DCIT, Ludhiana v. M/s Upper India Steel Mfg. & Engg. Co. Ltd., Ludhiana

ITA 832/CHANDI/2011 | 2008-2009
Pronouncement Date: 31-07-2012 | Result: Partly Allowed

Appeal Details

RSA Number 83221514 RSA 2011
Bench Chandigarh
Appeal Number ITA 832/CHANDI/2011
Duration Of Justice 10 month(s) 29 day(s)
Appellant DCIT, Ludhiana
Respondent M/s Upper India Steel Mfg. & Engg. Co. Ltd., Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2012
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 31-07-2012
Date Of Final Hearing 16-07-2012
Next Hearing Date 16-07-2012
Assessment Year 2008-2009
Appeal Filed On 01-09-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE MS.SUSHMA CHOWLA JUDICIAL MEMBER AND SHRI MEHAR SINGH ACCOUNTANT MEMBER ITA NO. 832/CHD/2011 ASSESSMENT YEAR: 2008-09 DCIT CIRCLE-I V M/S UPPER INDIA STEEL MFG. LUDHIANA. & ENGG. CO. LTD. DHANDARI KALAN FOCAL POINT PAN: AAACV-2091E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJEET SINGH RESPONDENT : SHRI SUDHIR SEHGAL DATE OF HEARING : 16.07.2012 DATE OF PRONOUNCEMENT : 31.07.2012 ORDER PER MEHAR SINGH AM THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 06-06.2011 PASSED BY THE LD . CIT(A) LUDHIANA. 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 16 510/- (12% OF RS.1 37 577/-) MADE ON ACCOUNT OF INTEREST ON AMOUNT OUTSTANDING AGAINST THE SISTER CONCERNS OF THE ASSESSEEE CONSIDERING IT ADV ANCE FOR NON BUSINESS PURPOSES. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN DELETING THE DISALLOWANCES OF RS.7 68 000/- MADE ON ACCOUNT INTEREST NOT DECLARED BY THE ASSESSEE ON UNDISCLOSED INVES TMENT OF RS. 64 LACS NOT RECORDED IN THE BOOKS OF ACCOUNT. 3. THAT THE LD CIT(A) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS. 4 08 835/- ON ACCOUNT LOSS OF S TOCK AS THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THIS C LAIM. 2 4. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS.18 200/- MADE U/S 14A ON THE IN COME CLAIMED AS EXEMPT TO TAX. 5. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS. 2 84 420/- MADE ON ACCOUNT OF I NTEREST CAPITALIZED ON PROPORTIONATE BASIS PERTAINING TO THE PRE- OPERATIVE PERIOD AS THE FUND BORROWED FOR THE PURCH ASE OF MACHINERY KEEPING IN VIEW OF RATIO OF DECISION OF H ON'BLE PUNJAB & HARYANA HIGH COURT REPORTED IN 286 ITR. 6. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY ALLOWING THE ASSESSEE'S CLAIM WORTH RS. 7 09 457 /- IN RESPECT OF REDUCING THE INCOME DUE TO VALUATION OF CLOSING STOCK. THE CLAIM OF ASSESSEE IS NOT ACCEPTABLE KEEPING IN VIEW JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF G OETEZ (INDIA) LTD. VS CIT REPORTED IN 284 ITR 323(SC). 7. THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AN D THAT OF THE A.O. BE RESTORED. 8. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF. 3. IN GROUND NO.1 REVENUE CONTENDED THAT CIT(A) ER RED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.16 510/- (12% OF RS.1 37 577/-) MADE ON ACCOUNT OF INTEREST ON AMOUNT OUTSTANDING AGAINST THE SISTER CONCERN OF TH E ASSESSEE CONSIDERING IT ADVANCE FOR NON-BUSINESS P URPOSE. 4. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS IT WAS STATED THAT GROUND NO.1 IS COVERED AGAINST THE ASSE SSEE IN ITA NO. 920/CHD/2009 A.Y. 2006-07 AND ITA NO. 1293/CHD/2010 A.Y. 2007-08 ORDER DATED 08.02.2012. 5. WE HAVE CAREFULLY PERUSED AND CONSIDERED THE RIV AL SUBMISSIONS AND THE ISSUE RAISED BY THE REVENUE IN GROUND NO.1 VIS--VIS THE ISSUE ADJUDICATED BY THE TRIBUNA L IN ITA NO. 920/CHD/2009 (SUPRA) IN ASSESSEE'S OWN CASE. T HE IDENTICAL ISSUE HAS BEEN ADJUDICATED BY THE TRIBUNA L IN 3 ASSESSEE'S OWN CASE AGAINST THE ASSESSEE. RESPECTFU LLY FOLLOWING THE SAID DECISION ISSUE IS ADJUDICATED A GAINST THE ASSESSEE. THE RELEVANT PART OF THE DECISION IS REP RODUCED HEREUNDER : 10. IN GROUND NO.4 REVENUE CONTENDED THAT THE CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.72 000/- MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST U/S 36(1)(III) OF THE ACT. THE AO FOUND THAT M/S UPPER INDIA SPECIAL CASTING LTD. AS AN ASSOCIATE CONCERN OF THE ASSESSEE COMPANY. NO CONTRACT HAS BEEN ENTERED INTO BY THE APPELLANT WITH THIS COMPANY DURING THE PERIOD UNDER REFERENCE. HOWEVER AS PER THE DETAILS OF LOANS AND ADVANCES AN ADVANCE OF RS.6 56 539/- WAS OUTSTANDING AGAINST THE ASSOCIATE CONCERN. ON THE OTHER HAND ASSESSEE WAS PAYING INTEREST ON UNSECURED LOANS RAISED BY IT @ 11%. THEREFORE AO MADE THE DISALLOWANCE OF RS.72 219/- FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT V ABHISHEK INDUSTRIES LTD. 286 ITR 1 (P&H). 11. WE HAVE GONE THROUGH THE FINDINGS OF THE LD. CIT(A) CAREFULLY AND FOUND THAT THE DELETION MADE BY THE CIT(A) IS FOUNDED ON MISINTERPRETATION OF TH E RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ABHISHEK INDUSTRIES (SUPRA) HEAD-NOTES OF THE SAME ARE REPRODUCED HEREUNDER : BUSINESS EXPENDITURE-INTEREST ON BORROWED CAPITAL-CONDITION PRECEDENT FOR GRANT- BORROWED CAPITAL MUST BE USED FOR BUSINESS PURPOSES-LOANS ADVANCED INTEREST-FREE TO SISTER CONCERNS WHILE PAYMENT OUTSTANDING ON BORROWINGS BY COMPANY-INFERENCE THAT ADVANCES WERE FROM BORROWED FUNDS AND FOR NON-BUSINESS PURPOSES-ONUS ON ASSESSEE TO 4 SHOW BORROWINGS USED FOR BUSINESS PURPOSES-NOT ON REVENUE TO SHOW NEXUS BETWEEN BORROWINGS AND ADVANCES-THAT ADVANCES BY COMPANY WERE OUT OF ITS OWN FUNDS OF SHARE CAPITAL OR OUT OF MIXED FUNDS NOT SUFFICIENT TODISCHARGE ONUS- INTEREST TO EXTENT RELATING TO SUMS ADVANCED INTEREST-FREE TO BE DISALLOWED- INCOME-TAX ACT 1961 S.36(1)(III). 12. RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED. 6. THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED. 7. IN GROUND NO.2 REVENUE CONTENDED THAT CIT(A) ER RED IN DELETING THE DISALLOWANCE OF RS.7 68 000/- MADE ON ACCOUNT OF INTEREST NOT DECLARED BY THE ASSESSEE ON UNDISCL OSED INVESTMENT OF RS.64 LACS NOT DECLARED IN THE BOOKS OF ACCOUNT. 7(I) IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS IT TRANSPIRED THAT ISSUE IS COVERED AGAINST THE REVENU E IN ASSESSEE'S OWN CASE IN ITA NO. 1293/CHD/2010 A.Y. 2 007- 08 AS PER PARA 16 & 17. WE HAVE PERUSED THE ISSUE IN QUESTION AND FOUND THAT THE SAME IS COVERED AGAINST THE REVENUE IN ASSESSEE'S OWN CASE. THE SAME IS REPROD UCED HEREUNDER : 16. IN GROUND NO.1 REVENUE CONTENDED THAT CIT(A) ERRED IN LAW IN DELETING ADDITION OF RS.7 68 000/- MADE BY AO ON ACCOUNT OF UNACCOUNTED INTEREST INCOME. THE FINDINGS OF THE LD. CIT(A) ARE RECORDED IN PARA 3.2 OF THE ORDER DATED 20.08.2010 FOR THE 5 ASSESSMENT YEAR 2007-08 RELEVANT PART OF THE SAME ARE REPRODUCED HEREUNDER : 3.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE AR. FIRST ADDITION OF RS.7 68 000/- HAS BEEN MADE ON ACCOUNT OF UNACCOUNTED INTEREST INCOME EARNED OUT OF THE BOOKS OF ACCOUNT OF THE ASSESSEE AND FOR THAT THE AO HAS RELIED UPON THE FINDING OF THE AO AS GIVEN IN ASSESSMENT YEAR 2006-07. ABOVE FINDINGS HAVE BEEN DISCUSSED FROM PAGES 2 TO 5 AND IT HAS BEEN STATED THAT LAST YEAR THE AMOUNT OF RS.3 96 725/- WAS DISALLOWED AS INTEREST INCOME EARNED OUT OF THE BOOKS OF ACCOUNT IN RESPECT OF CERTAIN NOTINGS ON ONE PIECE OF PAPER FOUND DURING THE COURSE OF SURVEY CONDUCTED ON 22.2.2006. 17. A PERUSAL OF THE FINDINGS OF THE LD. CIT(A) AS REPRODUCED ABOVE CLEARLY REVEALS THAT THE IMPUGNED ADDITION IS CONSEQUENTIAL IN NATURE AND HENCE IN VIEW OF THE FINDINGS RECORDED BY THE LD. CIT(A) AND DECISION OF THE ITAT IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2006-07 THE GROUND OF APPEAL IS DISMISSED. 7(II) FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESS EE'S OWN CASE THIS GROUND OF APPEAL OF THE REVENUE IS DISMI SSED. 8. IN GROUND NO.3 REVENUE CONTENDED THAT CIT(A) ER RED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.4 0 8 835/- ON ACCOUNT OF LOSS OF STOCK AS THE ASSESSEE FAILED TO PROVE GENUINENESS OF THE CLAIM. 8(I) IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS BEFORE US LD. 'DR' HAS RELIED ON THE ASSESSMENT ORDER AND LD. 'AR' RELIED ON THE ORDER PASSED BY THE CIT(A). 6 8(II) WE HAVE CAREFULLY PERUSED THE RIVAL SUBMI SSIONS FACTS OF THE CASE AND THE RELEVANT RECORD. THE APPE LLANT COMPANY CLAIMS THAT BECAUSE OF IMPLEMENTATION OF NE W SOFTWARE (SAP) DURING THE YEAR UNDER CONSIDERATION SUCH LOSS OF STOCK OF RS.4 08 835/- HAD BEEN DISCOVERED ON PHYSICAL VERIFICATION AND THE SAME WAS BOOKED IN TH IS YEAR. THE AO DISALLOWED THE CLAIM ON THE GROUND THAT THE ASSESSEE HAD NOT BEEN ABLE TO PROVE WHETHER THIS LO SS OCCURRED DURING THE PREVIOUS YEAR OR IN EARLIER YEA RS. HE ALSO OBSERVED THAT THE ASSESSEE COULD NOT GIVE ANY SATISFACTORY PROOF TO RULE OUT THE POSSIBILITY THAT THE SAID MIS-MATCHING OF STOCK ON PHYSICAL VERIFICATION WAS DUE TO SALES OUTSIDE THE BOOKS EITHER IN EARLIER YEARS OR DURING THIS YEAR. 8(III) IN THE COURSE OF ASSESSMENT PROCEEDINGS B EFORE CIT(A) ASSESSEE CLAIMED IT AS BUSINESS LOSS AND ST ATED THAT IT HAD WORKED OUT AT 0.02% OF THE TOTAL SALES OF TH E ASSESSEE COMPANY AND IN FACT THE STOCK WHICH IS IN SHORTAGE MAY HAVE RESULTED OVER THE YEARS DUE TO BREAKAGE THEFT OR SOME OTHER REASON. HOWEVER SAME WAS NOTICED IN THE YEA R UNDER CONSIDERATION. LD. CIT(A) ON APPRECIATION OF THE S UBMISSION FILED BY THE ASSESSEE AND FACT-SITUATION OF THE CAS E ALLOWED THE LOSS. RELEVANT PARA OF THE FINDINGS IS REPRODU CED HEREUNDER : 11. I HAVE CONSIDERED THE ISSUE UNDER APPEAL AND I T IS SEEN THAT THE APPELLANT'S BASIC CLAIM IS THAT THE DIFFERENCE HAS BEEN FOUND BECAUSE OF PHYSICAL VERIFICATION CARRIED OUT ON IMPLEMENTATION OF NEW SOFTWARE CALLED SAP. SINCE TH E PHYSICAL 7 VERIFICATION OF STOCKS IS CARRIED OUT EVERY YEAR IN ORDER TO ARRIVE AT THE FIGURES OF CLOSING STOCK IN RESPECT O F VARIOUS ITEMS THEN THERE IS NO LOGIC IN APPELLANT'S CLAIM THAT THE LOSS HAS BEEN DISCOVERED ON ACCOUNT OF IMPLEMENTATION OF NEW SOFTWARE. HOWEVER IT IS ALSO A MATTER OF FACT THAT THE PHYSICAL VERIFICATION HAS LED TO SHORTAGE OF STOCK TO THE EX TENT OF RS. 4 08 835/-. THIS DISCREPANCY COULD BE EITHER PERCEI VED AS GENUINE LOSS ON ACCOUNT OF POSSIBLE PILFERAGE ETC. OR ON ACCOUNT OF POSSIBLE SALES OUTSIDE THE BOOKS OF ACCO UNT. THE SECOND POSSIBILITY WOULD ONLY WARRANT AN ADDITION O F THE ROSS PROFIT ON SUCH POSSIBLE UNACCOUNTED SALES. HOWEVER IT ALSO NEEDS TO BE KEPT IN FOCUS THAT THE APPELLANT COMPANY IS HAVING TURNOVER RUNNING INTO HUNDREDS OF CRORES WITH RETURNED INCOME OF RS. 23 60 000/- AND THEREFORE THE LIKELY HOOD OF THE DISCOVERED DISCREPANCY ON PHYSICAL VERIF ICATION BEING UNACCOUNTED SALES IS HIGHLY UNLIKELY. THE TOTALITY OF CIRCUMSTANCES IN WHICH CLAIM OF LOSS HAS BEEN MADE DOES NOT POINT OUT TO ANYTHING OTHER THAN GENUINE BUSINESS L OSS AND THEREFORE THE SAME IS ALLOWED. 9. HAVING CONSIDERED THE FACTUAL-MATRIX OF THE CASE WE CONSIDER IT DEDUCTIBLE LOSS AND HENCE WE DO NOT FI ND ANY GROUND TO INTERFERE WITH THE FINDING OF THE CIT(A). 10. IN GROUND NO.4 REVENUE CONTENDED THAT CIT(A) H AS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.18 200/- MADE U/S 14A ON THE INCOME CLAIMED AS EXEMPT TO TAX. LD. 'DR' PLACED RELIANCE ON THE ORDER PASSED BY THE AO WHEREAS LD. 'AR' SUPPORTED THE FINDINGS OF THE CIT(A). 11. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS FACTS OF THE CASE AND THE RELEVANT RECORD. THE AO FOUND TH AT ASSESSEE MADE AN INVESTMENT OF RS.5 LACS IN EQUITY SHARES OF NIMBUA 8 GREEN FIELDS (PUNJAB) LTD. AND NO DISALLOWANCE ON A CCOUNT OF EXPENSES CORRESPONDING TO THIS INVESTMENT HAD BEEN MADE. SUCH INVESTMENT IS LIKELY TO ACCRUE CERTAIN INCOME TO THE APPELLANT COMPANY. THE AO INVOKED THE PROVISIONS OF SECTION 14A READ WITH RULE 8DD OF THE INCOME TAX RULES AND MADE THE IMPUGNED ADDITION. 12. IN THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE CIT(A) ASSESSEE SUBMITTED THAT PUNJAB GOVERNMENT HAD DIREC TED THE ASSESSEE TO MAKE INVESTMENT. THIS INVESTMENT WAS MA DE FOR BUSINESS INTEREST AND CONSIDERATION AS BY MAKING S UCH INVESTMENT THE WHOLE WASTE MATERIAL IS BEING LIFTE D BY THE COMPANY WHICH WAS FORMED BY THE STATE GOVERNMENT A ND WHATEVER WASTE IS COLLECTED FROM THE PREMISES THE SAME IS DUMPED NEAR ROPAR ON THE LAND ALLOTTED BY THE STATE GOVERNMENT. WE PAY TRANSPORTATION AND OTHER CHARGE S WHICH HAVE BEEN DEBITED IN THE BOOKS OF ACCOUNT. THE ASSE SSEE CONTENDED THAT SUCH INVESTMENT WAS MADE OUT OF BUSI NESS EXIGENCY AS PER THE DIRECTION OF THE PUNJAB GOVERN MENT WHICH WOULD ENABLE THE ASSESSEE TO CARRY OUT THE BU SINESS IN EFFICIENT MANNER. THE CIT(A) DELETED THE IMPUGNED ADDITION ON THE GROUND THAT THE SAID INVESTMENT HAS BEEN PUR ELY BECAUSE OF DIRECTION OF THE PUNJAB GOVERNMENT AND T HE SAME RELATED TO THE EXIGENCY OF BUSINESS. THE FINDINGS OF THE CIT(A) ARE CONTAINED IN PARA 14 AND SAME ARE REPRODUCED HE REUNDER: 14. I HAVE CONSIDERED THE BASIS OF DISALLOWANCE MA DE BY THE A.O. AND THE ARGUMENTS OF THE AR ON THE ISSUE. IT I S *CLEAR THAT THE SAID INVESTMENT HAS BEEN MADE ENTIRELY BECAUSE OF D IRECTIONS OF THE PUNJAB GOVT. AND IN CONNECTION WITH THE BUSINESS OF THE ASSESSEE COMPANY TO CONTRIBUTE ITS BIT IN WASTE MANAGEMENT A ND THERE HAS NOT BEEN ANY INCOME FROM THIS INVESTMENT DURING THE YEA R UNDER 9 CONSIDERATION. AS SUCH THERE WAS NO REASON FOR THE A.O. TO WORK OUT THE DISALLOWANCE AS NO EXEMPT INCOME FROM SUCH INVE STMENT HAS BEEN CLAIMED. THEREFORE THE ADDITION MADE BY THE A.O. IS DELETED. 13. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS AND ALSO FINDINGS OF THE AO AND CIT(A). HAVING REGARD TO THE EXIGENCY OF BUSINESS AND THE NON-OPTIONAL INVESTMEN T TO BE MADE BY THE ASSESSEE ON THE DIRECTION OF THE PUNJAB GOVERNMENT THE IMPUGNED ADDITION CANNOT BE MADE A S HELD BY THE CIT(A). ACCORDINGLY THIS GROUND OF APPEAL OF APPEAL OF THE REVENUE IS DISMISSED. 14. IN GROUND NO.5 THE REVENUE CONTENDED THAT CIT( A) ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF RS.2 84 420/- MADE ON ACCOUNT OF INTEREST CAPITALIZ ED ON PROPORTIONATE BASIS PERTAINING TO THE PRE-OPERATIV E PERIOD AS THE FUND BORROWED FOR THE PURCHASE OF MACHINERY KEEPING IN VIEW THE RATIO OF DECISION OF HON'BLE PU NJAB & HARYANA HIGH COURT REPORTED IN 286 ITR 1 CIT V ABHI SHEK INDUSTRIES LTD. 15. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS IT TRANSPIRED THAT IDENTICAL ISSUE HAS BEEN COVERED IN ASSESSEE'S APPEAL IN ITA NO. 1293/CHD/2010 (SUPRA) ASSESSMENT YEAR 2007-08. THE RELEVANT FINDINGS AS RECORDED IN PARA 18 & 19 BY THE BENCH WHILE ADJUDICATING TH E GROUND RAISED IN ITA 1293/CHD/2010 (SUPRA) IS REPRODUCED HEREUNDER : 18. IN GROUND NO.2 REVENUE CONTENDED THAT LD. CIT(A) ERRED IN DELETING ADDITION OF RS.10 00 909/- MADE ON ACCOUNT OF CAPITALIZATION OF INTEREST ON CAPITAL WORK IN PROGRESS IN VIEW OF THE PROVISIONS OF SECTION 36(1)(III) AND EXPLANATION 8 TO SECTION 10 43(1) OF THE INCOME-TAX ACT. THE IDENTICAL ISSUE H AS BEEN ADJUDICATED BY THE BENCH IN ASSESSEE'S APPEAL FOR THE ASSESSMENT YEAR 2006-07 AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. FINDINGS OF THE LD. CIT(A) IN RESPECT OF SUCH ISSUE AS CONTAIN ED IN PARA 3.11 OF THE ORDER PASSED BY HIM FOR THE ASSESSMENT YEAR 2007-08 ARE REPRODUCED HEREUNDER : 3.11 I HAVE GONE THROUGH THE ORDER OF THE AO SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE AND ALSO EARLIER ORDER OF THE CIT(A) FOR ASSESSMENT YEAR 2006-07 IN APPEAL NO. 130-IT-CIT(A)-I/LDH/08-09 WHEREIN SIMILAR ADDITION WAS MADE AND MY PREDECESSOR HAD DELETED THE ADDITION AS PER FINDING GIVEN IN PARA 15 & 16 OF THE ORDER OF THE CIT(A). SINCE THE ISSUE IS IDENTICAL FOLLOWING AND AGREEING WITH THE FINDINGS OF MY LD. PREDECESSOR IN APPEAL NO.130- IT/CIT(A)-I/LDH/08-09 DATED 8.6.2009 IN APPELLANTS OWN CASE FOR THE ASSESSMENT YEAR 2006-07 ADDITION OF RS.10 00 909/- IS DELETED. 19. AS SIMILAR ISSUE HAS BEEN ADJUDICATED IN ASSESSEE'S OWN APPEAL BY THE BENCH IN EARLIER ASSESSMENT YEAR I.E. 2006-07 IN FAVOUR OF THE ASSESSEE THE ISSUE IN QUESTION IS ALSO DECIDED IN FAVOUR OF THE ASSESSEE. THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 16. RESPECTFULLY FOLLOWING THE DECISION ON IDENTICA L ISSUE IN ASSESSEE'S OWN CASE THIS GROUND OF APPEAL OF THE R EVENUE IS DISMISSED. 17. IN GROUND NO. 6 REVENUE CONTENDED THAT CIT(A) ERRED IN LAW AND ON FACTS BY ALLOWING THE A SSESSEE'S CLAIM WORTH RS. 7 09 457/- IN RESPECT OF REDUCING T HE INCOME DUE TO VALUATION OF CLOSING STOCK. THE CLAIM OF ASS ESSEE IS NOT ACCEPTABLE KEEPING IN VIEW JUDGEMENT OF HON'BLE SUP REME COURT IN THE CASE OF GOETEZ (INDIA) LTD. VS CIT REP ORTED IN 284 ITR 323(SC). THE AO DISALLOWED THE CLAIM OF REDUCT ION IN CLOSING STOCK TO THE TUNE OF RS.7 09 457/-. THE AO DISALLOWED THE CLAIM ON THE GROUND THAT SAME WAS NO T MADE 11 BY THE ASSESSEE IN REVISED RETURN AND IN VIEW OF JU DGEMENT OF THE HON'BLE SUPREME COURT CITED IN THE GROUND OF AP PEAL. 18. BEFORE CIT(A) IT WAS SUBMITTED THAT THE ASSESS EE IS FOLLOWING CONSISTENT METHOD OF ACCOUNTING AND EACH YEAR VALUATION IS MADE ON THE BASIS OF SCIENTIFIC AND AC CEPTED METHOD BY THE DEPARTMENT AND IN EACH YEAR BY WAY O F CERTAIN ADJUSTMENTS IN THE STOCK VALUATION CERTAIN ADDITIONS ARE MADE IN THE VALUATION OF STOCK WHICH ARE ACCEP TED BY THE ASSESSEE AND THE BENEFIT OF THE SAME IS BEING G IVEN IN THE CORRESPONDING YEAR. THE ASSESSEE FILED A STATE MENT OF ADDITION OF CLOSING STOCK AS IS EVIDENT FROM PAGE 57 OF THE PAPER BOOK WHICH IS REPRODUCED HEREUNDER : UPPER INDIA STEE L MFG. & ENGG.CO.LTD: LUDHIANA STATEMENT OF ADDITION OF CLOSING STOCK ASSTT.YE AR OPENING STOCK EFFECT CLOSING STOCK EFFECT TOTAL EFFECT 2004-05 1013611 1092746 79135 2005-06 1092746 913988 (-) 178758 2006-07 913988 1075236 161248 2007-08 1075236 2296520 1221284 2008-09 2296520 1587063 (-) 709457 19. THE ASSESSEE ALSO FILED ASSESSMENT ORDER FOR TH E ASSESSMENT YEAR 2005-06 TO 2007-08 TO ESTABLISH THE CONTENTION MADE BY THE APPELLANT IN THE MATTER. TH E CIT(A) HELD THAT THE DEPARTMENT HAS BEEN ACCEPTING THE ADD ITION ON ACCOUNT OF ADJUSTMENT MADE IN THE VALUATION OF CLOS ING STOCK AND THEREFORE THE DEPLETION IN THE CLOSING S TOCK ARRIVED AT BY FOLLOWING THE SAME METHOD OF ACCOUNTI NG 12 SHOULD HAVE ALSO BEEN ALLOWED. THE AO HAS NOT DISP UTED THE CLAIM OF THE ASSESSEE IN THE MATTER AND HAS DISALLO WED THE SAME ON THE GROUND THAT IT SHOULD HAVE BEEN CLAIMED IN THE REVISED RETURN. THE CIT(A) CONSIDERED THAT IF AN A DDITION ON CONSISTENT APPLICATION OF METHOD OF ACCOUNTING IS M ADE IN ANY PARTICULAR YEAR THEN ALLOWANCE FOR DEPLETION I N CLOSING STOCK WORKED OUT ON THE BASIS OF SOME ACCOUNTING ME THOD DESERVES TO BE ALLOWED. ACCORDINGLY THE CLAIM OF THE ASSESSEE WAS ALLOWED BY THE CIT(A). WE DO NOT FIN D ANY INFIRMITY IN THE FINDINGS OF THE CIT(A) AND THEREF ORE THE SAME ARE UPHELD. GROUND OF APPEAL OF THE REVENUE I S DISMISSED. 20. GROUND NOS. 7 & 8 ARE GENERAL IN NATURE AND NEE D NO SEPARATE ADJUDICATION. ACCORDINGLY THE SAME ARE DI SMISSED. 21. IN THE RESULT APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JULY 2012. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31 ST JULY 2012. POONAM COPY TO: THE APPELLANT THE RESPONDENT THE CIT(A) THE CIT DR ASSISTANT REGISTRAR ITAT CHANDIGARH