TMI Blog2002 (9) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. On the contrary Shri Radhakrishna, learned representative for the Revenue submitted that the original return was filed on 31st Oct., 1996. The details called for by the AO was filed by the assessee on 28th Oct., 1997. The assessee has also filed a revised return on 23rd March, 1998. In the notice issued under s. 143(2), the date of return was wrongly mentioned and it is only a mistake. So long as the assessee has not disputed the filing of the original return as well as the revised return, there cannot be any illegality of the AO, merely because the date of return was wrongly mentioned in the notice issued under s. 143(3). 4. We have considered the rival submission and we have also perused the materials available on record. It is not in dispute that the assessee filed the original return on 31st Oct., 1996. The revised return was also filed on 23rd March, 1998. These facts are admitted by the assessee. Merely because the AO has wrongly mentioned the date of return as 31st Dec., 1996, it will not invalidate the order of the AO. The order of CIT(A) very clearly shows that the notice issued under s. 143(2) dt. 5th Nov., 1998, wrongly refers to the date of return as 31st Dec., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a loss of Rs. 11,68,159 on account of writing off irrecoverable advances made by the assessee. The learned representative further submitted that the assessee made advance for the purpose of acquiring a machinery being RF network analyser model 875A with 003GHZ extensioner for an amount of Rs. 60,20,527. Due to shortage of funds the assessee couldnot clear the consignment and the Asst. Collector issued a notice to show-cause why the consignment should not be sold. In that circumstances, the assessee made arrangement through their banker and a debit of Rs. 11,68,159 was made on assessee's account on 22nd Oct., 1993. However, the assessee subsequently, decided not to take delivery of the machinery. The AO rejected the claim of the assessee on, the ground that it is a capital loss. The learned representative submitted that the present transactions does not bring any capital asset into existence, since the assessee has decided not to take delivery of the machinery. The amount paid by the assessee has to be treated as revenue loss and it ought to have been allowed while computing the income of the assessee. The learned representative in support of his contention placed his reliance in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Subsequently, the assessee has decided not to take delivery of the machinery. In view of the factual aspects of this case, we are of the considered opinion, that the judgment of the Hon'ble Supreme Court in the case of India Cements Ltd. vs. CIT is not applicable to the facts of this case. 8. The other case relied upon by the learned representative is Addl. CIT vs. Akkamba Textiles Ltd. In this case the assessee paid guarantee commission on deferred payment. The question before the High Court was whether the guarantee commission paid was towards capital expenditure or revenue. The High Court is of the view that the guarantee commission paid by the assessee must be treated as revenue expenditure and not capital expenditure. In the case on our hand, it is not the case of the assessee that they have paid any guarantee commission for deferred payment. The assessee paid part of the purchase price. The assessee has to forego the purchase price paid by her since she decided not to take delivery of the machinery. In our opinion, the facts of the present case on our hand is entirely on different aspect, hence, the judgment of the Hon'ble Andhra Pradesh High Court is not applicable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to confirm the order of the lower authorities on this ground of appeal also. 9. The next issue is regarding the addition of Rs. 19,48,760 towards profit on account of valuation of closing stock at market price. The learned representative for the assessee submitted that the business of the assessee was taken over by Kaveri Telecoms Ltd. The assesse was not a dealer in raw materials. The assessee was only manufacturer. The raw materials and unfinished goods cannot be sold in the open market. Unfinished goods cannot be made available for sale in the open market. It can be taken over only by another manufacturer. In those circumstances, the addition of 43 per cent GP is not called for. The labour charges has to be included for calculating the market price for semifinished goods. 10. On the contrary, the learned Departmental Representative submitted that the assessee has not furnished the inventory of the closing stock prepared on the basis of the market price as on the taking over of the business by the company. Hence, it is not practically possible for the AO to ascertain the exact GP percentage of these goods. As per the agreement between the assessee and the company, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtunity to the assessee and decide afresh in accordance with law without being influenced by any of our observation made in this order. In our opinion, the sale consideration fixed or determined by the assessee and the company shall have a bearing in valuing the closing stock of the assessee. 12. The other ground of appeal relates to disallowance of Rs. 8,33,139 for the purpose of relief under s. 80-IA. Now it is well settled that the profit derived from the industrial undertaking is alone eligible for benefits under s. 80-IA. The lower authorities have disallowed the interest of Rs. 2,80,130 and service charges of Rs. 5,14,312 and liabilities written back of Rs. 37,570. In our opinion, these amounts cannot be construed as derived from industrial undertaking. Now, it is well settled that, unless the profit is derived from the industrial undertaking, the same is not eligible for any benefit under s. 80-IA. In those circumstances, we find no infirmity in the order of lower authorities. Accordingly, the same is confirmed. 13. The other ground of appeal with respect to disallowance of Rs. 21,437 on account of loss on scrap on machinery. The learned representative during the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X
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