STORE ONE RETAIL INDIA LTD, NEW DELHI V. DCIT CIR 7(1), MUMBAI

ITA 2563/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2981 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2007-2008
• Appeal Filed On: 05-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHARI
• Keywords: Revision of order
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI J BENCH , MUMBAI BEFORE SHRI SHAILEND RA K UMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER . ITA. NO. 256 3 / M UM /20 1 5 (ASSESSMENT YEAR: 2 0 0 7 - 0 8 ) STAR ONE RETAIL INDIA LIMITED, M - 62 & 63, FIRST FLOOR, CONNAUGHT PLACE, NEW DELHI - 110001 APPELLANT VS. D CIT, CIRCLE 7(1) , MUMBAI RESPONDENT PAN: AA DCP5164C / BY APPELLANT : SHRI JITENDRA SANGHAVI , A.R. / BY RESPONDENT : SHRI ALOK JOHARI , D .R. / DATE OF HEARING : 25 . 0 8 .201 6 / DATE OF PRONOUNCEMENT : 14.9. 201 6 ORDER PER SHAILENDRA KUMAR YADAV, J . M: THIS APPEAL HAS BEEN FILED BY ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME - TAX (APPEALS) - 1 4 , MUMBAI , DATED 27 . 01 . 20 1 5 FOR A.Y. 20 0 7 - 0 8 ON FOLLOWING GROUND S : GROUND NO.1: THE DIRECTION OF ADMINISTRA TIVE CIT U/S 263 TO THE AO WAS INVALID AS ORIGINAL ASSESSMENT ORDER WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. I T A NO . 256 3 / M UM / 1 5 A.Y. 0 7 - 0 8 [ STORE ONE RETAIL INDIA LTD. VS. D CIT ] PAGE 2 GROUND NO.2: THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION, MADE BY ASSESSING OFFICER VIDE ORDER DATED 31.01.2013 PASSED U/S143(3) R.W. SECTION 263, OF RS.8,280,195/ - BEING 50% OF TOTAL SHRINKAGE & SHORTAGE EXPENSES DEBITED TO PROFIT & LOSS ACCOUNT.' 2. THE ISSUE BEFORE US IS REGARDING ADDITION OF RS.82,80,195/ - BEING 50% OF TOTAL SHRINKAGE AND SHORTAGE EXPENSES DEBITED TO P&L ACCOUNT. ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS NOT GIVEN DETAILS WITH REGARD TO SHRINKAGE AND SHORTAGE EXPENSES, SO, HE DISALLOWED THE 50% OF AMOUNT OF PROVISIONS MADE ON ACCOUNT OF SHRINKAGES AND SHORTAGES, WHICH WAS CONFIRMED BY CIT(A). 2.1 SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF ASSESSEE INTER ALIA SUBMITTED THAT IN RETAIL BUSINESS , RETAIL STORES ARE OPEN TO PUBLIC FOR ALL SELF SERVICES, THE PILFERAGES, HANDLING, DAMAGES ETC. ARE BOUND TO OCCUR TO SOME EXTENT. DURING YEAR UNDER CONSID ERATION, ASSESSEE DEBITED ITS P&L ACCOUNT FOR RS.165.60 LACS ON ACCOUNT OF NORMAL WEAR & TEAR, PILFERAGE AND DAMAGED ITEMS, ETC. WHICH WAS BOUND TO HAPPEN IN ANY RETAIL BUSINESS. THE STAND OF ASSESSEE HAS BEEN THAT ACTUALLY UTILIZED AMOUNT WAS HIGHER THAN THE AMOUNT DEBITED IN P&L ACCOUNT OF ASSESSEE IN THE YEAR UNDER CONSIDERATION. ACCORDING TO ASSESSEE, ACTUAL SHRINKAGES WAS UP TO RS.2 CRORE. ASSESSEE RELIED ON AUDITORS OBSERVATIONS IN NOTE 4 OF ANNEXURE TO THE AUDITORS REPORT, WHICH READS AS UNDER: 4. WE ARE INFORMED THAT THE INVENTORY HAVE BEEN PHYSICALLY VERIFIED BY THE MANAGEMENT DURING THE YEAR. SCHEDULE 19(I)(V), PAGE NO.53 OF PAPER BOOK I T A NO . 256 3 / M UM / 1 5 A.Y. 0 7 - 0 8 [ STORE ONE RETAIL INDIA LTD. VS. D CIT ] PAGE 3 INVENTORIES ARE VALUED AT WEIGHTED AVERAGE COST OR ESTIMATED NET REALIZABLE VALUE WHICHEVER IS LOWER. ON COMBINED READING OF ABOVE SAID AUDITORS OBSERVATION, IT COMES OUT THAT INVENTORY HAS BEEN VALUED AND OBSERVED DEFICIENCY HAS BEEN ADJUSTED AGAINST PROVISION ACCOUNT. BASED ON WORKING IN PRECEDING PARA, THE SAID AMOUNT WORKS OUT TO BE RS. 2 CRORES. IN THIS BACKGROUND, LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT PROVISIONS IN QUESTION BE ALLOWED BECAUSE IN CASE IT IS MORE THAN . AS AND WHEN FINALLY INTERESTS ARE SETTLED. TAKING ALL FACTS AND CIRCUMSTANCES INTO CONSIDERATION, WE DELETE THE AD DITION IN QUESTION BECAUSE THEY HAVE BEEN POINTED OUT BY ACTIVITIES AND NOTHING ADVERSE HAS BEEN NOTED BY REVENUE AUTHORITIES IN THIS REGARD. SO, ADDITION IN QUESTION IS DIRECTED TO BE DELETED. 3. IN THE RESULT, THE APPEAL FILED BY ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 14TH DAY OF SEPT , 201 6 . S D SD ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI : DATED 14 / 09 /201 6 S.K.SINHA / COPY OF ORDER FORWARDED TO: - 1 . / REVENUE 2 . / ASSESSEE 3 . / CONCERNED CIT 4. - / CIT (A) 5 . , , / DR, ITAT, MUMBAI 6 . / GUARD FILE. BY ORDER / , T RUE COPY / , ,