ACIT, Pune V. Dyna-K Automotive Stampings P. Ltd., Pune

ITA 1255/PUN/2005

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7529 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 1994-1995
• Appeal Filed On: 17-05-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANT KUMAR C LEUUVA
• Assessee Lawyers: SUNIL PATHAK
• Section: 80IA; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI G.S. PANNU (AM) ITA NO S . 1255 TO 1258 /PN/200 5 ( ASSTT. YEARS : 1994 - 95 TO 1997 - 98 ) ASSTT. COMMISSIONER OF INCOME TAX , CIRCLE - 8 , PUNE , .. APPELLANT V. DYNA - K AUTOMOTIVE STAMPINGS P.LTD. , J - 450, MIDC INDUSTRIAL ESTATE BHOSARI , PUNE - 411 026 PAN : A AACD7370F . RESPONDENT APPELLANT BY : SHRI HEMANT KUMAR C. LEUUVA RESPONDENT BY : S/ SHRI SUNIL PATHAK & NIKHIL PATHAK ORDER PER I. C. SUDHIR J M IN ALL THESE APPEALS, THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER ON COMMON GROUND THAT LD CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S. 80IA FOR UNIT - II, WHEN IN FACT THE NEW UNIT IS NOT ELIGIBLE FOR DEDUCTION U/S. 80 IA. 2. THE R ELEVANT FACTS EMERGING FROM THE ORDERS OF THE AUTHORITIES BELOW ARE THAT THE ASSESSEE IN ITS RETURN OF INCOME CLAIMED DEDUCTION U/S. 80IA IN RESPECT OF ITS ELIGIBLE UNIT LOCATED AT J - 6 MIDC BHOSARI (HEREINAFTER REFERRED TO AS UNIT NO. II). UNIT NO. I WAS L OCATED AT J - 450 MIDC, BHOSARI. THE COMPANY SINCE ITS COMMENCEMENT IN 1985 WAS ENGAGED IN THE BUSINESS OF MANUFACTURE OF AUTOMOBILE PARTS. THESE PARTS WERE MANUFACTURED BY THE COMPANY IN ITS FACTORY PREMISES AT UNIT NO. I. THE PROCESS INVOLVED IN THESE MA NUFACTURE WERE PICKLING, WELDING, SHEARING, BLANKING, FORMING, PIERCING, DEBURRING AND CLEANING. BEFORE THE A.O, IT WAS SUBMITTED BY THE ASSESSEE THAT ALL THE PROCESSES ITA NO S.1255 TO 1258 /PN/200 5 DYNA - K AUTOMOTIVE STAMPINGS P. LTD. A.YS. 1994 - 95 TO 1997 - 98 PAGE OF 10 2 INVOLVED IN THE MANUFACTURE OF PRODUCTS EXCEPT PICKLING, SHEARING WERE DONE IN UNIT NO . I. PICKLING, SHEARING AND WELDING WERE, HOWEVER, DONE BY SUB - CONTRACTORS. WITH A VIEW TO ELIMINATE THE SUB - CONTRACTORS, THE ASSESSEE DECIDED TO SET UP A NEW UNIT I.E. UNIT NO. II. THE A.O DENIED THE CLAIMED DEDUCTION ON THE BASIS THAT THE UNIT NO. II WAS FORMED BY THE ASSESSEE BY SPLITTING UP ITS EXISTING BUSINESS IN ASMUCH AS THE TURNOVER OF THE ASSESSEE HAS BEEN BIFURCATED BETWEEN UNIT NO. I AND II I.E. ENTIRE SALE OF TOOLING IS SHOWN IN THE OLD FACTORY AND ENTIRE TURNOVER OF PRODUCTS IS SHOWN IN TH E NEW UNIT ALTHOUGH SUBSTANTIAL PART OF TOTAL PROCESSES OF MANUFACTURE OF PRODUCTS IS STILL DONE IN THE OLD FACTORY. THE A.O NOTED