DCIT CEN CIR-42, MUMBAI V. MEHER DISTILLERIES P. LTD, MUMBAI

ITA 3815/MUM/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1615 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 30-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PEEYUSH JAIN
• Assessee Lawyers: SHRI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: MUMBAI BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SMT ASHAVIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO 3815/MUM/2008 (ASSESSMENT YEAR: 2005-06) DY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -42, ROOM NO 655, 6TH FLOOR, AAYAKAR BHAVAN, M K MARG, MUMBAI -400 020 VS M/S MEHER DISTILLERIES PVT LTD, 275-E, OLD CHINOY BLDG, TARDEO ROAD, TARDEO, MUMBAI -400 007 PAN: AABCM 9321 L APPELLANT RESPONDENT APPELLANT BY: SHRI PEEYUSH JAIN RESPONDENT BY: SHRI PANKAJ TOPRANI ORDER PER PRAMOD KUMAR , ACCOUNTANT MEMBER 1. BY WAY OF THIS APPEAL THE AO HAS CHALLENGED CORR ECTNESS OF CIT (A)S ORDER DATED 5TH MARCH 2008 FOR THE AY 2005-06 ON THE FOLL OWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED ASSESSING OFFICER HAS ERRED IN ASSESSING THE TOTAL INCOME TO RS 1,54,330/- AS AGAINST THE RETURNED LOSS OF RS 6,83,591/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED ASSESSING OFFICER HAS ERRED IN ASSESSING THE VALUE OF CLOSING STOCK OF 180 ML BOTTLES BY RS 8,37,921/-. ON THE CONCLUSION THEY A RE LIGHT BOTTLES AND IN THE STOCK STATEMENT NOTHING HAS BEEN MENTIONED AS SUCH. 2. BRIEFLY STATED, THE MATERIAL FACTS ARE LIKE THIS . IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS D ISCLOSED CLOSING STOCK OF EMPTY BOTTLES AT RS 56,13,013/- AND THAT IN THE STATEMENT OF CLOSING STOCK FILED BY THE ASSESSEE, THE VALUATION OF 180 ML BOTTLES HAS BEEN TAKEN AT RS 1.50 PER BOTTLE. HOWEVER, WHEN THE AO FURTHER NOTICED THAT PURCHASE PRICE OF THESE BOTTLES IN SOME CASES WAS RS 1.75 PER BOTTLE. IT WAS IN THIS BACKD ROP THAT THE AO RECOMPUTED THE VALUE OF EMPTY BOTTLES OF 180 ML BY ADOPTING THE PR ICE AT RS 1.75 EACH, THE VALUATION SO ARRIVED AT WAS RS 8,39,921/- MORE THAN THE VALUE DISCLOSED IN THE STATEMENT OF CLOSING STOCK. ACCORDINGLY, AN ADDITION OF RS 8,37 ,921/- WAS MADE BY THE AO. M/S MEHER DISTILLERIES PVT LTD 2 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT (A). IT WAS SUBMITTED BY THE ASSESSEE THAT NO DOUBT SOME OF THE 180 ML BOTTLES WERE INDEED PURCHASED @ 1.75 EACH, BUT THESE PURCHASES WERE MAD E AT THE FAG END OF THE RELEVANT ACCOUNTING YEAR, WHEREAS THE ASSESSEE HAD ALSO PURCHASED THE SAME TYPES OF BOTTLES AT RS 1.35 EARLIER IN SAME ACCOUNTING YE AR. THE ASSESSEE SUBMITTED THAT ON ACCOUNT OF THESE VARIATIONS IN PURCHASE PRICES, THE ASSESSEE HAD ADOPTED THE AVERAGE PURCHASE PRICE OF RS 1.50 FOR 180 ML BOTTLE S. ON THE BASIS OF THESE SUBMISSIONS, THE CIT (A) DELETED THE IMPUGNED DISAL LOWANCE BY OBSERVING AS FOLLOWS:- I HAVE CAREFULLY CONSIDERED THE REASONING OF THE A O AS WELL AS THE SUBMISSION OF THE APPELLANT. I HAVE ALSO GONE THROUGH THE LED GER ACCOUNT OF THE PURCHASES MADE BY THE APPELLANT IN RESPECT OF 180 M L SIZE BOTTLES AND IT IS OBSERVED THEREFROM THAT THE MAXIMUM PURCHASES AFFEC TED BY THE APPELLANT ARE FROM THE PERIOD 21.3.2005 TO 31.3.2005 AND THESE AR E IN RESPECT OF BOTTLES OF 180 ML SIZE BROUGHT AT RS 1.35 AND AT THE FAG END I E ON 30.3.2005 THE APPELLANT HAS ALSO AFFECTED PURCHASES OF SIMILAR SI ZE OF BOTTLES AT RS 1.75. THE CLOSING STOCK OF THE APPELLANT CONTAINS MORE BOTTLE S OF 180 ML SIZE WHICH HAD BEEN PURCHASED AT RS 1.35. ACCORDINGLY I AM OF THE CONSIDERED VIEW THAT THE AVERAGE PRICE TAKEN BY THE APPELLANT IN ITS BOOKS O F ACCOUNT AT RS 1.50 IS JUSTIFIABLE AND I SEE NO REASON ON THE PART OF THE AO TO TAKE THE VALUE OF THE ENTIRE STOCK OF THE BOTTLES OF 180 ML AT RS 1.75. THEREFORE I HOLD THAT AO IS NOT JUSTIFIED TO MAKE THE ADDITION IN THE HANDS OF THE APPELLANT IN RESPECT OF THE VALUE OF THE CLOSING STOCK PERTAINING TO BOTTLE S OF 180 ML SIZE AND THE ADDITION AS MADE BY THE AO IS HEREBY DELETED. 4. AO IS AGGRIEVED AND IN APPEAL BEFORE US. 5. HAVING HEARD THE RIVAL SUBMISSIONS AND HAVING PE RUSED THE MATERIAL ON RECORD WE SEE NO REASONS TO INTERFERE WITH THE MATTER. AS WE TAKE ITS STAND, WE HAVE TAKEN THE NOTE OF THE FACT THAT IT IS AN UNDISPUTED POSIT ION THAT EMPTY BOTTLES OF 180 ML ARE PURCHASED AT RS 1.35 IN THE SAME ACCOUNTING YEAR AN D THAT IT WAS ONLY TOWARDS THE FAG END THAT THE ASSESSEE PURCHASED SIMILAR SIZE OF BOTTLES AT RS 1.75, AND WE HAVE ALSO NOTED THAT IT WAS NOT THE CASE OF THE REVENUE THAT THE TOTAL NUMBER OF BOTTLES IN THE CLOSING STOCK ARE LESS THAN THE NUMBER OF BOTTL ES PURCHASED AT THE PRICE OF RS 1.75. IT IS THUS CLEAR THAT THE EMPTY BOTTLES IN T HE CLOSING STOCK INCLUDE BOTTLES M/S MEHER DISTILLERIES PVT LTD 3 PURCHASED AT THE PRICE OF RS 1.75 EACH AS ALSO AT T HE PRICE OF RS 1.35 EACH. IN THESE CIRCUMSTANCES AND BEARING IN MIND THE FACT THAT SEG REGATIONS OF THESE BOTTLES HAS NOT BEEN DONE BY THE AO AS ALSO THE FACT THAT THE AMOUN T INVOLVED IN THE VALUATION IS NOT A VERY LARGE OR SUBSTANTIAL AMOUNT, WE SEE NO REASO NS TO DISTURB THE FINDINGS OF THE CIT (A), WE APPROVE AND CONFIRM HIS ORDER AND DECLI NE TO INTERFERE. 6. IN THE RESULT, APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 16TH DAY OF OCTOBER 2009. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATE: 16TH OCTOBER 2009 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CENTRALI, MUMBAI. 4) THE CIT CENTRALI, MUMBAI. 5) THE D.R. B BENCH, ITAT, MUMBAI. BY ORDER ASSTT. REGISTRAR CHAVAN* I.T.A.T., MUMBAI M/S MEHER DISTILLERIES PVT LTD 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 14.10.09 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 14.10.09 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS 7 FILE SENT TO THE BENCH CLERK SR.PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER