ACIT,CENTRAL CIRCLE-1,RANCHI, RANCHI V. CORE MINERALS , CHENNAI

ITA 215/RAN/2023

AI Insights

The case involves an appeal by the ACIT, Central Circle-1, Ranchi against the order of the CIT(A) Patna-3, which favored Core Minerals for the assessment year 2018-19. The primary issues in the appeal were the deletion of an addition of Rs.25,66,72,064 concerning the devaluation of closing stock and the application of section 41(1) regarding certain advances. The Assessing Officer had disallowed the devaluation of closing stock, citing a precedent where the business was not a going concern. However, the CIT(A) found that Core Minerals was a going concern and allowed the revaluation. Regarding section 41(1), the CIT(A) deleted the addition as the advances were not treated as income by the assessee. The Tribunal upheld the CIT(A)'s decisions, emphasizing the going concern status of the assessee and the inappropriate application of section 41(1) in this context.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633207 (ITAT-RANCHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Other Referred Cases: CIT vs Shyam Prasad Agarwal, (2003) 85 ITD 529 (Kol)
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RINKU SINGH
• Assessee Lawyers: PER BENCH; SHRIK.M.MOHAN DASSTHARIS V; ARS

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE AND RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER ACIT, Central Circle PAN/GIR No. AACFC 5210 G (Appellant Assessee by Per Bench This is an appeal filed by the assessee against the order of the ld CIT(A) Patna-3dated 8.7.2023 assessment year 2018 2. Smt. Rinku Singh, Ld CIT DR appeared for the revenue and Shri K.M.Mohan Dass/Tharis V, IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE S/SHRI GEORGE MATHAN, JUDICIAL MEMBER AND RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER ITA No.215/RAN/2023 Assessment Year: 2018-19 ACIT, Central Circle-1, Ranchi Vs. Core Minerals, No.2, North Crescent Road, T. Nagar, Chennai . AACFC 5210 G. (Appellant) .. ( Respondent Assessee by : Shri K.M.Mohan Dass/Tharis V, ARs Revenue by :Smt. Rinku Singh, CIT DR Date of Hearing : 12/06/202 Date of Pronouncement :12/06/202 O R D E R This is an appeal filed by the assessee against the order of the ld CIT(A) 8.7.2023in Appeal No.CIT(A),Patna-3/10454/2017 2018-19 Smt. Rinku Singh, Ld CIT DR appeared for the revenue and Shri K.M.Mohan Dass/Tharis V, ld ARs appeared for the assessee. P a g e 1 | 4 IN THE INCOME TAX APPELLATE TRIBUNAL, SHRI GEORGE MATHAN, JUDICIAL MEMBER AND RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER Core Minerals, No.2, North Crescent Road, T. Nagar, Respondent) K.M.Mohan Dass/Tharis V, ARs CIT DR /2025 /2025 This is an appeal filed by the assessee against the order of the ld CIT(A)- 3/10454/2017-18 for the Smt. Rinku Singh, Ld CIT DR appeared for the revenue and Shri appeared for the assessee. ITA No.215/Ran/2023 Assessment Year : 2018-19 P a g e 2 | 4 3. It was submitted by ld CIT DR that two issues are involved, first issue is in regard to deletion of addition of Rs.25,66,72,064/- in respect of devaluation in the closing stock allowed as deduction. It was the submission that the Assessing Officer in the course of assessment had disallowed the devaluation in the value of the closing stock by placing reliance on the decision of ITAT Kolkata Bench in the case of CIT vs Shyam Prasad Agarwal, (2003) 85 ITD 529 (Kol). It was the submission that the Assessing Officer had taken the stand as the business of the assessee was no more continuing, it would not be permissible for the assessee to revalue its closing stock. On appeal, ld CIT(A) held that the assessee is a going concern and consequently held that the assessee is entitled to revaluation of the closing stock leading to devaluation. It was the submission that the order of the ld CIT(A) is liable to be reversed and that of the AO restored. It was the submission that the second addition was made by invoking the provisions of section 41(1) in respect of certain advances given by the assessee. It was the submission that the assessee himself had applied the provisions of section 41(1) of the Act on some of the advances and balance advances which were old advances also, the AO had applied the provisions of section 41(1) of the Act. It was the submission that the ld CIT(A) had deleted the addition by holding that the assesee has not recognised said amount as income and, therefore, provisions of section 41(1) could not be applied in respect of such advances which have been treated as income by the assessee. He submitted that the order of the ld CIT(A) be reversed and that of the AO restored. ITA No.215/Ran/2023 Assessment Year : 2018-19 P a g e 3 | 4 4. In reply, ld AR vehemently supported the order of the ld CIT(A). It was the submission that in respect of the revaluation of the closing stock, the business of the assessee had not stopped and, therefore, the assessee was entitled to revaluation in respect of addition deleted by ld CIT(A) by applying the provisions u/s.41(1) of the Act. It was submitted that the advances are still live and the provisions of section 41(1) could not be applied to treat the same as income of the assessee. 5. We have considered the rival submissions. Ld CIT(A) has categorically given a finding tat the assessee is a going concern. The revenue has not been able to point out how the revenue is holding that the business of the assessee has come to an end. The fact that the revenue has not been able to dislodge the finding of fact in respect of going concern in the case of the assessee, we are of the view that the findings of ld CIT(A) in respect of revaluation of the closing stock is on right footing and does not call for any interference . As long as the it is going concern, the decision of ITAT Kolkata in the case of Shyam Prasad Agarwal,(supra) would have no applicability to the facts of the case of the assessee. In regard to issue of section 41(1) one of thecondition for invoking section 41(1), the assessee should recognise the same as income or the advance should have become time barring. This has not been shown by the revenue. Ld CIT(A) recognises the provisions of section41(1) and deleted the addition. As the revenue has not been able dislodge the findings arrived at by the ld CIT(A), we ITA No.215/Ran/2023 Assessment Year : 2018-19 P a g e 4 | 4 find no error to interfere with the order of the ld CIT(A), accordingly uphold the same. 6. In the result, appeal of the assessee stand allowed. Order dictated and pronounced in the open court on 12/06/2025. Sd/- Sd/- (RATNESH NANDAN SAHAY) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER Ranchi; Dated 12/06/2025 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Ranchi 1. The Appellant : ACIT, Central Circle-1, Ranchi 2. The respondent: Core Minerals, No.2, North Crescent Road, T. Nagar, Chennai 3. The CIT(A)-Patna-3 4. Pr.CIT, Ranchi 5. DR, ITAT, 6. Guard file. //True Copy// "