FURTHER THAT TOTAL VALUE OF PLANT AND MACHINERY BEFORE THE COMMENCEMENT OF PRODUCTION IN APRIL 1993 WAS RS. 3,15,232/ - . OUT OF THESE, THE VALUE OF MACHINERY PREVIOUSLY USED BY THE ASSESSEE WAS RS. 2,41,160/ - WHICH CONSTITUTES MORE THAN 20% OF THE VALUE OF THE TOTAL PLANT AND MACHINERY. WITHOUT PREJUDICE TO THE ABOVE FINDING, THE A.O HELD FURTHER THAT IF THE ASSESSEE IS ENTITL ED TO DEDUCTION U/S. 80IA, SUCH DEDUCTION WILL BE RESTRICTED TO 20% OF THE PROFIT AS ONLY 20% OF THE MANUFACTURING PROCESSES OF THE PRODUCT IS CARRIED OUT IN THE NEW UNIT. BESIDES, OTHER INCOME NOT DERIVED FROM THE ELIGIBLE UNIT (I.E UNIT NO. II) WILL AL SO HAVE TO BE REDUCED WHILE COMPUTING DEDUCTION U/S. 80IA, HELD THE A.O. 3. BEFORE THE CIT(A), THE ASSESSEE CONTENDED THAT NEW UNIT COMPRISED OF NEW PRODUCT I.E. SUSPENSION PART DEVELOPED FOR KALYANI BRAKES LTD., EMPLOYMENT OF LABOUR FOR ASSEMBLING AND S KILLED WELDING JOB WAS THERE; AND NEW FACTORY SHED WAS CREATED. IT WAS THUS CONTENDED THAT NEW UNIT WAS NEITHER FORMED BY SPLITTING UP OF EXISTING BUSINESS NOR BY USE OF PLANT AND MACHINERY AND THUS, THE CONDITIONS U/S. 80IA ARE FULLY SATISFIED. AN ALTE RNATIVE SUBMISSION ABOUT ITA NO S.1255 TO 1258 /PN/200 5 DYNA - K AUTOMOTIVE STAMPINGS P. LTD. A.YS. 1994 - 95 TO 1997 - 98 PAGE OF 10 3 ELIGIBILITY OF DEDUCTION U/S. 80I IN RESPECT OF SUBSTANTIAL EXPANSION UNDERTAKEN AND COMPLETED IN F.Y. 1989 - 90 WAS ALSO RAISED. IT WAS SUBMITTED THAT SUBSTANTIAL EXPANSION WAS UNDERTAKEN AT UNIT NO. I DURING THE F.Y. 1989 - 90 W HEN 5 NEW PRESSES WERE INSTALLED WHICH AS COMPARED TO INITIAL PRESSES JUSTIFIED THE SUBSTANTIAL EXPANSION. IT WAS SUBMITTED THAT THE SUBSTANTIAL EXPRESSION FULFILLED ALL THE ELIGIBLE CONDITIONS SO AS TO BE ELIGIBLE FOR DEDUCTION U/S. 80 I ON DERIVED P ROFITS FROM A.Y. 1990 - 91 BUT DUE TO LACK OF PROPER GUIDANCE, NO DEDUCTION WAS CLAIMED FROM A.Y. 1990 - 91 ONWARDS. IT WAS SUBMITTED THAT EVEN IF THE UNIT AT J - 6 WERE NOT TO BE A N UNIT, EVEN THEN THE UNIT AT J - 6 WOULD HAVE CONSTIT UT ED A PART OF THE EXPANSION UNDERTAKEN AND COMPLETED IN F.Y. 1989 - 90 RELEVANT TO A.Y. 1990 - 91. A FURTHER ALTERNATIVE PLEA WAS RAISED THAT DURING F.Y. 1990 - 91, THE COMPANY RECEIVED A LETTER INDENT FOR DEVELOPMENT AND SUPPLY OF SUSPENSION ITEMS FROM KALYANI BRAKES LTD. THE COMPANY S ET UP THE NEW UNIT AT THE PREMISES OF TRISHUL SPRINGS AT J - 312, MIDC TEMPORARILY W.E.F. 30.4.1991. THE COMPANY ACQUIRED AND INSTALLED PLANT AND MACHINERIES AT J - 312, MIDC WHICH WERE SUBSEQUENTLY SHIFTED TO J - 6, MIDC IN APRIL 1993. IT WAS SUBMITTED FURT HER THAT THE PRESENT JOB CARRIED OUT BY THE OLD UNITS WAS BASICALLY A MACHINE ORIENTED WHEREAS IN THE NEW UNIT, LABOUR ORIENTED JOB WAS CARRIED OUT AND MACHINES REQUIRED FOR THE SAME WAS COMPARATIVELY OF NEGLIGIBLE COST. AT PAGE NO. 6 AND 7 OF THE FIRST A PPELLATE ORDER, DETAILS OF MACHINERY INSTALLED AT J - 312, MIDC HAS BEEN GIVEN. THE MANUFACTURE OF VARIOUS NEW PRODUCTS LIKE SUSPENSION PART WAS STARTED ONLY AFTER SET UP OF THE NEW UNITS. REGARDING THE A.OS CONTENTION THAT VALUE OF OLD MACHINERY WAS MORE THAN 20%, IT WAS SUBMITTED BY THE ASSESSEE THAT IF THE FIRST YEAR OF UNIT WAS CONSIDERED AS FINANCIAL YEAR , FROM 1.4.1991 TO 31.3.1992 ( A.Y. 1992 - 93) AS AGAINST F.Y. 1993 - 94 (A.Y. 1994 - 95), THEN THE ITA NO S.1255 TO 1258 /PN/200 5 DYNA - K AUTOMOTIVE STAMPINGS P. LTD. A.YS. 1994 - 95 TO 1997 - 98 PAGE OF 10 4 CONDITION REGARDING OLD PLANTS AND MACHINERY BEING LESS THAN 20% OF TOTAL PLANT AND MACHINERY WAS SATISFIED. THE LD CIT(A) CALLED FOR REMAND REPORT TIME TO TIME FROM THE A.O ON THE SUBMISSIONS OF THE ASSESSEE. CONSIDERING SUBMISSIONS OF THE ASSESSEE AND REMAND REPORTS FILED BY THE A.O, THE LD CIT(A) DID NOT A CCEPT THE CONTENTION OF THE ASSESSEE THAT NEW UNIT WAS NOT FORMED BY USED PLANT AND MACHINERY BEYOND THE LIMIT OF 20% OF THE TOTAL PLANT AND MACHINERY. THE LD CIT(A) ALSO DID NOT AGREE WITH THE ALTERNATIVE PLEA OF THE ASSESSEE THAT THERE WAS A SUBSTANT IAL EXPANSION UNDERTAKEN IN F.Y. 1989 - 90 AND THAT IF UNIT AT J - 6, MIDC IS NOT CONSIDERED AS A NEW UNIT, THEN, IT WOULD HAVE FORMED PART AND PARCEL OF ABOVE EXPANSION , ON THE BASIS THAT THERE WAS NO EVIDENCE/WORKING IN SUPPORT. THE LD CIT(A), HOWEVER, HA S ACCEPTED THE FURTHER ALTERNATIVE PLEA OF THE ASSESSEE THAT THE NEW UNIT WAS SET UP IN APRIL 1991 ( F.Y. 199 1 - 9 2 RELEVANT TO A.Y. 1992 - 93 ) AND NOT IN F.Y. 1993 - 94 ( A.Y. 199 4 - 95 ) ON THE BASIS THAT THE VALUE OF NEW PLANT AND MACHINERY WAS MORE THAN 80% OF THE TOTAL VALUE OF PLANT AND MACHINERY OF THE NEW UNIT IN F.Y. 1991 - 92 AND SUCCEEDING YEARS. LD CIT(A) HAS THUS GIVEN PART RELIEF OF RS. 30,40,584/ - AGAINST THE TOTAL CLAIMED DEDUCTION U/S. 80 IA OF THE ACT FOR THE A.YS. IN QUESTION AT RS. 62,13,747/ - . IT IS PERTINENT TO MENTION OVER HERE THAT THE ASSESSEE HAD ALSO REVISED ITS CLAIM AT RS.34,84,635/ - FOR ALL THE A.YS. UNDER CONSIDERATION. 4. THE REVENUE HAS QUESTIONNED THE FIRST APPELLATE ORDER IN GIVING PART RELIEF OUT OF THE CLAIMED DEDUCTION. 5. I N SUPPORT OF THE GROUND, THE CONTENTION OF THE LD. D.R. REMAINED THAT IN SPITE OF THE SATISFACTION BY THE A.O, THE LD. CIT(A) FAILED TO APPRECIATE THAT INSPECTION WAS CONDUCTED AFTER LAPSE OF ITA NO S.1255 TO 1258 /PN/200 5 DYNA - K AUTOMOTIVE STAMPINGS P. LTD. A.YS. 1994 - 95 TO 1997 - 98 PAGE OF 10 5 SUFFICIENT TIME, HENCE CORRECT FACT REGARDING STARTING PERIOD O F UNIT II COULD NOT COME OUT. IT WAS SUBMITTED THAT 4 TH REMAND REPORT OF THE A.O WAS NOT TAKEN INTO CONSIDERATION BY THE LD CIT(A). 6. THE LD. A .R., ON THE OTHER HAND, TRIED TO JUSTIFY THE RELIEF GIVEN BY THE LD CIT(A). HE SUBMITTED THAT THE LD CIT(A) H AS CONSIDERED THE 4 TH REMAND REPORT OF THE A.O. DT. 26.5.2004 AT PAGE NOS. 18 AND 19 OF THE FIRST APPELLATE ORDER. THE LD. A.R. ALSO REFERRED PAGE NO. 255 OF THE PAPER BOOK WHEREIN A COPY OF SAID REMAND REPORT HAS BEEN MADE AVAILABLE. HE POINTED OUT THAT I N THE SAID REMAND REPORT, IN PARA 2.6, THE A.O HAS ACCEPTED THAT THE STAND OF THE ASSESSEE REGARDING THE AMOUNT OF OLD MACHINERY TRANSFERRED TO UNIT NO. II IS LESS THAN 20% OF THE TOTAL COST OF PLANT AND MACHINERY WOULD BE CORRECT ONLY IF IT IS ACCEPTED THAT THE NEW UNIT - II WAS SET UP IN RENTED PREMISES IN A.Y. 1992 - 93 AND NOT IN A.Y. 1994 - 95. 7. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT THE LD CIT(A) HAS ACCEPTED THE ALTERNATIVE CONTENTION OF THE ASSESSEE THAT THE NEW UNIT WAS SET UP IN APRIL 199 1 AND THAT THE VALUE OF NEW PLANT AND MACHINERY WAS MORE THAN 80% OF THE TOTAL VALUE OF PLANT AND MACHINERY OF THE NEW UNIT IN F.Y. 1991 - 92 AND SUCCEEDING YEARS WITH FOLLOWING FINDINGS : 2.15 THE ASSESSEE COMPANYS CONTENTION THAT THE NEW UNIT WAS SET UP IN APRIL 1991 [I.E. FINANCIAL YEAR 1991 - 92 RELEVANT TO ASSESSMENT YEAR 1992 - 93] AND NOT IN FINANCIAL YEAR 1993 - 94 [RELEVANT TO ASSESSMENT YEAR 1994 - 95] HAS BEEN CONSIDERED IN DETAIL. I WOULD HIGHLIGHT THE FOLLOWING IMPORTANT CONCLUSIONS WHICH EMERGED FROM THE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE COMPANY AND THE COMMENTS/REPORT RECEIVED FROM THE ASSESSING OFFICER ON THE BASIS OF DIRECTIONS FROM THIS OFFICE : [A] THAT THE TWO UNITS ARE PRESENTLY LOCATED AT SEPARATE AND INDEPENDENT LOCATIONS [I.E. OLD UN IT AT J - 450 AND NEW UNIT AT J - 6]. THE NEW UNIT INITIALLY OPERATED FROM RENTED FACTORY PREMISES AT TRISHUL SPRINGS AT J - 31 MIDC. ITA NO S.1255 TO 1258 /PN/200 5 DYNA - K AUTOMOTIVE STAMPINGS P. LTD. A.YS. 1994 - 95 TO 1997 - 98 PAGE OF 10 6 [B] THAT THE COMPANY COMMENCED MANUFACTURE OF A ENTIRELY NEW PRODUCT NAMELY SUSPENSION PARTS IN FINANCIAL YEAR 1991 - 92 REL EVANT TO ASSESSMENT YEAR 1992 - 93. [C] THAT THE VALUE OF NEW PLANT AND MACHINERY IS MORE THAN 80% OF THE TOTAL VALUE OF PLANT AND MACHINERY OF THE NEW UNIT IN FINANCIAL YEAR 1991 - 92 AND SUCCEEDING YEARS. [D] THAT THE ASSESSEE IN THE