Appeal details
Counselvise Citation
[2015] 140 COUNSELVISE.COM (IT) 96656 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 month(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-12-2015
Appeal Filed By
Assessee
Bench Allotted
C
Next Hearing Date
24-11-2015
Assessment Year
2011-2012
Appeal Filed On
13-05-2015
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , ! ' . #$ , % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ ITA NO. 1131/MDS/2015 / ASSESSMENT YEAR : 2011-12 M/S. KALLAKURICHI CO-OPERATIVE SUGAR MILLS LTD., UNIT II, CS , 11 KACHIRAYAPALAYAM, VILLUPURAM, CHINNAALEM TALUK -606207 PAN AAAAK0655Q APPELLANT) V. THE ASSISTANT COMMISSIONER OF INCOME-TAX, VILLUPURAM CIRCLE, VILLUPURAM. RESPONDENT) / APPELLANT BY :,SHRI S. VENUGOPALAN, CA / RESPONDENT BY : SHRI A.V.SREEKANTH, JCIT ! / DATE OF HEARING : 24.11.2015 '# ! / DATE OF PRONOUNCEMENT: 31.12.2015 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 27 .2.2015 - - ITA 1131/15 2 FOR THE ASSESSMENT YEAR 2011-12. 2. THE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO VALUATION OF CLOSING STOCK IN RESPECT OF MOLASSES WITHOUT REDUCING THE INCOME FROM SALE OF SCRAP, INT EREST ON FD, DIVIDEND, OTHERS AND UNWANTED ITEMS FROM THE COST O F PRODUCTION. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS MAINLY ENGAGED IN MANUFACTURE AND SALE OF SUGAR AND BY- PRODUCTS. THE ASSESSING OFFICER WHILE DETERMINING THE VALUE OF CLOSING STOCK NOT CONSIDERED THE INCOME FR OM SALE OF SCRAP, INTEREST ON FD, DIVIDEND, OTHERS AND UNWA NTED ITEMS FROM THE COST OF PRODUCTION, THEREBY MADE AN ADDITI ON OF ` 4,80,84,109/- ON ACCOUNT OF UNDERSTATEMENT OF VALU E OF CLOSING STOCK OF FREE SUGAR AND ` 94,73,234/- ON ACCOUNT OF UNDERSTATEMENT OF VALUE OF CLOSING STOCK OF MOLASSE S. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(APPEALS) , WHO CONFIRMED THE ORDER OF THE AO. AGAINST THIS, THE A SSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. THE LD. AR SUBMITTED THAT METHOD OF CLO SING STOCK VALUATION OF COST OF PRODUCTION AFTER DEDUCTING THE INCOME FROM - - ITA 1131/15 3 THE ABOVE COMPONENTS HAS BEEN CONSIDERED BY THE ASS ESSEE FOR THE PAST SEVERAL YEARS AND THE DEPARTMENT CANNOT DI STURB IN THE MIDDLE. IN OUR OPINION, THE ASSESSEE HAS BEEN FOLL OWING THE SYSTEM OF ACCOUNTING BY DEDUCTING THE INCOME FROM P OWER, SCRAP, INTEREST ON FD, DIVIDEND AND OTHERS FROM THE COST OF PRODUCTION. FIRST OF ALL TO ARRIVE AT THE COST OF VALUE OF CLOSING STOCK, THESE COMPONENTS ARE NOT THE INCOME GENERATE D FROM THE BUSINESS ACTIVITY CARRIED ON BY THE ASSESSEE. IN O THER WORDS, THE INCOME FROM THE ABOVE COMPONENTS ARE NOT ASSESSED U NDER THE HEAD INCOME FROM BUSINESS AND IT IS ASSESSED AS INC OME FROM OTHER SOURCES. WHEN IT IS ASSESSED AS INCOME FROM OTHER SOURCES, IT CANNOT BE CONSIDERED AS COMPONENT OF CO ST OF PRODUCTION FOR DETERMINING THE VALUE OF CLOSING STO CK. THE LD. AR RELIED ON THE FOLLOWING JUDGMENTS FOR THE PROPOS ITION THAT CONSISTENCY TO BE FOLLOWED IN INCOME-TAX PROCEEDING S : 1. UNITED COMMERCIAL BANK V. CIT (240 ITR 355)(SC) 2. CIT V. WOODWARD GOVERNOR INDIA P. LTD. (312 ITR 254)(SC) 3. MERCK LTD. V. DCIT (2 ITR (TRIB)-OL 629 (MUMBAI) 4. CIT V. DHAMPUR SUGAR MILLS LTD. (360 ITR 82) (AL LAHABAD) IN OUR OPINION, EACH ASSESSMENT YEAR IS AN INDEPEND ENT - - ITA 1131/15 4 ASSESSMENT OF UNIT AND THE WRONG METHOD OF ACCOUNTI NG FOLLOWED BY THE ASSESSEE CANNOT BE APPROPRIATED. I N OUR OPINION, THE ABOVE COMPONENTS ARE NOT INCOME FROM T HE BUSINESS OF THE ASSESSEE, THE SAME CANNOT BE CONSID ERED FOR THE PURPOSE OF VALUING THE CLOSING STOCK BY DED UCTING FROM COST OF PRODUCTION. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 31 ST OF DEC., 2015 AT CHENNAI. SD/- SD/- ( $ % . & '( ) ( ) * + , ) DUVVURU RL REDDY - ./012304556037- 8 9: /JUDICIAL MEMBER ! 9:;<<5=1>01>?@AB@3 )8 /CHENNAI, C9 /DATED, THE 31 ST DEC., 2015. MPO* 9D EFGF /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. H- /CIT(A) 4. H /CIT 5. FIJ K /DR 6. J(L /GF.
