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TMI Blog2018 (6) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... d undervaluation of the closing stock of land by holding that the value of land under litigation/encroachment cannot be adopted at Nil. 2. The assessee craves to amend, add, alter, or modify any of the ground of appeals. 3. Necessary cost be allowed to the assessee." 2. The assessee has challenged the orders of the authorities below regarding addition of Rs. 10,42,85,000/- on account of under valuation of the closing stock of land which was valued by the assessee at Nil due to litigation and encroachment. The AO held that the value of land cannot be taken at nil and further, the assessee has changed its method of valuation during the year under consideration. The assessee challenged the action of the AO before the ld. CIT(A) but cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are instance of some of the land is used as cremation ground cannot be readily available to the assessee for industrial development activity and hence, the value of such land at nil is proper and justified. 4. On the other hand, ld. DR has relied upon the order of the authorities below and submitted that an identical issue has been considered by this Tribunal in assessee's own case for the assessment year 2007-08 as well as A.Ys. 2009-10 to 2012-13. 5. We have considered the rival submissions as well as relevant material on record. We note that though the land which is under encroachment and litigation cannot be valued at the cost or prevailing market price but the value of such land would definitely be very less due to defects and defici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uation has been taken at nil from 31-03-06 to 31-03- 07. It is true that encroachment and litigation will have an impact on the on the valuation. The management has taken the decision to consider the value at Nil but we are not informed as to whether the decision is based on certain expert opinion or on the basis of prudence or after considering each and every case on merits. Section 4 is a charging Section and according to which income tax is to be charged in respect of total income of the previous year. The reduction in the value of the stock is to be substantiated by the assessee that it has resulted into previous year relevant to assessment year under consideration . In case the litigation and encroachment were existing at the time when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO has not considered the aspects as to whether events in respect of reduction in valuation of stock have occurred during previous year relevant to assessment year under consideration. We are not having full facts in respect of the stock which have been valued at nil to ascertain the nature of litigation or encroachment and the period when such lands were acquired and when the assessee became aware of encroachment or litigation. Hence, the issue of addition of Rs. 145.33 lacs is restored back on the file of the AO. We do feel that litigation and encroachment will affect the valuation of the 13 stock and such stock cannot be valued at cost price. With this observation, the matter is restored back on the file of the AO." In view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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