M/s Ganesh Factory, Neemuch V. The ACIT, Ratlam

ITA 348/IND/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1520 (ITAT-INDORE)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 11-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S C GOYAL
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AABFM3057G I.T.A.NO. 348/IND/2012 A.Y. : 2004 - 05 M/S.GANESH FACTORY, ACIT, NEEMUCH VS RATLAM APPELLANT RESP ONDENT APPELLANT BY : SHRI S. C. GOYAL, ADV. RESPONDENT BY : SHRI R. A. VERMA, SR. DR DATE OF HEARING : 30 . 01 .201 3 DATE OF PRONOUNCEMENT : 31 . 0 1 .201 3 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A) DATED 30 TH APRIL, 2012, FOR THE ASSESSMENT YEAR 2004-05. 2. THE ASSESSEE IS AGGRIEVED FOR DISALLOWANCE OF LOSS CLAIMED IN THE TRADING ACCOUNT OF CHANA DAL, CHHILK A, -: 2: - 2 SOYABEAN AND MAKKA. PRECISELY FOLLOWING GROUNDS HAV E BEEN TAKEN BY THE ASSESSEE :- 1. BECAUSE THE DISALLOWANCE OF LOSS CLAIMED IS CHANA DAL, CHHILKA, SOYABEAN AND MAKKA AT RS. 2,45,511/- ON ACCOUNT OF DECLINING TENDENCIES IN THE MARKET AND PRICE GOING DOWN IS NOT CORRECT WHEN TOTAL SALES & PROFIT SHOWN IN OTHER TRADING ACCOUNT ARE ACCEPTED AT GROUND NO.3. 2. BECAUSE CLOSING STOCK IS TAKEN AS PER MARKET REPORT & QUALITY OF PRODUCT HE ERRED IN DISALLOWING THE SAME & FURTHER ERRED IN NOT DIRECTING ITS ALLOWANCE IN SUBSEQUENT YEAR AS PER SUPREME COURT DECISION IN V.K.J. BUILDERS & CONTRACTORS (P) LIMITED ( CTR 14 JAN.2010). 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. FROM THE RECORD, WE FOUND THAT THE ASSESSI NG OFFICER HAS DISALLOWED LOSS SUFFERED IN TRADING OF CHANA DA L, CHANA CHHILKA, SOYABEAN ETC. THE ASSESSING OFFICER OBSERV ED THAT THE -: 3: - 3 ASSESSEE HAS NOT VALUED THE CLOSING STOCK AS PER TH E SALE PRICES REALIZED IMMEDIATELY BEFORE THE CLOSE OF THE YEAR. ACCORDINGLY, BOOKS OF ACCOUNT WAS REJECTED AND LOSS CLAIMED WAS DISALLOWED. 4. IN THE APPEAL FILED BEFORE THE CIT(A), THE CIT(A) OBSERVED THAT AS PER THE AUDIT REPORT CLOSING STOCK WAS VALUED BY THE ASSESSEE AT A MARKET RATE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT AS PER THE SALE BILL DATED 26 TH MARCH, 2004, THE SALE PRICE WAS WORKED OUT AT RS. 1961/- PER QTL . BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS FURNISHED DAILY REPORT OF M/S. PUROHIT DAINIK MARKET OF 1 ST APRIL, WHERE CHANA DAL HAS QUOTED AT RS. 1700/-, RS. 1750/- AND 1825/-. AS AGA INST THIS MARKET QUOTATION, THE ASSESSEE HAS VALUED THE CLOSI NG STOCK AT RS. 1810/-. WE FOUND THAT THE ASSESSEE HAS MAINTAIN ED QUANTITATIVE DETAILS OF GOODS MANUFACTURED AND THE SAME WAS SUPPORTED BY VOUCHERS AND MANDI REGISTER, NO MISTAK E WAS FOUND IN THE PURCHASE AND SALE PRICE SHOWN BY THE ASSESSEE. THE DISALLOWANCE OF LOSS WAS MADE MERELY ON THE PLE A THAT CLOSING STOCK OF CHANA DAL WAS NOT AS PER THE SALE PRICE -: 4: - 4 FETCHED BY THE ASSESSEE AS PER ITS SALE BILL DATED 26 TH MARCH, 2004. AS PER OUR CONSIDERED VIEW, CLOSING STOCK IS TO BE VALUED AS PER MARKET PRICE OR COST PRICE WHICHEVER IS LOWE R. IN THE INSTANT CASE, AS PER MARKET QUOTATION, THE COST VAR IES BETWEEN 1700/- TO RS. 1825/- PER QTL. AGAINST WHICH ASSESSE E HAS TAKEN RS. 1810/- WHICH APPEARS TO BE VERY REASONABL E. SINCE THERE IS FREQUENT FLUCTUATION IN THIS TRADE, THE SA LE PRICE OF 26 TH MARCH, CANNOT BE ADOPTED FOR VALUING THE STOCK AS O N 31 ST MARCH, WHEN THE MARKET QUOTATION WAS AVAILABLE AS A T THE END OF THE YEAR. ACCORDINGLY, WE DO NOT FIND ANY JUSTIF ICATION IN DISALLOWING THE CLAIM OF LOSS BY TAKING RATE OF CLO SING STOCK AT RS. 1961/- IN PLACE OF RS. 1810/- PER QTL. FURTHERM ORE, WHATEVER IS THE VALUE OF CLOSING STOCK AT THE END O F THE YEAR, THE SAME IS BEING CARRIED FORWARD AS AN OPENING STO CK IN THE NEXT YEAR, THEREFORE, THERE IS NO LOSS OF REVENUE M ERELY BY VALUING THE CLOSING STOCK AT HIGHER FIGURE. ACCORDI NGLY, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE LOSS DI SALLOWED BY HIM. -: 5: - 5 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY,2013. SD/ - SD/ - (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST JANUARY, 2013. CPU* 301