ASSESSMENT PROCEEDING S HAD CLAIMED DEDUCTION U/S. 80IA ON THE ENTIRE SALES OF PRODUCTS INCLUDING THE PRODUCTS EARLIER MANUFACTURED BY THE OLD UNIT. DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE COMPANY HAS FILED DETAILED AUDITED COMPUTATION OF PROFITS OF THE ELIGIBL E UNDERTAKING [I.E. UNIT NO. II] FOR THE VARIOUS YEARS IN WHICH THE TURNOVER OF SUSPENSION PARTTS ALONE HAS BEEN CONSIDERED IN UNIT NO. II EVEN THOUGH THE SALES INVOICES FOR ALL PRODUCTS EXCEPT TOOLINGS WAS MADE THROUGH UNIT NO. II. THUS IT IS CLEAR THAT THE ASSESSEE COMPANY HAS NOW CLAIMED THAT ONLY THE NEW PRODUCTS I.E. SUSPENSION PARTS IS THE ELIGIBLE TURNOVER OF UNIT NO. II AND ONLY THE PROFITS FROM SALE OF ABOVE SUSPENSION PARTS IS CONSIDERED AS ELIGIBLE FOR DEDUCTION U/S. 80IA. [E] AS REGARDS THE Q UESTION REGARDING ADMISSIBILITY OF SO CALLED FRESH PLEA I.E. NEW UNIT WAS SET UP IN FINANCIAL YEAR 1991 - 92 [I.E. RELEVANT TO ASSESSMENT YEAR 1992 - 93]. I FIND THAT THE ASSESSEE COMPANY HAD ALREADY TAKEN THE GROUND REGARDING DEDUCTION U/S. 80IA AND HAS GIVE N JUSTIFICATION / ELABORATION OF THE ABOVE GROUND IN ITS SUBMISSION. FURTHER THE FAILURE TO TAKE SUCH NEW PLEA DURING ASSESSMENT PROCEEDINGS CAN ALSO BE ATTRIBUTED TO LACK OF PROPER ADVICE FROM ITS EARLIER TAX CONSULTANT. FURTHER I WOULD ALSO ADD THAT EV EN IF IT WAS CONSIDERED THAT THE SO CALLED NEW PLEA IS AN ADDITIONAL GROUND OF APPEAL EVEN THEN THE SAME IS ADMISSIBLE IN LIGHT OF FOLLOWING CASE LAWS : RAMGOPAL GANAPATRAI & SONS V CIT [1953] 24 ITR 362 [BOM] CIT V KANPUR COAL SYNDICATE [1964] 53 ITR 225 [SC] JUTE CORPORATION OF INDIA LTD. V CIT [1991] 187 ITR 688 [SC] I MAY ADD THAT THE ASSESSING OFFICER HAS ALSO ACCEPTED THAT THE ASSESSEE COMPANYS REVISED CLAIM STILL REMAINS ON THE ISSUE OF DEDUCTION U/S 80IA WHICH WAS THE GROUND TAKEN BY THE ASSESSEE COMPANY IN ITS APPEAL. 2.16 IN VIEW OF ABOVE DISCUSSIONS, I HOLD THAT THE ASSESSEE COMPANY IS ELIGIBLE FOR DEDUCTION U/S. 80IA IN RESPECT OF ITS UNIT NO. II WHICH BEGAN MANUFACTURE OF SUSPENSION PARTS DURING FINANCIAL YEAR 1991 - 92 RELEVANT TO ASSESSMENT YEAR 1992 - 93. FURTHER, THE ASSESSEE WILL NOT BE ELIGIBLE FOR DEDUCTION U/S. 80IA IN RESPECT OF ITA NO S.1255 TO 1258 /PN/200 5 DYNA - K AUTOMOTIVE STAMPINGS P. LTD. A.YS. 1994 - 95 TO 1997 - 98 PAGE OF 10 7 OTHER INCOME WHICH IS NOT DERIVED FROM THE UNDERTAKING. THE DEDUCTION ALLOWABLE U/S. 80IA FOR THE ASSESSMENT YEAR IN APPEAL I.E. ASSESSMENT YEAR 1997 - 98 WILL BE AS UNDER : RS. PROFITS OF THE ELIGIBLE INDUSTRIAL UNDERTAKING 19,24,027/ - AS PER REVISED STATEMENT OF COMPUTATION OF TOTAL INCOME LESS: OTHER INCOME : SALES TAX