ENAR TRADERS P. LTD, MUMBAI v. ITO WD 1(1)(3), MUMBAI

ITA 3782/MUM/2009 | 2004-2005
Pronouncement Date: 28-02-2011 | Result: Dismissed

Appeal Details

RSA Number 378219914 RSA 2009
Assessee PAN AAACE1107B
Bench Mumbai
Appeal Number ITA 3782/MUM/2009
Duration Of Justice 1 year(s) 8 month(s) 16 day(s)
Appellant ENAR TRADERS P. LTD, MUMBAI
Respondent ITO WD 1(1)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted J
Tribunal Order Date 28-02-2011
Date Of Final Hearing 25-01-2011
Next Hearing Date 25-01-2011
Assessment Year 2004-2005
Appeal Filed On 11-06-2009
Judgment Text
1 ITA NO.3782 &4275/MUM/2009 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI J J J J BENCH BENCH BENCH BENCH MUMBAI BENCHES MUMBAI MUMBAI BENCHES MUMBAI MUMBAI BENCHES MUMBAI MUMBAI BENCHES MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI R V EASWAR PRESIDENT & SHRI R V EASWAR PRESIDENT & SHRI R V EASWAR PRESIDENT & SHRI R V EASWAR PRESIDENT & SHRI R K PANDA AM SHRI R K PANDA AM SHRI R K PANDA AM SHRI R K PANDA AM ITA NO. ITA NO. ITA NO. ITA NO. 3782/MUM/2009 3782/MUM/2009 3782/MUM/2009 3782/MUM/2009 (ASST YEAR (ASST YEAR (ASST YEAR (ASST YEAR 2004 2004 2004 2004- -- -05 0505 05 ) )) ) M/S ENAR TRADERS P LTD 3AA EDENA 98 MAHARSGHI KARV ROAD MUMBAI 2 VS THE INCOME TAX OFFICER WARD 1(1)(3) MUMBAI ( (( (APPELLANT APPELLANT APPELLANT APPELLANT) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO.AAACE1107B AAACE1107B AAACE1107B AAACE1107B ITA NO. ITA NO. ITA NO. ITA NO. 4275/MUM/2009 4275/MUM/2009 4275/MUM/2009 4275/MUM/2009 (ASST YEAR (ASST YEAR (ASST YEAR (ASST YEAR 2004 2004 2004 2004- -- -05 05 05 05 ) )) ) THE INCOME TAX OFFICER WARD 1(1)(3) MUMBAI VS M/S ENAR TRADERS P LTD 3AA EDENA 98 MAHARSGHI KARV ROAD MUMBAI 2 (APPE (APPE (APPE (APPELLANT) LLANT) LLANT) LLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY SHRI V C SHAH REVENUE BY SHRI SMEET KUMAR SR DR PER R K PANDA AM PER R K PANDA AM PER R K PANDA AM PER R K PANDA AM THESE ARE CROSS APPEALS THE FIRST ONE FILED BY THE ASSESSEE AND THE SECOND ONE FILED BY THE REVENUE AND ARE DIRECTED AGAINST T HE ORDER DATED 13.5.2009 OF THE CIT(A)I MUMBAI RELATING TO ASSESSMENT YEAR 2004 -05. 2 APPEAL IN ITA NO.3782/MUM/2009 WAS EARLIER DISMIS SED BY THE TRIBUNAL FOR NON PROSECUTION. SUBSEQUENTLY THE TRIBUNAL VIDE OR DER DATED 22.10.2010 RECALLED ITS EARLIER ORDER. THEREFORE APPEAL IN IT A NO.3782/MUM/2009 IS A RECALLED MATTER. 2 ITA NO.3782 &4275/MUM/2009 2.1 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSES SEE IS ENGAGED IN MANUFACTURING 100% COTTON NETTING MOSQUITO CLOTH. D URING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED FROM THE P&L ACCOUNT THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF ` 40 52 233/- UNDER THE HEAD DECREASE IN STOCK. ON BEING ASKED BY THE ASSESSING OFFICER TO EXPLAIN AS TO WHY THE DECREASE IN STOCK DEBITED TO THE P&L ACCOUNT SHOULD NOT BE DISALLOWED THE ASSESSEE EXPLAINED THE DECREASE IN STOCK TO THE P&L ACCOUNT BY REFERRING TO THE OPENING STOCK PURCHASES SALES AND CLOSING STOCK D ETAILS OF SCHEDULE 11 ATTACHED WITH THE FINAL ACCOUNTS. IT WAS SUBMITTED THAT THE OPENING STOCK AS ON 1.4.203 VALUED AT ` 5 563 539/- WAS VALUED @ 34.66 PER MTR WHEREAS AS ON 31.3.2004 THE CLOSING STOCK WAS ARRIVED AT ` 1 726 715/- @ 11.84 PER MTR. IT WAS SUBMITTED THAT THERE WAS NO MANUFACTURING DURIN G THE YEAR BUT THE READY STOCK WHICH WAS VALUED AT THE END OF THE PREVIOUS YEAR @ 34.66 PER MTR HAS BEEN VALUED AT THE YEAR END AT ` 11.84 PER MTR ON THE BASIS OF CONSISTENT METHOD OF ACCOUNTING OF VALUATION. IT WAS SUBMITTE D THAT THE ASSESSEE REGULARLY VALUED THE CLOSING STOCK AT COST OR MARKET PRICE WH ICHEVER IS LOWER. 2.2 VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER. ACCORDING TO HIM BUSINESS LOSS CAN ACCRUE ONLY WHEN SALES ARE TAKEN PLACE. IF THE SALE PRICE IS LESSER THEN THAT OF THE COST PRICE AND IN THAT CASE IF LOSS HAPPEN THEN THAT KIND OF LOSS CAN BE HELD AS BUSINESS LOSS BUT AS A RESULT OF DECREASE IN THE VALUE OF STOCK AS ON THE DATE OF VALUATION IT CANNOT BE HELD AS BUSINESS LOSS. HE NOTED THAT THE ASSESSEE HAD MADE CERTAIN ADJUSTMENTS IN THE VALUE OF THE FINISHED GOODS ON THE BASIS OF CERTAIN SALES DONE IN THE 3 ITA NO.3782 &4275/MUM/2009 SUBSEQUENT YEAR AND IT HAS INCREASED ITS BUSINESS L OSS DURING THE YEAR TO THAT EXTENT NOTIONALLY WORKED OUT ON THE BASIS OF SALES TAKEN PLACE IN THE SUBSEQUENT YEAR I.E. ASSESSMENT YEAR 2005-06. HE NOTED THAT I T IS NOT A LOSS INCIDENTAL TO BUSINESS AND HENCE IT IS NOT DEDUCTABLE; THEREFORE IT CANNOT BE TREATED AS BUSINESS EXPENDITURE U/S 37 OF THE I T ACT. THE AS SESSING OFFICER ACCORDINGLY DISALLOWED THE LOSS OF ` 40 52 233/- DEBITED TO THE P&L ACCOUNT UNDER THE H EAD DECREASE IN STOCK. 3 BEFORE THE CIT(A) THE ASSESSEE FILED A CHART REC ONCILING THE DECREASE IN VALUE OF STOCK AMOUNTING TO ` 40 52 233/-. IT WAS SUBMITTED THAT OUT OF THE TOTAL STOCK OF 160532.52 MTRS AT THE BEGINNING OF T HE YEAR THE ASSESSEE COULD SELL ONLY 7700.45 METRES DURING THE YEAR. THE OPENI NG STOCK OF TWO TYPES OF PRODUCT WAS VALUED @ ` 30/- PER METRE AND ` 26.80 PER METRE. OUT OF THE PRODUCTS WHICH WAS ` 30/- PER METRE 7700.45 METRES WERE SOLD FOR ` 1 45 742/- WHICH WAS @ 19/- PER METRE. THUS THE ASSESSEE HAS INCURRED A LOSS VIS-A-VIS THE VALUE OF THE OPENING STOCK. IT WAS SUBMITTED THAT THE BALANCE STOCK REMAINED UNSOLD AS ON 31.3.2004. THE MARKET PRICE OF THIS ST OCK ON THE LAST DATE OF THE YEAR WAS MUCH LESS THAN THE VALUE OF THE OPENING ST OCK. SUBSEQUENTLY IN THE NEXT YEAR THE ASSESSEE HAS SOLD A FEW ITEMS AND TH E CLOSING STOCK VALUE AS ON 31.3.2004 HAS BEEN VALUED ON THE BASIS OF THE MARKE T PRICE REALIZED. IT WAS ARGUED THAT THE CLOSING STOCK HAS TO BE VALUED AS P ER COST OR MARKET PRICE WHICHEVER IS LOWER. IN THIS CASE SINCE THE MARKET PRICE WAS LOWER AND AS SUCH THE ASSESSEE HAS APPLIED THE MARKET PRICE FOR THE V ALUATION OF THE CLOSING STOCK. 