TMI Blog2019 (11) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. [ 2003 (9) TMI 43 - BOMBAY HIGH COURT] also held that when assessee is valued the closing stock on obsolete items at 10% of the cost. Auditor s report justifying the valuation. The items were in fact sold in the subsequent year at a price less than 10% of the cost. It could not be said that valuation of obsolete item made by assessee was not proper. In view of the aforesaid discussion, we affirm the order of ld. CIT(A). Addition in book profit under section 115JB - HELD THAT:- We find that we have affirmed the finding of ld. CIT(A) in deleting the addition. Therefore, the addition which was consequential to the addition of subject matter of Ground No.1. Therefore, this ground of appeal is also dismissed. - ITA No. 2333/Mum/2017 - - - Dated:- 1-10-2019 - Shri R.C. Sharma, Accountant Member And Shri Pawan Singh Judicial Member For the Appellant : Shri Abi Rama Karthikeyan (Sr DR) For the Respondent : Shri Rajan Vora with Shri Nikhil Tiwari (AR) ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by revenue is directed against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -cause notice to explain why the closing stock should not be disallowed. The assessee filed its reply dated 05.03.2015, wherein the assessee stated that closing stock is valued in accordance with accounting slandered -2(AS-2), the closing stock was valued at cost or Net Realizable Value (NRV), whichever is lower. The contention of assessee was not accepted by Assessing Officer. The Assessing Officer made addition of ₹ 6,16,55,838/- in valuation of stock as on 31.03.2012 (being difference between the cost and NRV) holding that the depreciation on closing stock is not allowable. The Assessing Officer also made addition of the disallowed amount while computing book profit under section 115JB. On appeal before the ld. CIT(A), the action of Assessing Officer was reversed. Aggrieved by the order of ld. CIT(A), the revenue has filed the present appeal before us. 3. We have heard the submission of ld. Departmental Representative (DR) for the revenue and ld. Authorized Representative (AR) of the assessee and perused the material available on record. Ground No.1 2 relates to deletion of addition of ₹ 6,16,55,838/-. The ld. DR for the revenue submits that assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank (240 ITR 355) (SC). Hughes Communication India Ltd. (215 Taxman 136) (Del HC). Indian Sugar Gen. Industry Export Import (349 ITR 38) (Del HC). Alfa Laval (India) Ltd. (133 Taxman 740) (Hom HC). Edelweiss Capital Ltd. (ITA No. 5324/Mum/2007). Edel Commodities Ltd. (170 ITD 402) (Mum Trib.). 5. The ld. AR of the assessee submits that the ld. CIT(A) while granting relief to the assessee followed the decision of Alfa Laval (India) Ltd. (supra). 6. We have considered the rival submission of the parties and perused the material available on record. During the assessment, the Assessing Officer made addition of ₹ 6,16,55,838/- by disallowing depreciation on closing stock holding that the depreciation on the closing stock is not eligible deduction. Before the ld. CIT(A), the assessee given the breakup of depreciation on various inventory, demo-vehicles, accessories and consumable Auto Parts in the following manner: Sr. No. Description Cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in a particular form, market value of the share and securities is not mentioned in brackets. For the purpose of Income Tax, whichever method is adopted by assessee is a true picture of the profit and gains, i.e. to say, real income is to be disclosed. For determining the real income, the entries in the balancesheet required to be maintained in the statutory form, may not be decisive or conclusive. In such case, it is not open to Assessing Officer as well as to the assessee to point out the true and proper income while submitting return. It was further held that for valuing the closing stock, it is open to the assessee to value it at the cost or market value, whichever is lower, a method of accounting adopted by tax payer consistently and regularly cannot be discarded by the departmental authorities on the view that he should have adopted a different method of keeping accounts or valuation. 9. The Hon ble Delhi High Court in CIT vs. Hughes Communication India Ltd. (supra) held that the diminution of closing stock on account of impairment and effect is allowable, if the same method of valuation consistently followed. 10. Further, the Hon ble Del ..... X X X X Extracts X X X X X X X X Extracts X X X X
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