TMI Blog2020 (7) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... fit/loss margins, the blocks were sold has not been specified - assessee has failed to justify the quantum of defective stock of marble blocks and its realizable value, thereby the addition made by the AO is hereby confirmed. In the result, the ground of appeal is dismissed. Disallowance u/s 14A read with Rule 8D - HELD THAT:- As noted that investment in shares of SBBJ has been made in the earlier years as is evident from the computation done by the AO wherein there is no change in the value of investment at the beginning of the year and at the close of the year. In AY 2013-14, the ld CIT(A) has given a finding that interest free funds were more than investment made by the assessee and disallowance of interest was deleted which was subsequently upheld by the Coordinate Bench. However, disallowance on account of administrative expenses was sustained at ₹ 13,414. Therefore, following the earlier year, the disallowance of administrative expenses of ₹ 2,974 as made by the AO is upheld for the impugned assessment year. In the result, the ground of appeal is dismissed. - ITA. No. 1523/JP/2018 - - - Dated:- 9-3-2020 - Shri Sandeep Gosain, JM And Shri Vikram Singh Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receding year ended on 31-03-2014, than how it is possible that 50% of the stock become defective within the year. Accordingly, the AO made addition of ₹ 48,27,278/- by treating the defective stock as non-defective. He further did not given direction to increase the value of the opening stock of the next year. 4. It was further submitted that on appeal, the Ld. CIT(A) held that assessee has not been able to justify the valuation of 50% of its stock at 55% of its value. There is absolutely no evidence to show that 50% of stock of assessee was defective. Also there is no justification for valuing such stock at 55% of its value. Accordingly, he confirmed the addition made by the AO. However, he directed the AO to adjust both the opening stock as well as closing stock of subsequent assessment year. 5. In light of above factual matrix, the ld. AR submitted that during the year only stock of marble block is considered defective and valued at net realizable value. The method of valuation of the marble block as referred in Note 1 to the accounts is as under:- Stock of marble block is valued at direct cost (net off VAT and CENVAT credit available) or realisable value estima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 50 50 50 50 25 - - Valuation % 25 25 50 50 25 50 - - The assessee on the basis of physical verification arrives at defective stock and the same is valued at certain percentage of the average cost to arrive at the net realisable value. This is followed consistently on year to year basis. 7. It was further submitted that in AY 2008-09 2009-10, the AO made addition by not accepting the claim of defective stock and reduction in its value. The Ld. CIT(A) after relying on the decision of ITAT in assessee s own case for AY 2005-06 deleted the addition made by the AO. The order of Ld. CIT(A) was upheld by Hon ble ITAT. 8. It was further submitted that in AY 2013-14, the AO again made the addition by not accepting the claim of defective stock in its valuation at the reduced rate and thus made an addition of ₹ 41,84,495/-. The Ld. CIT(A) deleted the addition made by the AO. Against this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f opening stock in the subsequent year but his direction to give effect only if the assessee accepts the order of Ld. CIT(A) is incorrect. His further direction that if the opening stock in increased, then closing stock should also be adjusted in the next year is incorrect as in AY 2016-17 AO has again made addition of ₹ 74,01,921/- by not allowing the claim of defective marble stock in the closing stock of AY 2016-17. This has resulted into double addition and therefore, such direction of Ld. CIT(A) be expunged in case the ground of assessee is not allowed. In view of above, addition of ₹ 48,27,278/- confirmed by Ld. CIT(A) be directed to be deleted. 12. The ld. DR is heard who has relied on the findings of the lower authorities. 13. We have heard the rival contentions and perused the material available on record. The ld CIT(A) has returned a finding that there is no evidence to show 50% of stock of marble block is defective and also there is no justification for valuing such stock at 55% of its value. In response, the ld AR has submitted that the assessee on physical verification has determined 50% of stock as defective and considering its realizable value has v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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