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2016 (12) TMI 557 - ITAT BANGALORE

2016 (12) TMI 557 - ITAT BANGALORE - TMI - Addition as profit from trading in gold - appellant had resorted to under valuation of closing stock - Held that:- As decided in assessee's own case this Tribunal had indeed considered the argument of the assessee on gold content in the stock and held that only real gold content was to be considered. It also held that the valuation at rate of 538.599 per gram, as done by the assessee considering the actual gold content in 91.6 purity gold jewellery was .....

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t the disallowance is reasonable and accordingly, the addition is confirmed”. The assessee has not let in any material to dislodge the above findings and hence we dismiss this ground of appeal.- Decided against assessee - TDS u/s 194C - non deduction of TDS on making charges to various persons - Held that:- . The appellant has not furnished any details regarding the basis of the making charges paid to each of the 23 persons but it appears from the AO's observations that making charges were p .....

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ing charges. The provisions of sec 194C are clearly attracted. Even if we assume that the 23 persons who were paid making charges were employees of the appellant, then also in most of the cases TDS provisions are attracted because payment to each individual person exceeded the minimum taxable income. The appellant should have deducted tax u/s 192. The disallowance is therefore, confirmed. - Decided against assessee - I.T.A No.494/Bang/2012, CO No.42/Bang/2011, In I.T.A No.631/Bang/2011 - Dated:- .....

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. It purchases standard gold and old gold ornaments, convert them into ornaments and sells them. In the assessment made for ay 2008-09, the AO made the following additions: (i) The assessee firm has arrived at an opening stock as on 1.4.2007 at ₹ 1,10,45,800/- on the net weight of gold at 25201.830 gms., which works out to ₹ 438.29 per gram. For the F.Y.2006-07 relevant to the A.Y.2007-08, the closing stock was arrived at 25428.56 grams by the department by recasting the trading acco .....

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.2007 at ₹ 438.29 per gram as against the value of ₹ 849.639 per gram determined by the department on the basis of the average cost method as on 31.3.2007. On the same basis, the closing stock as on 3 1.3.2008 was worked out by the assessee at ₹ 1,63,21,900/- on the net weight of ₹ 30242.50 grams at ₹ 539.700 per gram. The AO proposed to adopt the valuation of closing stock at average cost method for which the assessee objected . The AO did not accept its contention .....

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by the assessee, the AO found that they were self vouched . The assessee firm prepared the receipts for converting standard gold to ornament gold at ₹ 15.81 lakhs. He also found that the Sl. nos. are also not reflected in the vouchers and the complete details of the person is not reflected in the vouchers so produced. Considering the volume of vouchers produced he proposed to disallow 10% of the making charges at ₹ 4,18,908/- which was accepted by the assessee and accordingly disallo .....

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as profit from trading in gold by considering that the appellant had resorted to under valuation of closing stock under the facts and in the circumstances of the appellant's case. 2.1 The learned CIT[A] failed to appreciate that the appellant has valued the closing sotck by considering the actual quantity of the old embedded in the gorss weight of the ornaments at the cost arrievd at by the appellant, which is one of the well recognied methods of valuation and there is no justificatin to rej .....

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d on account of the impurities, possiblilities of obsolesce on account of fast changing designs, etc. and consequently, the impugned addition made deserves to be deleted. 3. The learned CIT[A] is not justified in disallowing a sum of ₹ 4,18,908/- from out of the making charges on the ground that the vouchers produced are self vouchers and the complete details of the persons in those vouchers not there. She failed to appreciated the payments are made as is the practice by self-vouchers only .....

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ovisions of Section 69C of the Act. 4. The learned authorities below are not justified in suggesting the appellant to accept the unwarranted disallowances while making the assessment. 5. Without prejudice to the right to seek waiver waiver with the Hon'ble CCIT/DG, the appellant denies itself liable to be charged to interest u/s. 234-B of the Act, which under the facts and in the circumstances of the appellant's case deserves to be cancelled especially the appellant was not required to p .....

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eful perusal of the facts and circumstances, we are inclined to hold that one the AO had computed the missing quantity of gold on the basis of purchase and sale from the impounded books of accounts and on the basis of survey conducted it was an exercise to be made for valuing the missing stock of 1442.01 grams. The learned counsel before us has indicated that the exercise was under taken by the AO who had recasted the trading account which figures have been incorporated for computing the value o .....

