Prudent-Agri Commodities Indai Private Limited , New delhi V. ACIT Spl. Range-7, New Delhi

ITA 1499/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0193 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 22-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV DUDEJA
• Section: 143(3); 201

Judgement Text

ITA NO. 1499/DEL/2019 PRUDENT AGRI COMMODITIES INDIA P . LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI G.S. PANNU, HONBLE VICE PRESIDENT & SHRI K.N. CHARY, JUDICIAL MEMBER ITA NO.-1499/DEL/2019 (ASSESSMENT YEAR:2014-15) PRUDENT - AGRI COMMODITIES INDIA PRIVATE LIMITED, RNM CENTRE, 68/2, JANPATH, NEW DLEHI. VS. ACIT SPECIAL RANGE-7, C.R. BUILDING, I.P. ESTATE, NEW DELHI. PAN NO. AAGCP9228E APPELLANT RESPONDENT REVENUE BY SH. GAURAV DUDEJA, SR. DR ASSESSEE BY KANCHAN KAUSHAL, ADV. SH. RISHABH MALHOTRA, ADV. DATE OF HEARING: 30 .12.2020 DATE OF PRONOUNCEMENT : 30 .12.2020 ORDER PER K. NARASIMHA CHARY, JM AGGRIEVED BY THE ORDER DATED 21/12/2018 IN APPEAL N O. 324/17-18 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-XXV, NEW DELHI (LD. CIT(A)) IN THE CASE OF PRUDENT AGRI CO MMODITIES INDIA PRIVATE LIMITED (RESULTANT COMPANY POST-MERGER WITH THE SUN DER AGRI COMMODITIES INDIA PRIVATE LIMITED), FOR THE ASSESSMENT YEAR 201 4-15, ASSESSEE PREFERRED THIS APPEAL ON 3 GROUNDS. LD. AR, HOWEVER THE TIME OF ARGUMENTS, GAVE UP GROUNDS NO. 1 AND 2 AND CONFINED THE ARGUMENTS TO G ROUND NO. 3 IN RESPECT OF THE DISALLOWANCE OF FORWARD LOSSES BASING ON THE CLOSING STOCK FOR THE ITA NO. 1499/DEL/2019 PRUDENT AGRI COMMODITIES INDIA P . LTD. 2 ASSESSMENT YEAR 2013-14, WHICH WOULD BE THE OPENING STOCK FOR THE ASSESSMENT YEAR 2014-15. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEEIS A PRIVATE LIMITED COMPANY INCORPORATED UNDER THE PROVISIONS OF THE CO MPANIES ACT, 1956 AND IS MAINLY ENGAGED IN THE TRADING OF AGRICULTURAL CO MMODITY I.E. COTTON; THAT DURING THE IMMEDIATELY PRECEDING YEAR I.E. AY 2013- 14, THE ASSESSEE HAS VALUED ITS CLOSING STOCK BASED ON NET REALIZABLE VA LUE (NRV), IN ACCORDANCE WITH THE PROVISIONS, OF ACCOUNTING STANDARDS (AS) - 2 VALUATION OF INVENTORIES NOTIFIED UNDER SECTION 211(3C) OF COMP ANIES ACT, 1956; AND THATBASED ON THE ACCOUNTING POLICY MENTIONED ABOVE AS FOLLOWED BY THE ASSESSEE, THE CLOSING STOCK HAD BEEN VALUED AT A VA LUE OF INR 909,339,489 WHICH IS LOWER THAN COST PRICE OF INVENTORY AMOUNTI NG TO INR 935,581,336. 3. LEARNED ASSESSING OFFICER, HOWEVER, BRUSHED ASI DE THE CONTENTIONS RAISED BY THE ASSESSEE AND CONSIDERED THE VALUE OF CLOSING STOCK AT COST INSTEAD OF NRV AND MADE AN ADJUSTMENT OF INR 2,62,4 1,856 ON ACCOUNT OF VALUATION OF CLOSING STOCK ADOPTED BY THE ASSESSEE. AGGRIEVED BY SUCH DISALLOWANCE, THE ASSESSEE PREFERRED AN APPEAL FOR THE AY 2013- 14 BEFORE THE LD. CIT(A) AND THE SAME IS PENDING DISPOSAL.FOR THIS YEAR ALSO LEARNED ASSESSING OFFICER IGNORED THE FACT THAT THE CLOSING STOCK OF THE PRECEDING YEAR WOULD BE THE OPENING STOCK FOR THE CURRENT YEA R, AND DISALLOWED THE BROUGHT FORWARD LOSSES FOR THE IMPUGNED ASSESSMENT YEAR TO THE EXTENT OF RS.2,62,41,856 I.E. THE ADDITIONS MADE IN THE IMMED IATELY PRECEDING YEAR. APPEAL PREFERRED BY THE ASSESSEE AGAINST THIS ORDER WAS DISMISSED BY THE LD. CIT(A), WITH THE OBSERVATIONS THAT,- THE AO HAD DISALLOWED THE BROUGHT FORWARD LOSSES I N EARLIER YEAR. THE SAME HAVE TO BE FACTORED IN DURING THE CURRENT PERI OD AS THE ISSUE STANDS DECIDED AGAINST THE APPELLANT AS OF NOW. THE BRIEFF ACTS ARE THAT DURING AY 2013-14 ORDER U/S 143(3) DATED 29.03.2016 WAS PASSE D AT A TOTAL LOSS OF ITA NO. 1499/DEL/2019 PRUDENT AGRI COMMODITIES INDIA P . LTD. 3 RS. 56,44,239/- AS AGAINST RETURNED LOSS OF RS. 3,1 8,86,095/- THEREBY REDUCING THE LOSSES. HENCE THE AVAILABLE LOSS FROB/ F WITH THE APPELLANT IS RS.56,44,239/-. THE AO HAD CONFRONTED THIS TO THE A PPELLANT VIDE NOTE SHEET DATED 28.11.2016. THERE IS NO PROVISION FOR K EEPING SUCH DISALLOWANCES IN ABEYANCE. THE AO RESTRICTED THE SE T-OFF OF BROUGHT FORWARD LOSS TO RS. 56,44,239/-. ON THE FACTS AS DI SCUSSED SUPRA, THIS GROUND IS DECIDED AGAINST THE APPELLANT. THE ACTION OF THE AO IS UPHELD 4. AGGRIEVED BY SUCH FINDINGS OF THE LD. CIT(A) TH E ASSESSEE PREFERRED THIS APPEAL. 5. AT THE OUTSET, LD. AR SUBMITTED THAT THE ASSESS EE IS CONTEMPLATING TO SETTLE ITS LITIGATION FOR AY 2013-14 AND AY 2014-15 BY OPTING FOR VIVAD-SE- VISHWAS SCHEME, BUT THE ABOVE ISSUE IS SERIOUSLY IM PACTING THE CARRIED FORWARD LOSSES OF THE COMPANY, AND ACCORDINGLY PRAY ED, THAT A DIRECTION MAY BE PASSED IN THE CASE OF THE APPELLANT HOLDING THAT THE VALUE OF CLOSING STOCK AS ON THE CLOSE OF AY 2013-14 WOULD BE THE VA LUE OF OPENING STOCK AS ON THE OPENING DAY OF NEXT ASSESSMENT YEAR I.E. AY 2014-15 IN CONSONANCE WITH THE DECISION RENDERED BY THIS HONBLE TRIBUNAL IN THE CASE OF PEE EMPRO EXPORTS PVT.LTD. IN ITA NO.6589/DEL/2019. 6. HE BROUGHT TO OUR NOTICE RELEVANT FINDING IN TH E ABOVE CASE IN SUPPORT OF HIS SUBMISSION THAT FOR THE PURPOSE OF S ETTING THE MATTER UNDER THE VIVAD-SE-VISHWAS SCHEME, THE CLARIFICATION IS N ECESSARY AS TO THE TREATMENT OF THE CLOSING STOCK OF THE EARLIER YEAR AS THE OPENING STOCK OF THE CURRENT YEAR. THE RELEVANT PORTION READS THUS,- WE ARE OF THE VIEW THAT THE VALUE OF CLOSING STOCK AS COMPUTED BY THE ASSESSING OFFICER NEEDS TO BE ACCEPTED AS SUCH. HOW EVER, SAME METHOD IS TO BE APPLIED FOR VALUATION OF OPENING STOCK, WH ICH IS TO BE RE- DETERMINED BY REDUCING THE VALUE OF OPENING STOCK B Y 9.22%. IT IS AN ADMITTED POSITION THAT SAME RATE NEEDS TO BE APPLIE D TO COMPUTE THE VALUE OF OPENING STOCK AND/OR CLOSING STOCK. IT MAY ALSO BE POINTED OUT THAT THE VALUE OF CLOSING STOCK AS ON THE CLOSE OF THE YEAR WOULD BE THE ITA NO. 1499/DEL/2019 PRUDENT AGRI COMMODITIES INDIA P . LTD. 4 VALUE OF OPENING STOCK AS ON THE OPENING DAY OF NEX T ASSESSMENT YEAR. ACCORDINGLY, WE HOLD SO. 7. LD. DR DOES NOT DISPUTE THE ACCEPTABILITY OF THE PRINCIPAL IN ACCORDANCE WITH WHICH THE LD. AR SEEKS RELIEF IN TH IS MATTER. THE CLOSING STOCK OF THE PREVIOUS YEAR HAS TO BE TREATED AS THE OPENING STOCK OF THE CURRENT YEAR AND THERE CANNOT BE ANY QUARREL TO IT. BECAUSE THE ASSESSEE IS PLAYING THIS DIRECTION/CLARIFICATION IN ORDER TO GE T THE MATTER STATED UNDER THE VIVAD-SE-VISHWAS SCHEME, IN THE ABSENCE OF ANY DISPUTE AS TO THE PRINCIPLE INVOLVED IN THIS, WE ARE OF THE CONSIDERE D OPINION THAT THERE IS NO HARM IN ISSUING SUCH CLARIFICATION AND WE ACCORDING LY DIRECT THE AUTHORITIES TO TREAT THE CLOSING STOCK OF THE ASSESSMENT YEAR 2 013-14 AS THE OPENING STOCK FOR THE ASSESSMENT YEAR 2014-15. WE ACCORDING LY CLARIFY THAT THE AUTHORITIES MAY TREAT THE CLOSING STOCK OF THE ASSE SSMENT YEAR 2013-14 AS THE OPENING STOCK FOR THE ASSESSMENT YEAR 2014-15. WITH THIS OBSERVATION WE DISPOSE OF THIS APPEAL. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT IMMEDIATELY AFTE R THE CONCLUSION OF THE HEARING IN THE VIRTUAL COURT ON 3 0/12/2020. SD/- SD/- (G.S. PANNU) (K. NARSIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER DATED: 30.12.2020 *KAVITA ARORA, SR. PS ITA NO. 1499/DEL/2019 PRUDENT AGRI COMMODITIES INDIA P . LTD. 5 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI