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2016 (10) TMI 582 - ITAT KOLKATA

2016 (10) TMI 582 - ITAT KOLKATA - TMI - Undisclosed sales - non-availability of information - Held that:- AO raised the issue for the undisclosed sale due to non-availability of information with regard to the quantitative details of the opening stock, purchases and sales, closing stock along with their respective values in the tax audit report. During the proceedings the details were furnished by the assessee but the AO rejected the same and worked out the undisclosed sale as discussed above. A .....

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t be rejected merely because it will hamper the revenue. AO has not found any actual defect in the valuation of closing stock. AO has not found any defect in the books of accounts. Even if the average cost method is applied then also the AO calculation is not done properly and closing stock, 5584 pieces of sarees @ 1624 per piece = 90,68,416/- on the average price of the opening stock and purchases during the year( 24,30,650 + 3,72,95,387=3,97,26,037.00/ 24464). While assessee has shown the clos .....

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n the interest of justice and fair play we restore this matter to the file of AO with the direction that in case the assessee has made the composite payment for the purpose of aforesaid properties, then the depreciation as per the order of Ld. CIT(A) should be allowed. Hence, this ground of Revenue’s appeal is allowed for statistical purpose. - ITA No.350/Kol /2013 - Dated:- 26-8-2016 - Shri N.V.Vasudevan, Judicial Member and Shri Waseem Ahmed, Accountant Member For The Appellant : Shri Uday Kum .....

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nder:- 1. That on the fact and circumstances of the case and in law the Ld. C.I.T.(A)-VIII, Kolkata has erred in not appreciating the fact that the assessing officer has rightly computed the value of closing stock where the assessee did not furnish the qualitative analysis of closing stock and as such is coming under the ambit of section 145 of the IT Act, 1961 and deleted the addition of ₹ 30,37,993/- under the head Undisclosed Sales holding that the calculation of valuation of closing st .....

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vs - AIPS Theatre (1967) 65 ITR 377 (SC) in its proper perspective. 3. The appellant craves leave to ad, alter or abrogate any ground of appeal at the time of hearing. Shri S.M. Gupta, Ld. Authorized Representative appeared on behalf of assessee and Shri Uday Kumar Sardar, Ld. Departmental Representative appeared on behalf Revenue. 2. First issue raised by the Revenue is that ld. CIT(A) erred in deleting the addition made by the AO on account of undisclosed sales amounting to ₹ 30,07,993/- .....

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s Rs.1,10,95,279/- It was observed by the AO that the qualitative analysis of the stock has not furnished, therefore the cost of each item of the stock cannot be determined. Accordingly the AO applied the average pricing method and worked out cost of the goods sold on the basis of per saree which comes to ₹ 1516.45 (2,86,30,758/- 18880 =1516.45). The cost of goods sold was worked out at ₹ 2,86,30,758.00 ( 24,30,650+3,72,95,387-1,10,95,279.00). The AO further applied this average rate .....

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ees comes to ₹ 30,07,993/-. The AO accordingly has added it to the income of the assessee as undisclosed sales. 4. Aggrieved assessee preferred an appeal to ld. CIT(A) who deleted the addition made by the AO by observing that the method of valuation adopted by the assessee is consistent. It cannot be rejected merely because it will hamper the revenue. AO has not found any actual defect in the valuation of closing stock. AO has not found any defect in the books of accounts. Even if the aver .....

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hem. Ld. AR submitted paper book which is running pages from 1 to 81. 6. We have heard the rival contentions and perused the materials available on record. From the aforesaid discussion we find that the AO raised the issue for the undisclosed sale due to non-availability of information with regard to the quantitative details of the opening stock, purchases and sales, closing stock along with their respective values in the tax audit report. During the proceedings the details were furnished by the .....

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. CIT(A). Accordingly, we uphold the same. Ground raised by Revenue is dismissed. 7. Next issue raised by Revenue is that ld. CIT(A) erred in deleting the addition made by the AO on account of depreciation charged on buildings. 8. It was observed by the AO that Column no. 14 and Annexure A are missing from the Tax Audit Report with regard to the depreciation. On demand, assessee has provided the annexure showing the details of depreciation claimed by it on two properties i.e. Ownership flat @5% .....

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sumed the one third value of property as land and thus disallowed the proportionate depreciation on both the property amounting to ₹ 2,65,903/- (114648.00 plus 1,51,255). 9. Aggrieved, assessee preferred an appeal to ld. CIT(A) who has deleted the addition made by the AO by observing that AO has assumed one third of the cost as land cost but there is no any material to support his findings. When price of land and building is not identifiable then and payment is a composite payment entire p .....

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was composite payment for the land & building. In the instant case the AO has relied in the order of CIT Vs. AIPS Theatre 65 ITR 377 and DCIT Vs Capital Car Private Limited reported, supra for disallowing the depreciation. However in our view the facts were different in that case because the value for the building and land was separately available but this is no so in the present case. The details of the Hon ble Supreme Court decision stand as under : This question arose out of the following .....

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e appealed to the AAC. The AAC upheld the order of the ITO. The assessee then appealed to the Tribunal which accepted the appeal. In accepting the appeal it observed as follows : "You cannot conceive of a building without the land beneath it. It is not possible to conceive of a building without a bottom. What s. 10(2)(vi) of the Act says is that depreciation will be allowed on the building. The word "building" itself connotes the land upon which something has been constructed. It .....

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