4 ITA NO.3782 &4275/MUM/2009 3.1 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSE E THE CIT(A) SUSTAINED THE ADDITION OF ` 10 81 580/- AGAINST ` 40 52 223/- MADE BY THE ASSESSING OFFICER BY HOLDING AS UNDER: 3.8 I HAVE CAREFULLY CONSIDERED THE ENTIRE FACTS AND GONE THROUGH THE VARIOUS STATEMENTS SUBMITTED BEFORE ME. AS IT IS QU ITE CLEAR THE ACTUAL REDUCTION IN THE CLOSING STOCK VALUE DUE TO REVALUA TION IS ONLY 28 20 614/-. THE OTHER ITEMS GOING INTO THE TOTAL SUM OF ` 40 52 223/- CLAIMED TOWARDS DECREASE IN STOCK HAVE BEEN PROPERLY EXPLAINED BY T HE LD AR. THE PRICE WHICH HAS BEEN REALISED FROM THE SALE OF THE OPENI NG STOCK OF MANUFACTURED GOODS AND SPARE PARTS HAVE BEEN DULY C REDITED TO THE P&L ACCOUNT. HENCE THE SAME ITEMS CANNOT REMAIN IN THE CLOSING STOCK AND HAVE BEEN RIGHTLY REDUCED. SIMILARLY THE EXCISE DUT Y WHICH WAS ADDED TO THE VALUE OF THE OPENING STOCK HAS BEEN WRITTEN BAC K AND CREDITED TO THE P&L ACCOUNT. HENCE THIS CAN NO MORE BE THE COMPONE NT OF THE VALUE OF THE CLOSING STOCK. SO THE TOTAL SUM OF ` 7 85 197/- REDUCED UNDER THIS HEAD IS PERFECTLY JUSTIFIED. SIMILARLY WHEN THE OPENING STOCK HAS BEEN SOLD AT A LOWER PRICE IT HAS RESULTED IN A LOSS. AS THE TOTA L REALIZATION FROM THE SALE OF PART OF THE STOCK IS LESS THAN THE VALUE OF THAT STOCK INCLUDED IN THE OPENING STOCK THE RESULTANT LOSS OF ` 85 271/- HAS BEEN CORRECTLY REDUCED FROM THE CLOSING STOCK. 3.9. THAT BRINGS ME TO THE SUM OF ` . 28 20 614/- WHICH IS DERIVED BY THE VALUATION OF THE CLOSING STOCK AT A RATE LOWER THAN THE VALUE OF THE SAME STOCK AS OPENING STOCK. THERE IS NO DISPUTE WITH TH E PRINCIPLE THAT THE CLOSING STOCK HAS TO BE VALUED AT THE COST OR MARKE T PRICE WHICHEVER IS LOWER ACCORDING TO THE CHOICE OF THE ASSESSEE. THE OPENING STOCK OF THE TWO TYPES OF PRODUCT WAS VALUED AT 30 AND 26.80 PER METER AS PER THE DETAILED STOCK TREATMENT SUBMITTED BEFORE ME. THESE TWO ITEMS HAS BEEN VALUED AT THE RATE OF 11.75 AND 11.00 PER METER FOR THE PURPOSE OF THE CLOSING STOCK. THE RATE OF 11.75 AND 11 HAS BEEN AD OPTED BY THE APPELLANT SINCE IT COULD SELL A SMALL QUANTITY OF THE PRODUCT IN THE SUBSEQUENT FINANCIAL YEAR AT THIS RATE. SUCH SALES WERE DONE IN JULY 2004 AND FEB 2005 AS PER THE COPIES OF INVOICES SUBMITTE D BEFORE ME. HOWEVER I DO NOT AGREE THAT THE PRICE REALIZED IN THE MONTH OF JULY 2004 AND FEB 2005 CAN BE APPLIED AS MARKET PRICE OF THE SAME GOO DS AS ON 31.3.2004. EVEN IF THE APPELLANTS EXPLANATION REGARDING THE L OSS OF ITS TRADE WITH THE ARMED FORCES IS ACCEPTED AND IT IS ACCEPTED THAT T HE APPELLANT WAS NOT IN A POSITION TO SALE THE PRODUCTS IN THE OPEN MARKET STILL THEN THE MARKET PRICE HAS TO BE REASONABLY WORKED OUT. HERE I FIND THAT THE APPELLANT HAS REALIZED SALE PROCEEDS