SET OFF 1,70,236/ - INTEREST AND MISCELLANEOUS INCOME 59,222/ - EXCESS PROVISION WRITTEN BACK 8,39,764/ - ------------------ PROFITS DERIVED FROM ELIGIBLE UNDERTAKING 8,54,805/ - -------------------- DEDUCTION U/S. 80IA @ 30% OF 2,56,442/ - PROFITS DERIVED FROM EL IGIBLE UNDERTAKING [6 TH YEAR OF CLAIM] ------------------ 2.17 IN EFFECT, THE APPELLANT COMPANY IS ALLOWED DEDUCTION U/S. 80IA OF RS.2,56,442/ - AS AGAINST RS. 9,43,962/ - BEING THE AMOUNT OF DEDUCTION CLAIMED AS PER THE RETURN OF I NCOME WHICH WAS SUBSEQUENTLY REVISED TO RS.5,77,208/ - AS PER REVISED COMPUTATION OF TOTAL INCOME. THUS THE APPELLANT COMPANY GETS PART RELIEF ON THE ABOVE GROUND. 8. THE ABOVE DECISION TAKEN IN THE A.Y. 1997 - 98 HAS BEEN FOLLOWED ON AN IDENTICAL ISSUE UND ER SIMILAR FACTS IN THE REMAINING A.YS. UNDER CONSIDERATION. 9. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THE LD CIT(A) WHILE GIVING THE PARTIAL RELIEF OUT OF THE CLAIMED DEDUCTION U/S. 80 IA OF THE ACT, HAS MET OUT THE OBJEC TION OF THE A.O IN DENYING THE CLAIMED DEDUCTION MERELY ON THE BASIS THAT NEW PLANT I.E. UNIT NO. II WAS FORMED BY THE ASSESSEE BY SPLITTING UP ITS EXISTING BUSINESS AND THE TOTAL VALUE OF OLD PLANT AND MACHINERY WAS MORE THAN 20% OF THE VALUE OF THE NEW P LANT AND MACHINERY. WE THUS FIND THAT THE FIRST APPELLATE ORDER ON THE ISSUE IS REASONED ONE. WE ARE THUS NOT INCLINED TO INTERFERE THEREWITH. THE SAME IS UPHELD. THE GROUND IS, ACCORDINGLY, REJECTED. ITA NO S.1255 TO 1258 /PN/200 5 DYNA - K AUTOMOTIVE STAMPINGS P. LTD. A.YS. 1994 - 95 TO 1997 - 98 PAGE OF 10 8 10. IN THE APPEAL FOR THE A.Y. 1997 - 98, ONE MORE G ROUND HAS BEEN RAISED BY THE REVENUE THAT THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 4,60,550/ - MADE ON ACCOUNT OF ENHANCEMENT OF STOCK VALUATION ( GROUND NO. 2 IN ITA NO. 1258/PN/2005 FOR A.Y. 1997 - 98 ) . 11. AT THE OUTSET, THE LD. A.R. POINTED OUT THAT THE ISSUE RAISED IN THE GROUND IS FULLY COVERED BY THE DECISION OF CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF FOR THE A.Y. 1995 - 96 IN ITA NO. 222/PN/1999 VIDE ORDER DATED 15 TH JUNE 2005, COPY SUPPLIED. 12. THE LD A.R DID NOT DISPUTE THE ABOVE SUBMISSION OF THE LD. A.R. HE, HOWEVER, PLACED RELIANCE ON THE ASSESSMENT ORDER IN THIS REGARD. THE RELEVANT FACTS ARE THAT ASSESSEE COMPANY SINCE PREVIOUS YEAR RELEVANT TO A.Y. 1995 - 96 VALUED THE STOCK LYING WITH THE CUSTOMERS WHIC H WAS EARLIER SOLD AND REJECTED, WHICH WAS SUBJECT TO RE - WORK AND RE - SALE AGAIN LATER AT SELLING PRICE LESS THAN 20%. THE A.O ENHANCED THE VALUE OF SAID STOCK BY CONSIDERING PROFIT MARGIN AT THE RATE OF 6.46%. THE LD CIT(A) FOLLOWING DECISION TAKEN BY F IRST APPELLATE AUTHORITY, ON AN IDENTICAL ISSUE IN THE CASE OF ASSESSEE FOR THE A.Y. 1995 - 96 H OLDING THAT THE PROCEDURE FOLLOWED BY THE ASSESSEE COMPANY WAS IN CONFORMITY WITH THE ACCOUNTING PRINCIPLES AND THE A.O WAS NOT CORRECT IN DISTURBING THE SAME A ND IN MAKING ADDITION TO THE INCOME FOR UNDER VALUATION OF STOCK. THE LD CIT(A) HAS ACCORDINGLY HELD THAT THE ADDITION ON ACCOUNT OF ENHANCEMENT OF STOCK VALUATION AT RS. 4,60,550/ - WAS NOT WARRANTED AND DELETED THE SAME. THE SAID FIRST APPELLATE ORDER ON THE ISSUE FOR A.Y. 1995 - 96 IN THE CASE OF ASSESSEE ITSELF HAS BEEN UPHELD BY THE TRIBUNAL VIDE ITS ORDER DATED 15.6.2005 (SUPRA) WITH THE FOLLOWING CONCLUSIONS : 5. IN OUR CONSIDERED OPINION THE METHOD ADOPTED BY THE ASSESSEE FOR THE VALUATION OF STOC K CANNOT BE FOUND FAULT WITH. THE SELLING PRICE OF THE ITA NO S.1255 TO 1258 /PN/200 5 DYNA - K AUTOMOTIVE STAMPINGS P. LTD. A.YS. 1994 - 95 TO 1997 - 98 PAGE OF 10 9 STOCK LYING WITH THE CUSTOMERS WAS RS. 17,81,676. IT WAS SUBMITTED BY THE LD. A.R BEFORE THE CIT(A) AND ALSO BEFORE US THAT THE SALE PRICE OF RS. 17,81,676 INCLUDED GROSS PROFIT AND SINCE THE GROSS P ROFIT RATE SHOWN BY THE ASSESSEE IN A.Y. 1993 - 94 AND 1994 - 95 WAS 20.6% AND 18.2% RESPECTIVELY, THE ASSESSEE ADOPTED THE AVERAGE RATE OF 20% FOR ESTIMATING THE VALUE OF IMPUGNED STOCK. IT WAS EXPLAINED BY THE LD. A.R THAT SINCE THE SALE PRICE AND THE VALUE OF STOCK ARE ITEMS OF THE TRADING ACCOUNT THE ASSESSEE HAD RIGHTLY VALUED THE STOCK BY REDUCING THE SALE PRICE BY 20%. THE REASONS GIVEN BY THE AO FOR INTERFERING WITH THE ASSESSEES VALUATION HAVE NO MERIT. AND, ON THE OTHER HAND, WE SEE NO INFIRMITY IN THE ORDER OF THE CIT(A) WHICH IS ACCORDINGLY UPHELD. 13. FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL ON TH E ISSUE UNDER SIMILAR FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT LD CIT(A) HAS RIGHTLY DELETED THE ADDITION IN QUESTION. THE SAME IS UPHE LD. GROUND NO. 2 IS ACCORDINGLY REJECTED. 14. IN RESULT, ALL THE APPEALS PREFERRED BY REVENUE ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 4TH MARCH 201 1 . SD/ - SD/ - ( G.S. PANNU ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE , DATED THE 4TH MARCH , 20 1 1 US COPY OF THE ORDER IS FORWARDED TO : 1. THE A PPELLANT 2. THE RESPONDENT 3. THE CIT V , PUNE 4. THE CIT(A) - I I I , NASHIK 5. THE D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER ITA NO S.1255 TO 1258 /PN/200 5 DYNA - K AUTOMOTIVE STAMPINGS P. LTD. A.YS. 1994 - 95 TO 1997 - 98 PAGE OF 10 10 ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE