DCIT, New Delhi V. M/s. Bharti Airtel Services Ltd, New Delhi

ITA 4209/DEL/2009

• Counselvise Citation: 420920114 RSA 2009
• Duration Of Justice: 4 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-02-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 28-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKARDR
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.4209/DEL/2009 ASSESSMENT YEAR : 2005-06 DCIT, BHARTI AIRTEL SERVICES LTD., CIRCLE-2 (1), FORMERLY KNOWN AS BHARTI COMTEL NEW DELHI. V. LTD., H-5/12, QUTAB AMBIENCE, MEHRAULI ROAD, NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAACB AAACB AAACB AAACB- -- -8917 8917 8917 8917- -- -G GG G APPELLANT BY : MS. Y. KAKKAR,DR. RESPONDENT BY : SHRI ANIL BHALLA, C.A. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF LD CIT(A) DATED 31.8.2009. THE REVENUE HAS TAKEN THE FO LLOWING GROUNDS OF APPEALS:- 1. THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW BY DIREC TING TO DELETE ADDITION OF ` .30,45,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROVISION FOR DIMINUTION IN THE VALUE OF STOCK BY IGNORING THAT SUCH PROVISIONS WERE UNASCERTAINED LIABIL ITIES AND CONTINGENT IN NATURE AND THE ASSESSEE FAILED TO SHOW THA T THE LIABILITY WAS ASCERTAINED AND HAD ACTUALLY ARISEN AND INCURRED IN THE RELEVANT PREVIOUS YEAR. ITA NO4209/DEL/2009 2 2. RELIANCE OF THE LD CIT(A) UPON THE CASE OF PEPPERL + FUCHS (I) LTD (2006) 6 SOT 10 (DEL) IS MISPLACED BECAUSE IN THE PRESE NT CASE ASSESSEE FAILED TO PROVE THAT THE DIMINUTION IN THE VAL UE OF STOCK WAS ASCERTAINED LIABILITY. 2. THE SOLE GRIEVANCE OF REVENUE IN THIS CASE IS THE AC TION OF LD CIT(A) BY WHICH HE DELETED THE ADDITION OF ` .30,45,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROVISION FOR DIMINUTION IN THE VALUE OF STOCK. 3. AT THE OUTSET, THE LD DR READ GROUNDS OF APPEALS AN D SUBMITTED THAT THE DIMINUTION IN VALUE OF STOCK WAS UNASCERTAINE D LIABILITY AND MOREOVER THE ASSESSEE HAD NOT GIVEN ANY DETAIL AS TO WHI CH STOCK WAS DAMAGED AND ASSESSEE HAD GIVEN THE DETAIL AS PER PAPER BOOK PAGE 1 & 2 RELATING TO DAMAGED STOCK ONLY TO LD CIT(A) AND LD CIT(A) INSTEAD OF AGREEING WITH THE SUBMISSIONS OF ASSESSEE SHOULD HAVE REM ANDED BACK THE CASE TO THE ASSESSING OFFICER. IT WAS ARGUED THA T BEFORE LD CIT(A) NO APPLICATION FOR ADDITIONAL EVIDENCE WAS FI LED. THEREFORE, THE LD IT(A) HAS ACCEPTED THE ADDITIONAL EVIDENCE WITHOU T FOLLOWING THE PROPER PROCEDURE. IT WAS FURTHER ARGUED THAT WHOLE O F THE ASSETS AS MENTIONED AT PAGE 1 & 2 OF PAPER BOOK HAS BEEN WRITT EN OFF WITHOUT ANY TECHNICAL REPORT. IT WAS FURTHER SUBMITTED THAT L D CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE ON THE BASIS THAT ASSESSEE WAS FOLLOWIN G GENERALLY ACCEPTED ACCOUNTING POLICY TO VALUE STOCK AT COST OR NET REALIZABLE VALUE WHICH IS NOT CORRECT AS LD CIT(A) SH OULD HAVE CONSIDERED THE PROVISIONS FOR CLAIM OF SUCH UN-ASCERTAI NED LIABILITY WITH RESPECT TO PROVISIONS OF INCOME TAX ACT. 4. THE LD AR, ON THE OTHER HAND, SUBMITTED THAT CLAI M OF ASSESSEE WAS NOT WITH RESPECT TO WRITING OF UN-ASCERTAINED LIA BILITY AND WERE NOT ITA NO4209/DEL/2009 3 CONTINGENT IN NATURE AND RATHER THE ASSESSEE HAS BEEN FO LLOWING THE CONSISTENT POLICY OF