the CIT(A) in holding that no penalty was leviable on this issue. Accordingly, the order of the CIT(A) in cancel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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