M/S Wright India Ltd., Kolkata V. DCIT-CC-VII, Kolkata, Kolkata

CO 39/KOL/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7477 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-07-2012
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 11-04-2012
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR SINGH
• Assessee Lawyers: J M THARD

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ) BEFORE , /AND , . . ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM ] ' / I.T.A NO.1577/KOL/2011 ASSESSMENT YEAR: 2003-04 DEPUTY COMMISSIONER OF INCOME-TAX, VS. WRIGHT IND IA LTD. CENTRAL CIRCLE-VIII, KOLKATA. (PAN: AAACW2277L) ($% /APPELLANT ) (&'$%/ RESPONDENT ) & C. O. NO.39/KOL/2012 IN ' / I.T.A NO.1577/KOL/2011 ASSESSMENT YEAR: 2003-04 WRIGHT INDIA LTD. VS. DEPUTY COMMISSIONER OF IN COME-TAX, CENTRAL CIRCLE-VIII, KOLKATA. ( CROSS OBJECTOR ) (&'$%/ RESPONDENT ) FOR THE REVENUE: SHRI AJAY KUMAR SINGH FOR THE ASSESSEE: SHRI J. M. THARD DATE OF HEARING : 16.07.2012 DATE OF PRONOUNCEMENT: 16.07.2012 ) / ORDER IMMEDIATELY UPON CONCLUSION OF HEARING OF THIS APPE AL ON 16 TH JULY, 2012, THE BENCH PASSED THE FOLLOWING ORDER: 16 TH JULY, 2012 REVENUES APPEAL AS WELL AS CO OF ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT. DETAILED ORDER WILL FOLLO W. IN ACCORDANCE WITH THE ABOVE, THE REASONED ORDER IS NOW SET OUT AS FOLLOWS: PER BENCH: THIS APPEAL BY REVENUE AND CO BY ASSESSEE ARE ARISI NG OUT OF ORDER OF CIT(A), CENTRAL II, KOLKATA IN APPEAL NO. 159/CIT(A),C-II/CC-VIII/1 0-11 DATED 15.09.2011. ASSESSMENT WERE FRAMED BY ACIT, C.C-VIII, KOLKATA U/S. 143(3)/147 O F THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2003 -04 VIDE HIS ORDER DATED 11.12.2009. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE SUPPRESSION OF CLOSING STOCK OF VALUE OF RAW MATERI AL, PACKAGING MATERIAL, STORES AND 2 ITA 1577/K/2011 & CO NO.39/K/2012 WRIGHT INDIA LT D. AY 03-04 ADVERTISEMENT MATERIAL FOR AN AMOUNT OF RS.1,45,91, 272/-. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NOS. 1 AND 2: 1. THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETI NG THE ADDITION OF RS.1,45,91,272/- MADE ON ACCOUNT OF SUPPRESSION OF CLOSING STOCK BY THE AO. 2. THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THERE IS NO SUPPRESSION OF CLOSING STOCK THOUGH THE VALUE OF RAW MATERIALS, PA CKING MATERIALS, STORES AND ADVERTISEMENT MATERIALS AGGREGATING TO RS.1,45,91,2 72/- HAVE NOT BEEN INCLUDED IN THE VALUATION OF CLOSING STOCK BY THE ASSESSEE. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT AO DURING THE COURSE OF ASSESSMENT PRO CEEDINGS NOTED THAT THE ASSESSEE HAS VALUED CLOSING STOCK OF RAW MATERIALS, PACKING MATE RIALS, STORES AND ADVERTISEMENT MATERIALS ON COST. BUT, ACCORDING TO HIM, THE ASSESSEE WHILE VA LUING CLOSING STOCK HAS EXCLUDED THE VALUATION OF RAW MATERIAL, PACKING MATERIAL, STORES AND ADVERTISEMENT MATERIALS AGGREGATING TO RS.1,45,91,272/-. ACCORDINGLY, AO MADE ADDITION OF DIFFERENTIAL CLOSING STOCK OF RAW MATERIALS AND PACKING MATERIAL AS UNDER: I) RAW AND PACKAGING MATERIALS FOR PREVIOUS YR. 2002-0 3 RS.14313311/- II) STORES AND ADVERTISING MATERIALS FOR PREVIOUS Y R. 2002-03 RS. 277961/- RS.14591272/- AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION BY OBSERVING IN PARA 4.1 AS UNDER: 4.1. I HAVE CAREFULLY CONSIDERED THE SUBMISSION O F THE LD. A.R AND PERUSED THE PROFIT AND LOSS ACCOUNT AND ENCLOSED SCHEDULES. THE ASSESS ING OFFICER HAS NOT GIVEN ANY REASON FOR REJECTING THE CLARIFICATION FILED BY THE ASSESS EE . IT APPEARS THAT THE A.O HAS FAILED TO UNDERSTAND THE MAINTENANCE OF THE ACCOUNTS IN ITS P ROPER PERSPECTIVE. THE OBSERVATION OF THE A.O THAT THE ASSESSEE WAS SEEN TO HAVE EXCLUDED THE VALUATION OF RAW MATERIALS AND PACKING MATERIALS AND STORES AND ADVERTISING MATERI ALS AGGREGATING TO RS. 1,45,91,272/- IS NOT CORRECT. THE NET OF STORE MATERIAL AND ADVER