TMI Blog2015 (8) TMI 1376X X X X Extracts X X X X X X X X Extracts X X X X ..... o consider the amount of opening stock of low grade iron ore also while bringing to tax the entire stock available, which might have been produced over a period of many years, in the closing stock of this year which certainly distort the profits of this year. Since we are not in agreement with the addition of closing stock of unrealisable low grade iron ore, we have no hesitation in deleting the addition so made by the A.O. Accordingly the grounds raised in the cross objection are considered allowed A,O. is directed to delete the addition. - Decided in favour of assessee. - ITA No. 13/PNJ/2014 - - - Dated:- 5-8-2015 - SHRI N.S. SAINI, HON BLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HON BLE JUDICIAL MEMBER Assessee by : Shri Mihir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1692 10257324 10496654 -239330 Low Grade Tailing 71730 2708059 0 2708059 4. From the above table, the Assessing Officer observed that the assessee has not properly valued its closing stock. There arise difference as per books and the total value as per the revaluation, therefore, the difference in the value of closing stock of ₹ 27,08,059/- is added to the total income of the assessee. 5. The Assessing Officer also observed that the assessee has not shown value of low grade ore as closing stock. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduce his returned total income by filing a letter/revised computation. The only option available to the assessee is reducing the total income by filing a revised return under sec. 139(5), which option is not availed by the assessee in the present case while the re-assessment proceedings have been initiated by issuance of notice under sec. 148 of the Act. Therefore, the reduction in total income of ₹ 3,20,40,964/- is not in compliance with the Supreme Court findings. In view of the above, the value of lumpy ore of ₹ 6,50,05,000/- (including the value of reduction in total income is ₹ 3,20,40,964/-) is added to the total income of the Assessee. 6. Before the Commissioner of Income Tax (Appeals), the assessee submitted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lumps Total Opening stock as on 1st April, 2005 4,50,786 26,358 1,26,544 1,73,004 7,76,692 Production 7,29,897 49,300 2,66,467 3,39,856 13,85,520 Despatch/Sales 7,63,627 59,260 - 3,13,612 11,36,499 Closing stock 4,17,056 16,398 3,93,011 1,99,248 10,25,713 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate proceedings. I have carefully read the order of the Hon ble ITAT on this issue. The Hon ble ITAT in the case of the appellant for A. Yr. 2004-05 in ITA No. 29/PNJ/2008 dated 7.0 2009 decided the issue of low grade and lumpy ore with the following concluding remarks: We have considered the rival submissions and perused the facts on record. It is well recognised principle of commercial accounting to enter in the P L Account the value of stock in trade at the beginning and end of the accounting year at cost or market price, whichever is lower. For the purpose of ascertaining the profits and gain the ordinary principles of commercial accounting should be applied so long as they are not in conflict with the provisions of the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In our considered opinion by taking the value of closing stock of low grade iron ore at nil the assessee has followed the well recognised principle of commercial accounting. Since there is no distortion to the profits of the assessee in any of the year and since the assessee has been consistently accounting sale of low grade iron ore in the year of realisation both in production figures as well as sale figures we are not persuaded by the logic of the CIT (A) in confirming the addition. Since the assessee has consistently following the method of accounting and no such addition has been made in earlier years, even though the assessee is in the business for so many years, we are not persuaded by the contention that the assessee would get bene ..... X X X X Extracts X X X X X X X X Extracts X X X X
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