TMI Blog2016 (12) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and shifting. Hence, we are of the considered opinion that in the facts and circumstances of the present case as discussed above, the addition made by the AO in valuation of closing stock is not proper and justified and hence we delete the same - Decided in favour of assessee Disallowance of JD Plot rent - Held that:- AO himself has accepted that the plot was used for the purpose of sister concern M/s. Obulapuram Mining Co., and goods are in fact sold by the assessee to this sister concern and delivery at this plot was an important aspect for affecting this sale as per the assessee. Hence, the facts are not in dispute and under these facts, the judgment of the Hon’ble Apex Court rendered in the case of S.A. Builders (2006 (12) TMI 82 - SUPREME COURT ) is applicable as per which, if the expense has incurred expenses for business expediency and third party also gets some benefit in the process, then also, the expenditure is allowable. Respectfully following the judgment of the Hon’ble Apex Court and considering the facts of the present case as discussed above, we are of the considered opinion that the expenses incurred by the assessee on account of rent of the plot in question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejudice to each other ground. 8. For these and other grounds that may be urged at the time of actual hearing, it is prayed that the Honorable ITAT may be pleased to cancel the assessment order in the interest of equity and justice. 3. Ground No.1 is general in nature. Regarding ground Nos. 2, 3 4, it is submitted by the learned counsel of the assessee that on pages 2 to 8 of paperbook (PB) is the tax audit report for the AY 2008-09. In particular, our attention was drawn to page 3 of PB and it was pointed out that it was reported by the auditors in Form 3CD that method of valuation of closing stock employed by the assessee is purchase cost plus other direct cost on FIFO basis. Thereafter, he drew our attention to the tax audit report for the present year available at pages 12 13 of PB. In particular, our attention was drawn page 13 of PB and it was pointed out that in this year also, the auditors have reported that closing stock is valued at purchase cost plus other direct cost or market value, whichever is lower. 4. Thereafter, he submitted that on pages 35 36 of PB is the computation of value of closing stock as on 31.3.2008 and 31.3.2009 and it was pointed out th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , no cost was included on that account also. This explanation of assessee was rejected by the AO, but in view of this factual position that in the tax audit report for the year ending 31.3.2008, it was reported by the auditors that assessee is valuing its closing stock at cost on FIFO basis, it has to be accepted that if closing stock at the end of the present year is without any processing such as screening, crushing etc. and without shifting; the screening, crushing and shifting charges cannot be added to the valuation of closing stock in the present year and therefore, if the total amount of cost of production in the present year after excluding plot rent is considered, it will amount to valuation of closing stock at a cost including such charges also i.e., screening, crushing and shifting charges, whereas the closing stock was without screening, crushing and shifting. Hence, we are of the considered opinion that in the facts and circumstances of the present case as discussed above, the addition made by the AO in valuation of closing stock is not proper and justified and hence we delete the same. Accordingly, ground Nos. 2 to 4 are allowed. 7. Regarding ground Nos.5 6 i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted position is that the assessee did not export iron ore, the expenditure incurred on land of such plot is not allowable. In this regard, he drew our attention to clause 4(d) and 4(e) of the said agreement available at page 40 of PB as per which it was specified that minimum 2 lakh tonnes of iron ore has to be exported before the end of license period and since this has not been done by the assessee, the expenditure is not allowable. 9. We have considered the rival submissions. We find that this is the objection of the AO that as per license agreement between assessee and CPT, the assessee was required to make exports for using this plot of about 2 lakh tonnes of iron ore before the end of license period and since the assessee has not made any export, the plot in question was not used by the assessee for business purpose and therefore, expenditure on account of rent of plot is not allowable. In this regard, we find force in the submissions of the ld. AR of assessee that since the assessee has used this plot for storage of its product which was sold by assessee to its sister concern, M/s. Obulapuram Mining Co. Pvt. Ltd., and that company has in turn made the exports, it has t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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