TISEMENT MATERIAL WERE DIRECTLY DEBITED IN THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD CONSU MABLE STORE AND SALES PROMOTION & DISTRIBUTION EXPENSES RESPECTIVELY AS APPARENT FROR N SCHEDULE 15 OF THE AUDITED PROFLT AND LOSS ACCOUNT / BALANCE SHEET FR THE YEAR END 31.03 .2003. CONSIDERING ABOVE IT IS HELD THAT THERE IS NO SUPPRESSION OF CLOSING STOCK. ACCO RDINGLY THE ADDITION OF RS. 1,45,9 1,272/ UNDER THE NARRATION CLOSING STOCK (NOT TAKEN INTO ACCOUNT) MADE BY THE A.O IS DELETED. WE FIND THAT THE ASSESSEE BEFORE AO AS WELL AS BEFO RE CIT(A) FILED RECONCILED INVENTORIES FOR THE FY 2002-03, WHICH IS AS UNDER: OPENING STOCK CLOSING STOCK FINISHED GOODS 224742 7440832 SEMI FINISHD GOODS 3559792 7997255 (SEMI FINISHED GOODS INCLUDED IN RAW & PACKING MATE RIAL) 562246 RAW & PACKING MATERIAL 7410406 22285963 3 ITA 1577/K/2011 & CO NO.39/K/2012 WRIGHT INDIA LT D. AY 03-04 STORES & ADVERTISEMENT MATERIALS 2056045 2334006 13813231 40058056 FURTHER, THE ASSESSEE HAS FILED THE DETAILS OF RAW AND PACKAGING MATERIALS AND DETAILS OF NET CONSUMPTION IS AS UNDER: COST OF GOODS CONSUMED PARTICULARS OPENING STOCK PURCHASES/PACKING EXP. PURCHASE RETURNS CLOSING STOCK CONSUMPTION RAW & PACKING 7,410,406.20 74,152,894.77 22,285,96 2.89 59,277,338.08 MATERIALS & PACKING EXPENSES FURTHER, THE ASSESSEE HAS ALSO FILED THE DETAILS O F STORES AND ADVERTISEMENT MATERIALS WHICH ARE AS UNDER: PARTICULARS OPENING STOCK PURCHASES/PACKING EXP. PURCHASE RETURNS CLOSING STOCK CONSUMPTION STORES ADVERTISING MATERIALS 1,415,538.22 640,507.05 2,056,045.27 1,099,512.97 2,392,949.00 3,492,461.97 1,384,296.88 949,709.52 2,334,006.40 1,130,754.31 2,083,746.53 3,214,500.84 THE ASSESSEE IN VIEW OF THE ABOVE RECONCILIATION EX PLAINED THAT THE CONFUSION REGARDING CLOSING STOCK OF RS.23,34,004/- IS ON ACCOUNT OF NET OF STO RE MATERIALS AND NET OF ADVERTISEMENT MATERIALS IN VIEW OF SCHEDULE 15 IN THE BALANCE SHE ET. THE ASSESSEE EXPLAINED AS UNDER: (A) NET OF STORE MATERIALS OF RS.1130754.31 AS PER ABOVE CHART IS DIRECTLY DEBITED IN PROFIT & LOSS A/C IN OUR AUDITED BALANCE SHEET FOR THE YEAR END 31.03.03. (B) NET OF ADVERTISEMENT MATERIAL OF RS.2083746.53 AS PER ABOVE CHART IS DIRECTLY DEBITED IN PROFIT & LOSS A/C IN AUDITED BALANCE SHEET. THESE ARE ENCLOSED IN SCHEDULE 15 OF BALANCE SHEET UNDER THE HEAD CONSUMABLE STORES, SALES PROMOTION AND DISTRIBUTION EXPENSES OF RS.7,9 3,22,781/-. THE ASSESSEE HAS RECONCILED THE OPENING AND CLOSING STOCK DIFFERENCE AS UNDER: CLOSING STOCK OPENING STOCK = RS.1,45,91,272/- (22285963 + 2334006) (562246 + 7410406 + 13813231 ) WE ARE IN AGREEMENT WITH THE FINDINGS OF CIT(A) THA T THE AO HAS NOT UNDERSTOOD THE VALUATION OF CLOSING STOCK MADE BY ASSESSEE AND ASS ESSEE HAS CLEARLY EXPLAINED THE DISCREPANCY IN ITS RECONCILIATION AND CHARTS REPROD UCED ABOVE. WE FIND THAT THERE IS NO SUPPRESSION OF CLOSING STOCK IN SUCH SITUATION AND HENCE, WE CONFIRM THE ORDER OF CIT(A). REVENUES APPEAL IS DISMISSED. 4 ITA 1577/K/2011 & CO NO.39/K/2012 WRIGHT INDIA LT D. AY 03-04 4. AS REGARDS CO NO. 39/KOL/212 OF THE ASSESSEE, LD . COUNSEL FOR THE ASSESSEE UNDER INSTRUCTION OF THE ASSESSEE HAS NOT PRESSED THE SAM E. ON QUERY FROM THE BENCH, THE LD. DR HAS NOT OBJECTED TO THE WITHDRAWAL OF THE SAME. AS THE ASSESSEE HAS WITHDRAWN THE CO, WE DISMISS THE SAME AS WITHDRAWN. 5. IN THE RESULT, BOTH THE APPEAL AS WELL AS CO ARE DISMISSED. 6. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- . . ! , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( ! ! ! !) )) ) DATED : 16TH JULY, 2012 *+ ,-. / JD.(SR.P.S.) ) 0 &1 2 134- COPY OF THE ORDER FORWARDED TO: 1 . $% / APPELLANT DCIT, CENTRAL CIRCLE-VIII, KOLKATA. 2 &'$% / RESPONDENT M/S. WRIGHT INDIA LTD., 63, RADHA BA ZAR STREET, 2 ND FLOOR, KOLKATA-700 001. 3 . ), ( )/ THE CIT(A), KOLKATA 4. 5. ), / CIT KOLKATA 1:; &, / DR, KOLKATA BENCHES, KOLKATA '1 &/ TRUE COPY, ),