Appeal details
Counselvise Citation
[2021] 108 COUNSELVISE.COM (IT) 4738 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 8 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
21-04-2021
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
H
Assessment Year
2012-2013
Appeal Filed On
07-08-2019
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH , MUMBAI BEFORE : SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI M.BALAGANESH, ACCOUNTANT MEMBER I TA NO. 5170 /MUM/ 2019 ( ASSESSMENT YEAR : 2012 - 13 ) M/S. HANJER FIBRES LIMITED SHALIMAR HOUSE 335, GRA NT ROAD, MUMBAI - 400007 VS. DCIT - 5(1)(2) 5 TH FLOOR, AAYAKAR BHAVAN MUMBAI 400 020 PAN/GIR NO. AAACH1003M (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY MS. NEELAM JADH AV REVENUE BY MS. BHARATI SINGH DATE OF HEARING 17 / 03 /202 1 DATE OF PRONO U NCE MENT 21 / 04 /202 1 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 5170/MUM/2019 FOR A.Y. 2012 - 13 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 10, MUMBAI IN APPEAL NO. CIT(A) - 10, MUMBAI/10671/2015 - 16 D ATED 31/05/2019 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S. 143(3 ) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 13/03/2015 BY THE LD. DY . COMMISSIONER OF INCOME TAX - 5(1)(2) , MUMBAI (HEREINAFTER REFERRED T O AS LD . AO). ITA NO . 5170 /MUM/ 2019 M/S. HANJER FIBRES LIMITED 2 2 . THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING TH E ADDITION MADE ON ACCOUNT OF RE VALUATION OF STOCK IN THE SUM OF RS.32,42,105/ - IN THE FACTS AND CIR CUMSTANCES OF THE IN STANT CASE. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE IS MANUF ACTUR ER OF LOW CO UNT COTTON YAR N AND COTTON WASTE. DUE TO NON - VIABILITY OF THE UNIT, THE ASSESSEE HAS DISCONTINUED IT S BUS INESS ACTIVITIES. THE RETURN OF INCOME FOR THE A.Y.2012 - 13 WAS FILED BY THE ASSESSEE ON 24/08/2012 DECLARING TOTAL LOSSES OF RS.1,26,11 ,102/ - . THE LD. A O IN THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE, THE ASSESSE E HAS SHOW N R E - VALUATION OF STOCK AMOUNTING TO RS.32,42,105/ - . THE EXPLANATION GIVEN BY THE ASSESSEE WITH REGARD TO THE SAME WAS NOT FOUND SATISFACTORY BY THE LD. AO AND ACCORDINGLY, THE S UM OF RS.32,42,105/ - WAS SOUGHT TO BE ADDED BY THE LD . AO IN THE ASSESSMEN T ON ACCOUNT OF RE - VALUATION OF STOCK . WE FIND THAT ASSESS EE COMPANY HAS VALUED ITS CLOSING STOCK OF RAW MAT ER IALS AND FINISHED GOODS AT THE LOWER OF COST OR N ET REALIZABLE VALUE. PURSUANT TO THIS VALUATION, IT HAD RESULTED IN RED UCTION IN VALUE OF STOCK T O THE TUNE OF RS.32,42,105/ - WHICH WAS CLAIMED AS EXPENSES BY THE ASSESSEE. IN OTHER WORDS, THE CLOSING STOCK O F RAW MATERIALS AND FINISHED GOODS WAS REF LECTED AT THE REDUCED VAL UE W HICH HA D RESULTED IN INCREASE IN LOSS FOR THE YEAR . WE FIND THA T THE ASSES SEE H AD PLEADED THAT THE MET HOD OF VAL UATION ADOPTED BY IT WAS IN CONSONANCE WITH INDIAN ACCOUN TING STA NDARD 2 ON I NVENTORIES IS SUED BY THE I NSTITUTE OF CHARTERED ACCOUNT ANTS OF INDIA (ICAI) WHICH IS MAND ATORILY TO BE FO LLOWED BY THE ASSESSE E. IT WAS A LSO B ROUGHT TO THE NOTICE OF THE LD. CIT(A) BY THE ASSESSEE THAT THE SAME ISSUE HAD CROPPED UP IN ASSESSEE S OWN CASE FOR A.Y .2014 - 15 AND THE LD. AO HAD NOT MADE ITA NO . 5170 /MUM/ 2019 M/S. HANJER FIBRES LIMITED 3 ANY DISALLOWANCE ON ACCOUNT OF STOCK IN A.Y.2014 - 15. WE FIND THAT ASSESSEE HAS BEEN CONSISTENT LY FOLLOW I NG TH E SAME METHOD OF ACCOUNTING FOR VALUATION OF INVENTORIES IN EARLIER AS WELL AS SUBSEQ UENT YEARS. WE FIND THAT THE LOWER AUTHORITIES HAD GROSSLY ERRED IN NOT UNDERSTANDING THE ACCOUNTING PRACTICE FOLLOWED BY THE ASSESSEE FOR VALUATION O F INVE NTORIES WH ICH IS NORMALLY ACCEPTING ACCOUNTING PRACTICE PREVAILING IN INDIA. WE DO NOT FIND ANY INFI RMITY IN THE VALUATION METHOD ADOPTED BY THE ASSESSEE WHICH HAS RESUL TED IN CLAIM OF EXPENSES IN THE SUM OF RS.32,42,105/ - DUE TO VALUATION OF STO CK A T LOWE R OF COST OR NET REALIZABLE VALUE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLO WED. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCE D ON 2 1 /04/ 202 1 BY WAY OF PROPER M ENTIONING IN T HE NOTICE BOARD. SD/ - ( VIKA S AWASTHY ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 21 / 04 / 202 1 KARUNA , SR.PS ITA NO . 5170 /MUM/ 2019 M/S. HANJER FIBRES LIMITED 4 C OPY OF THE O RDER FORWARDED TO : BY ORDER, ( ASSTT. REGIST RAR) ITAT, MUM B AI 1. THE APPELLANT 2. THE RESP O NDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITA T, MUMBAI 6. GUARD FILE. //TRUE COPY//
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