OF ` 19 PER METER DURING THE YEAR. SO THE SAME PRICE CAN BE REASONABLY APPLIED TO THE VALUE OF THE CLOSING STOCK AS ON THE LAST DATE OF THE ACCOUNTING YEAR. THE OTHER ITEM CA N BE VALUED @ ` 18/- PER METER. AS PER THE STATEMENT SUBMITTED BEFORE ME THE CLOSING STOCK VALUE HAS BEEN WORKED OUT BY THE APPELLANT AS UNDER : 5 ITA NO.3782 &4275/MUM/2009 S.N S.NS.N S.N PARTICULARS PARTICULARS PARTICULARS PARTICULARS OPENING STOCK OPENING STOCK OPENING STOCK OPENING STOCK CLOSING STOCK AS VALUED BY THE CLOSING STOCK AS VALUED BY THE CLOSING STOCK AS VALUED BY THE CLOSING STOCK AS VALUED BY THE APPELLANT APPELLANT APPELLANT APPELLANT RATE TO BE APPLIED RATE TO BE APPLIED RATE TO BE APPLIED RATE TO BE APPLIED QTY RATE VALUE QTY RATE VALUE QTY RA TE VALUE 1 NMRM WHITE 122 CM 7274 2.37 30 2182271.1 64992.6 11.75 763663.0 5 64992.6 19 1234859.4 2 NMRM KHAKI 122CM 7602 9.22 30 2280876.6 74666.93 11 821336.2 3 74666.93 18 1344004 3 NMRM WHITE 109 CM 10455.7 6 26.8 280214.37 10844.56 11.75 127423.5 8 10844. 56 19 206046 4 NMRM KHAKI 109 CM 1305.21 26.8 34979.63 1299.26 11 14291.86 1299.26 18 23386.68 5 EX PAYABLE ON CL. STOCK 785197 TOTAL 160532. 5 5563538.7 15183.35 1726715 2808285 3.10 THE CLOSING STOCK VALUE WORKED OUT AT THESE R ATES OF ` . 19/- AND ` 18/ PER METER COMES TO ` . 28 08 295/-. THE APPELLANT HAS VALUED IT AS ` 17 26 715/-. THE DIFFERENCE OF ` 10 81 580 SHOULD BE REDUCED FROM THE LOSS CLAIMED BY THE APPELLANT FROM DECREASE IN VALU E OF STOCK. ACCORDINGLY ADDITION OF ` . 10 81 580/- UNDER THIS HEAD IS CONFIRMED. THE APP ELLANT GETS RELIEF OF THE BALANCE AMOUNT OUT ` 40 52 223/-MADE IN THIS GROUND. 4 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) GIVING PA RT RELIEF THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL HERE BEFORE US WI TH THE FOLLOWING GROUNDS: ITA 3762/MUM/2009 (BY THE ASSESSEE) ITA 3762/MUM/2009 (BY THE ASSESSEE) ITA 3762/MUM/2009 (BY THE ASSESSEE) ITA 3762/MUM/2009 (BY THE ASSESSEE) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) ERRED IN SUSTAINING DISALLOWANCE/ADDITION OF ` . 10 81 580/- STATED TO BE ON ACCOUNT OF UNDER VALUATION OF STOCK. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD CIT(A) ERRED IN OPINING THAT STOCK SHOULD HAVE BEEN VALUED AT ` 28 08 295/- AS AGAINST THE REALIZABLE VALUE OF ` 17 26 715/- ADOPTED BY YOUR APPELLANT ON THE BASIS OF EXPECTED REALISABLE PRICE BASED ON NEGOTIATIONS WITH THE PURCHASING PARTIES AND AS PER PROFORMA INVOICE SUBMITTED BY YOUR APPELLANT ON 1T JULY 2004 AS YOUR APPELLANT COULD NOT EXPECT ANY REALISABLE PRICE ABOVE THAT. THIS IN FAC T IS SUPPORTED BY ACTUALLY REALISED PRICE SUBSEQUENTLY. THE LD CIT(A) ADMITS THAT CLOSING STOCK IS TO BE V ALUED AT COST OR REALISABLE PRICE WHICHEVER IS LESS BUT ERRED IN DIR ECTING TO VALUE THE SAME AT ACTUALLY REALIZED PRICE WHERE AS THE REALISABLE PRICE HAD FALLEN DOWN TO ` 11/- PER METER AS PER COMMITMENT GIVEN THOUGH SAME WAS GIVEN IN WRITING ON 1 ST JULY 2004 I.E. IN FOLLOWING ASSESSMENT YEAR. HENCE THE VALUE OF ` . 17 26 715/- WAS CORRECTLY ADOPTED BY YOUR APPELLA NT. 6 ITA NO.3782 &4275/MUM/2009 3. WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTER NATIVE YOUR APPELLANT SUBMITS THAT THE LOSS OF ` 10 81 580/- IF IT IS HELD AS SUFFERED IN ASSESSMENT YEAR 2005-06 DIRECTIONS MAY BE ISSUED TO ALLOW THE SAME IN ASSESSMENT YEAR 2005-06 AS STOCK HAS INTIMATELY BEE N SOLD AT THE VALUE ADOPTED BY YOUR APPELLANT ON 31 ST MARCH 2004 AND SAME APPEARED IN FINAL ACCOUNTS OF YOUR APPELLANT. ITA ITA ITA ITA 4275 4275 4275 4275/MUM/2009 (BY THE /MUM/2009 (BY THE /MUM/2009 (BY THE /MUM/2009 (BY THE REVENUE REVENUE REVENUE REVENUE) )) ) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) XXI ERRED IN REVALUATING CLOSING STOCK AT AVERAGE SALE PRICE OF THE YEAR AS AGAINST THE OPENING VALUE RATE ADOPTED BY THE ASSES SING OFFICER. 5 THE LD COUNSEL FOR THE ASSESSEE REFERRING TO THE AUDITED ACCOUNTS PLACED AT PAGES 9 TO 19 OF THE PAPER BOOK DREW THE ATTENTI ON OF THE BENCH TO PAGE 12 AND SUBMITTED THAT THE SALE OF THE ASSESSEE DURING THE YEAR IS RS. 1 45 742/- AS AGAINST RS. 20 50 017/- IN THE IMMEDIATELY PRECEDIN G ASSESSMENT YEAR. HE SUBMITTED THAT THERE IS NO MANUFACTURING DURING THE YEAR AND WHATEVER STOCK WAS LYING WITH THE ASSESSEE WAS DEAD STOCK. THE COM PANY DURING THE YEAR DEBITED THE ELECTRICITY CHARGES AND SOME OTHER MAND ATORY EXPENSES INCURRED BY IT. THE CLOSING STOCK HAS BEEN VALUED AT COST OR MA RKET VALUE WHICHEVER IS LESS. HE SUBMITTED THAT EVEN IN FY 2007-08 THE ASSESSEE WAS ABLE TO REALIZE THE PRICE OF RS. 11/- PER METER. THE ASSESSEE HAS FOLLOWED T HE GUIDELINES AS PER ACCOUNTING STANDARD WHICH HAS BEEN PRESCRIBED BY TH E INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. 5.1 REFERRING TO PAGE 20 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE SUMMARY OF STOCK STATEMENT FOR THE YEA R ENDING 31.3.2004 AND SUBMITTED THAT THE CLOSING STOCK HAS BEEN VALUED CO RRECTLY BY THE ASSESSEE AS PER ACCOUNTING STANDARD II. HE SUBMITTED THAT THE LOSS SUFFERED BY THE ASSESSEE DUE TO SUCH VALUATION IN CLOSING STOCK IS GENUINE L OSS THE BENEFIT OF WHICH MUST 7 ITA NO.3782 &4275/MUM/2009 BE MADE AVAILABLE TO THE ASSESSEE. HE SUBMITTED TH AT THE CIT(A) FOLLOWED THE METHOD OF AVERAGE COST WHICH IS NOWHERE PRESCRIBED . HE SUBMITTED THAT THE BUSINESS MAN KNOWS WHAT IS THE PRICE OF THE CLOSING STOCK WHICH CAN BE REALIZED AND THE CIT(A) CANNOT SUBSTITUTE HIMSELF AT THE PL ACE OF THE ASSESSEE. HE ACCORDINGLY SUBMITTED THAT THE VALUATION ADOPTED B Y THE ASSESSEE HAS TO BE ACCEPTED. 5.2 THE LD DR ON THE OTHER HAND SUBMITTED THAT TH E OPENING STOCK OF FINISHED GOODS HAS BEEN VALUED AT RS. 30/- AND RS. 26.80 RES PECTIVELY; WHEREAS THE ASSESSEE HAS VALUED THE CLOSING STOCK AT RS. 11.75 AND RS. 11/- RESPECTIVELY. HE SUBMITTED THAT THE ASSESSEE HAS ADOPTED THE VALUATI ON OF THE CLOSING STOCK AT A PRICE WHICH HE HAS REALIZED AFTER 3 YEARS; WHEREA S DURING THE YEAR HE HAS SOLD ITS GOODS AT MUCH HIGHER PRICE. THEREFORE HE CANN OT SUBSTITUTE THE RATE ACCORDING TO HIS SWEET WILL. HE SUBMITTED THAT THE CIT(A) HAD ADOPTED THE RATE FOR VALUATION OF THE CLOSING STOCK WHICH WAS GIVEN BY THE ASSESSEE AT THE TIME OF HEARING BEFORE THE CIT(A). BUT NOW HE CANNOT SAY THAT THE VALUATION GIVEN BY THE CIT(A) IS WRONG OR ERRONEOUS. HE HOWEVER SUBM ITTED THAT THE VALUATION ADOPTED BY THE AO IS JUSTIFIED. THEREFORE THE ORDE R OF THE CIT(A) SHOULD BE SET ASIDE AND THAT OF THE AO BE UPHELD. 6 WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE PARTIES PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. IN OUR CONSIDERED OPINION THE ORDER PASSED BY THE LD CIT(A) IS A REASONED ORDER. WE AGREE WITH THE FINDINGS GIVEN B Y THE LD CIT(A) THAT THE SALE OF THE OPENING STOCK OF THE FINISHED GOODS AND SP ARE PARTS WHICH HAVE BEEN DULY CREDITED TO THE P&L ACCOUNT CANNOT REMAIN IN T HE CLOSING STOCK AND THEREFORE THE SAME HAS BEEN RIGHTLY BEEN REDUCED. SIMILARLY THE EXCISE DUTY 8 ITA NO.3782 &4275/MUM/2009 WHICH WAS ADDED TO THE VALUE OF THE OPENING STOCK W HICH HAS BEEN CREDITED TO THE P&L ACCOUNT THEREFORE THE SAME NO LONGER CA N BE THE COMPONENTS OF THE VALUATION OF THE CLOSING STOCK. 6.1 SO FAR AS THE ADOPTION OF THE VALUE AT RS. 19/- AND RS. 18/- PER METER AS AGAINST RS. 11.75 AND RS. 11/- ADOPTED BY THE ASSE SSEE AND RS. 30/- AND RS. 26.80 ADOPTED BY THE AO WE FIND THE ASSESSEE DURIN G THE YEAR HAS REALIZED SALE PROCEEDS @ RS.19/- PER METER. THEREFORE ON THE BA LANCE SHEET DATE AS ON 31.3.2004 THE OPENING PRICE OF THE TWO ITEMS WAS RS . 30/- AND RS. 26.80 RESPECTIVELY; WHEREAS THE REALIZABLE SALE PRICE DUR ING THE YEAR WAS RS. 19/ PER METER. THEREFORE ADOPTION OF THE VALUE BY THE CIT( A) FOR THE TWO ITEMS AT RS. 19/- AND RS. 18/- RESPECTIVELY IS MORE SCIENTIFIC THAN THE ADOPTION OF THE VALUATION AT RS. 11.75 AND RS. 11/- PER METER BY THE ASSESSEE ON THE BASIS OF SALES MADE IN THE SUBSEQUENT YEAR. WE FURTHER FIND THE CIT(A) HAS VALUED THE CLOSING STOCK ON THE BASIS OF FIGURES GIVEN BY THE ASSESSEE HIMSELF. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED ORDER PAS SED BY THE LD CIT(A) WE DO NOT FIND ANY INFIRMITY IN THE SAME. THE GROUNDS RAISED BY THE ASSESSEE AS WELL AS THE REVENUE ARE ACCORDINGLY DISMISSED. 7 IN THE RESULT THE APPEALS FILED BY THE ASSESSEE AS WELL AS THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THE 28 TH DAY OF FEB 2011 SD/- SD/- ( (( ( R V EASWAR R V EASWAR R V EASWAR R V EASWAR ) )) ) PRESIDENT ( (( ( R K PANDA R K PANDA R K PANDA R K PANDA ) )) ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 28 TH FEB 2011 RAJ* 9 ITA NO.3782 &4275/MUM/2009 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI