TMI Blog2018 (6) TMI 1505X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of slow moving goods should be reduced from computation of book profits u/s 115JB. Adjudicating ground no.1 of the assessee’s appeal, we uphold the order of the CIT(A) and dismiss this ground of the revenue. - I.T.A Nos. 1431&1432/Kol/2014 - - - Dated:- 27-6-2018 - Shri J. Sudhakar Reddy, AM And Hon ble Shri S.S. Viswanethra Ravi, JM For the Appellant : Shri P.K. Srihari, CIT Shri Sallong Yaden, Addl. CIT For the Revenue : Shri D. S. Damle, FCA ORDER Per J.Sudhakar Reddy, AM Both the appeals are filed by the revenue and are directed against a separate order of the Commissioner of Income Tax(Appeals), CC-2, Kolkata, passed on 31.03.2014 u/s 250 of the Income Tax Act, 1961 (the Act). 2. The assessee is a company and is engaged in the business of manufacturing glass bottles. 3. I.T.A. No. 1431/Kol/2014 The grounds of appeal are as under: 1. That on the facts and in circumstances of the case, the CIT(A) erred on facts as well as in law in holding that disallowance of ₹ 2.22 crore on account of 'Inventory Written off was not warranted by accepting additional evidence which was not produced before the AO. at the time of assessment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the investigation of these facts. He submitted that the Ld. CIT(A) has simply allowed the claim of the assessee for the reason that, the AO has not submitted a report. As per the Ld. CIT DR, administrative action should have been initiated by the Ld. CIT(A) against the AO, if the AO has not replied to this letter. He submitted that this issue should be set aside to the AO for fresh adjudication. 5. On ground no. 4 he submitted that the Ld. CIT(A) has simply allowed the claim of the assessee by applying the principles of res judicata. He argued that it is well settled that the principles of res judicata does not apply to income tax proceedings. 6. The ld. Counsel for the assessee submitted that on ground no. 1 fresh evidence was filed on the issue of inventory written off and the Ld. CIT(A) admitted the same by passing a speaking order. He supported this order admitting additional evidence. On ground nos. 2 3 he submitted that no new evidence whatsoever was filed by the assessee and hence both the ground nos. 2 and 3 are factually incorrect and misconceived. 7. He submitted that the appeal was lying for 10 years before the Ld. CIT(A) and remand report was called for fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opinion that the AO was not justified in disallowing the amount of commission which was in excess of the amount of the commission paid in the preceding year i.e. ₹ 34,92,603/-. In the assessment order the AO had made the disallowance only for the reason that the reply filed by the assessee was not found satisfactory. However, I am of the opinion that for this reason, disallowance cannot be made. He has not stated as to why the reply of the appellant was not satisfactory. It is observed that in the course of assessment proceedings, the appellant had submitted party-wise details of commission payment. Such details contain the name of the agents, rate of commission and amount of commission. The AO had not made any enquiry from the agents to prove that the claim of the appellant company was not correct. Merely for the reason that in the year under consideration there was no increase in the turnover in comparison to the preceding year, it does not mean that the amount of commission payment can also not be increased. Further, there is no basis or reason that the AO had allowed the payment of commission to the extent paid in the preceding year. It means that the AO had admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent years the gross profit declared by the company had been doubted. In subsequent years also there was loss but the same was accepted by the AO as the accounts of the appellant company were duly audited. The AO has brought no material to prove that either the appellant company had suppressed the production and the sales turnover or inflated the expenses. He did not reject the books of accounts to estimate the gross profit. Further, he did not prove that the explanation submitted by the appellant giving reasons for decline in the gross profit margin was not correct. Under the circumstances, I am of the opinion that the AO was not justified in making addition on account of gross profit and same is directed to be deleted. The ground no. 4 is allowed. As can be seen from the above there is no additional evidence. The factual finding could not be controverted the ld. DR. Hence, we uphold the findings and dismiss the ground no. 3 of the revenue appeal. 12. Ground no. 4 the Ld. CIT(A) in his order, as the issue of addition on account of difference is finished goods held as follows: 15. I have considered the submission of the appellant and perused the assessment order. I have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the AO was not justified in making addition on account of shortage in finished goods due to breakage and spoilage. He is directed to delete the addition made by him. The ground no. 5 is allowed. 13. The Ld. DR could not controvert these facts and findings of the Ld. CIT(A). Though res judicata is not applicable to income tax proceedings, when there is no difference in the facts, the Courts have held that the principle of consistency has to be applied. We do not find any infirmity in the order of the Ld. CIT(A). We uphold these findings and dismiss the ground no.4 of the revenue appeal. 14. Ground no. 5 is general in nature and does not require any specific adjudication. Hence this appeal of the revenue is allowed in part. 15. Now take up in I.T.A. No. 1432/Kol/2014 The grounds of appeal are as follows: 1. That on the facts and circumstances of the case, the CIT(A) erred on facts as well as in law in holding that addition on account of reduction in 'Value of Inventory' of ₹ 91,94,216/- was not warranted by accepting additional evidences not produced at the time of assessment, which is clearly a violation of Rule 46A . 2. That on the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ems of hardware tools spares etc. having cost of ₹ 4,66,11,530/- which were found to be slow moving or non-moving nature. Cost of these items was reduced by 25%. Similarly, the appellant had identified refractories having cost of ₹ 2,12,21,765/- which had remained un-moved or become obsolete and in respect thereof reduction @ 60% in the cost was effected in the books. The appellant also identified obsolete items of stores, spares and materials and in respect thereof 100% reduction in the cost was effected. From the details furnished, it is found that the total reduction in the value of inventory carried out in books was ₹ 2,61,94,216/- where against ₹ 1,70,00,000/- provision had already been created in the earlier years. The net off of the said provision against reduction in the value of inventory debited to the profit and loss account for the year under appeal which was ₹ 91,24,216/-. 5.1. On perusal of working submitted by the appellant before the AO as well as in the course of appellate proceedings, I am of the opinion that the appellant had identified numerous items of slow moving, non-moving and obsolete stock of materials and spares. Having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, on merits the findings of the Ld. CIT(A) have not been controverted by the ld. DR. Hence we uphold the same and dismiss the ground no. 1 of the revenue. 18. Ground no. 2 is on the issue of rate of depreciation allowable on printers and UPS/inventories i.e. computer accessories. 19. The Ld. CIT(A) followed the proposition of law laid down by the ITAT, Kolkata Benches in the case of ITO vs. Samiran Majumdar in 98 ITD 119 and allowed 60% depreciation on these computer accessories. We see no infirmity in the same. Hence we uphold the same and dismiss the grounds of appeal. 20. Ground no. 3 is against the deletion of disallowance of bad debts. The assessee has written off bad debts during the year. This issue is adjudicated at para 14 of the Ld. CIT(A) wherein he held as follows: 14. We have considered the submission of the appellant and perused the assessment order. I have also gone through the party wise details of bad debts written off and the judicial decisions relied upon by the appellant. It is observed that the appellant could not submit the party-wise details of the bad debts before the AO for the reason stated above. However, the said details were submitted in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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