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11- in place of addition of ₹ 7,66,665 or ₹ 8,68,061 which we are unable to co-relate to the finding of the AO. The AO on page 6 of his order has clear ly establ ished that the assessee had suppressed stock as on 31-03-2006 to the extent of 1306.735 grams, therefore, would have left no room for learned CIT(A) to value the same at Rs . 18,68,711 was not cons idered appropriately by the learned CIT(A). The assessee being a firm of gold jewelers established in the impugned assessment ye .....

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#8377; 18,68,711 therefore, does not figure anywhere near the computation, valuation, co- relation between the quantity of purchase and sale that could be considered for taxat ion in the impugned year itself as against market value of gold and not jewellery. In the light of the above, the addi t ion i s to be conf i rmed o the extent of ₹ 7,76,665 being the value adopted by the AO @ ₹ 538.599 per gram being the gold content in. the jewellery which quantity computed by the AO stands a .....

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, at para-8 above. What we find is that the Tribunal had indeed considered the argument of the assessee on gold content in the stock and held that only real gold content was to be considered. It also held that the valuation at rate of 538.599 per gram, as done by the assessee considering the actual gold content in 91.6 purity gold jewellery was correct. The result of this exercise is that variation was limited to difference in quantity in the closing stock alone and not in the pricing. Differenc .....

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₹ 60 1.98 will in fact be equal to re-writing the order of the Tribunal. Our hands are tied and powers very limited in a rectificatory proceedings under section 254(2) of the Act. We can only rectify a glaring and apparent mistake that throws upon itself by a bare reading and not through a re-assimilation of entire facts. We are constrained to come to a conclusion that no such mistake is apparent in the order of the Tribunal. 05. Thus, we find that this Tribunal had indeed considered the .....

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regard to the disallowance of ₹ 4,18.908/- on the making charges, inter alia, on the ground that the vouchers are self-vouched and not verifiable etc the CIT(A) held that inter alia that apparently, it is an agreed addition and there is no dispute about the observations made by the AO. I find that the disallowance is reasonable and accordingly, the addition is confirmed . The assessee has not let in any material to dislodge the above findings and hence we dismiss this ground of appeal. 07 .....

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by applying an average cost of purchase at ₹ 837.20 per gram. For working out the average cost of purchase of gold, the AO valued the opening stock of 18382.87 grams @ ₹ 601.98 per gram, reworked the net profit at ₹ 78,90,381 and assessed it as against the admitted net loss of ₹ 7,28,244/-. (i i) The assessee paid making charges to various persons and claimed such expenditure. The AO verified the details from the appellant's books and found that it paid to 25 differe .....

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al, the assessee pleaded before the CIT(A), Mysuru that this Hon'ble ITAT in the appellant's case in a y 2006-07 had held that the closing stock of gold as on 3 1.3.2006 be valued @ ₹ 538.59 per gram. Adopting it, the CIT(A) arrived the average cost of gold for the purpose of valuation of the closing stock and reworked the net profit at ₹ 87,18,317/- as against the net profit determined by the AO at ₹ 78,90,381. Thus, it resulted in an enhancement to the extent of ͅ .....

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1. Aggrieved against the CIT(A) order, the Revenue filed an appeal before this Tribunal in ITA No 631(BNG)/2011 and the assessee filed this CO. Since the tax effect involved in the Revenue s appeal is below ₹ 10 lakhs, this Tribunal dismissed the Revenue s appeal in ITA No 631(BNG)/2011 dt 06.01.2016. However, the assessee s CO remained undisposed with the following grounds : 1. The order of the authorities below in so far as they are aginst the Cross-objector/respondent are opposed to law .....

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/- from out of the making charges by invoking the provisions of section 40[a][ia] of the Act, which is inapplicable under the facts and in the circumstances of the cross-objector's case. 4. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the Cross-objector/respondent denies itself liable to be charged to interest u/s234-B of the Act, which under the facts and in the circumstances of the respondent/cross-objector's case deserves to be cancelled. 12. The Ld. AR .....

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(in ITA Nos.1859 to 1864/Bang/1992) is set aside and the matters are remitted to the Tribunal for hearing and disposal of Cross- objections No.73- 78/Bang/2001 filed by the appellant in accordance with law. 13. We heard the rival submissions and gone through relevant orders. With regard to the Valuation of closing stock, the relevant portion of the CIT(A) order is extracted as under : 5.1 …………………………………&he .....

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on 31.3.2006. Sri Subramanian pointed out that the Hon'ble ITAT in its order in the appellant's case for the A.Y.2006-07 had held that the closing stock of gold as on 3 1.3.2006 be valued @ ₹ 538.59 per gram. 5.2 I have gone through the order of the Hon'ble ITAT. I find that, in principle, the argument of the AR has to be accepted. I may mention here that as regards the quantity of the opening or closing stock of gold, there is no dispute. I direct the AO to value the opening s .....

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worked out as under: Sales ₹ 6,48,32,596 Closing stock ₹ 2,12,67,939 ₹ 8,61,00,535 Cost of purchases including making charges ₹ 7,34,48,307 Gross profit ₹ 1,26,52,228 Less: expenditure debited to P&L A/c ₹ 39,33,911 Net Prifit ₹ 87,18,317 5.3 The appellant's net profit is accordingly determined at ₹ 87,18,317/- as against the net profit determined by the AO at ₹ 78,90,381/-. It results into an enhancement to the extent of ₹ 8,27 .....

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ting the consistent valuation method has decided this issue with which we do not find any infirmity and accordingly we dismiss the assessee s appeal ground no 2, supra. 15. With regard to the disallowances made u/s 40(a)(ia) , the relevant portion of the assessment order is extracted as under : II. Making charges : (i) On perusal of the Trading account filed by the assessee, it is seen that an amount of ₹ 31,10,253 is debited to the trading account under the head "Making Charges" .....

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ld smith has his own specialization Like some are good at making bangles, some in making Of necklaces etc. Customers also place order for making ornaments to a particular gold smith and its our practice not to give more jobs to a single gold smith as we would be carrying risk. We give gold of a particular weight for manufacture an ornament. We do not enter into any contract in terms of wages payable. The job being skilled takes different time for completion and based on the skill involved and th .....

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smith in the entire financial year would be less than ₹ 50,000/-. The provisiom of Section 194C are inapplicable to us for the above reasons. Since the provisions of Sec.194C are inappl icable we have not made any deduction from such payments. Hence (here is no justification for disallowing the above expenses". (ii) The assessee's contention is not acceptable because as seen from the ledger Extract produced there are about 25 persons who did ornaments in the assessee's busines .....

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000/- at a time or ₹ 50,000/- in a year, requires to deduct tax at source at the time of making the payments. According to assessee, there is no written contract entered between the assessee and the labourers. Hence TDS provisions is inapplicable. The work is done in his business premises and the payment is made to the persons depending upon the work entrusted to them. It was also explained that the job involves skilled workers, the wages are demanded as per the work and after negotiations .....

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erever it exceeds ₹ 20000/- one time and ₹ 50,000/- in a year as per the provision of Sec. 194C. Hence, the above payments attracts the provisions of section 194C thereby the assessee should have deducted TDS wherever the amount has exceeded ₹ 20000/- or ₹ 50,000/-. He cannot discharge the duties of the main labourers by disbursing the wages to all the persons. The assessee is utilizing the above tool to camouflage that section 194C is inapplicable in his case. Therefore, .....

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ring on 29.12.2009. Assessee did not respond to the above letter. In turn, he filed a revised ledger account showing the making charges paid to the workers as on 31.12.2009 without any explanation for filing the revised ledger account. On verification of the same, it is seen that the assessee has incorporated as many number of workers for whom cash payment is made as per the ledger extract filed. In the light of the above, the assessee s claim of ₹ 30,35,224 being expenditure on making cha .....

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nd found that the amount was paid to 25 different persons and in 22 cases, the amount paid was exceeding ₹ 50,000/- in individual case. The details are mentioned on page 8, 9 and 10 of the assessment order. The total making charges debited in the name of 25 persons were ₹ 31,10,253/-. Out of this, ₹ 75,029/- were paid to 3 persons. In each case the payment was less than ₹ 50,000/ in the full year. Hence this was allowed by the AO. However, in the remaining cases, the AO f .....

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