VALUING STOCKS AT COST OR NET REALI ZABLE VALUE WHICHEVER IS LOWER AND THE REVENUE HAS BEEN ACCEPTING THE POLICY BEING FOLLOWED BY ASSESSEE. REGARDING CONTENTION OF LD DR THAT DETAIL OF INVENTORY NOT WAS BEFORE ASSESSING OFFICER, HE INVITE D OUR ATTENTION TO A COPY OF LETTER DATED 4.12.2007 AND INVITED OUR ATTENTION TO POINT NO.10 AT PAGE 3 AND SUBMITTED THAT NECESSARY DETAILS WE RE SUBMITTED TO ASSESSING OFFICER. REGARDING VALUATION OF STOCKS THE LD AR ARGUED THAT ASSESSEE HAS BEEN FOLLOWING CONSISTENT ACCOUNTING P OLICY WHICH IS GENERALLY ACCEPTED FOR VALUATION OF STOCK BY WHICH T HE ASSESSEE USED TO VALUE ITS STOCK AT COST PRICE OR NET REALIZABLE VAL UE WHICH EVER IS LOWER. AS PER THIS POLICY THE VALUE OF STOCK AS ON THE CLOSE OF YEAR WAS REDUCED BY DAMAGED/UN-USEABLE STOCKS TO MAKE IT AT NET REALIZABLE VALUE AND THEREFORE THIS IS A CASE OF VALUATION OF STOC K AND NOT OF A CONTINGENT LIABILITY. OUR ATTENTION WAS INVITED TO A CCOUNTING POLICY BEING FOLLOWED BY THE ASSESSEE PLACED AT PAPER BOOK PAG E 16 AND INVITED OUR ATTENTION TO POINT NO.6 RELATING TO VAL UATION OF INVENTORIES AND LD AR FURTHER PLACED IS RELIANCE ON THE CASE LAWS RELIED UPON BEFORE LD CIT(A) AND FURTHER ON VARIOUS CASE LAWS AS P ER BRIEF SYNOPSIS FILED DURING APPELLATE PROCEEDINGS. 5. THE LD DR IN HER REJOINDER SUBMITTED THAT CASE LAW S RELIED UPON BY LD AR WERE DISTINGUISHABLE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSING OFFICER HAD MADE THE ADDITION IN VIEW OF THE FACT THAT ASSESSEE HAD CLAIMED AN AMOUNT OF ` .30,45,000/- IN THE P&L A/C AS PROVISIONS FOR DIMINUTION IN VALUING OF STOCK WHEREAS T HE FACT REMAINS THAT ASSESSEE HAS BEEN FOLLOWING ITS POLICY OF VALUING STOCK AT COST ITA NO4209/DEL/2009 4 PRICE OR NET REALIZABLE VALUE WHICHEVER IS LOWER WHI CH IS APPARENT FROM THE ACCOUNTING POLICY BEING FOLLOWED BY THE ASSESSEE PL ACED AT PAPER BOOK PAGE 16. THE NET REALIZABLE VALUE OF STOCK IS AL WAYS DETERMINED AFTER REDUCING THE VALUE OF DAMAGED/UN-USEABLE STOCK FROM THE GROSS VALUE OF STOCK. THE ASSESSEE INSTEAD OF TAKING THE NET RE ALIZABLE VALUE OF STOCK IN THE TRADING ACCOUNT TOOK GROSS VALUE OF STO CK IN TRADING ACCOUNT AND CLAIMED THE DECREASE IN VALUE IN ITS P&L A/C. HAD IT DONE THE REVERSE I.E. IT HAD CLAIMED THE NET REALIZABLE V ALUE OF CLOSING STOCK IN TRADING ACCOUNT, THIS DEBIT OF PROVISION FOR DIMIN UTION IN VALUE OF STOCK IN P&L ACCOUNT UNDER SCHEDULE 15 WOULD NOT HAVE APPEARED. THE VALUATION OF STOCK HAS BEEN DONE ON THE BASIS OF GENERA L ACCOUNTING POLICY AS REGULARLY FOLLOWED BY THE ASSESSEE AND THERE FORE LD CIT(A) HAS RIGHTLY DELETED THE ADDITION AND WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD CIT(A). 7. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE RE VENUE IS DISMISSED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 29TH DAY O F APRIL, 2014. SD/- SD/- (I.C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT.29.04.2014. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER ITA NO4209/DEL/2009 5 (ITAT, NEW DELHI). DATE OF HEARING 17.2.2014 DATE OF DICTATION 17.4.2014 DATE OF TYPING 17.2.2014 DATE OF ORDER SIGNED BY 29.04.2014 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET & SENT TO THE BENCH CONCERNED.