DCIT, Cochin V. Alapatt Jewellery, Ernakulam

ITA 555/COCH/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7236 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 04-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Keywords: Capital asset; Depreciation; Cost of acquisition

Judgement Text

1 ITA NO.555/COCH/2011 ITA NO.430/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI CHANDRA PO OJARI (AM) I.T.A NO. 555/COCH/2011 (ASSESSMENT YEAR 2008-09) DY.CIT, CIR.2(1) VS M/S ALAPATT JEWELLERY KOCHI-18 M.G. ROAD, ERNAKULAM PAN : AAEFA0559Q (APPELLANT) (RESPONDENT) C.O.NO. 35/COCH/2011 (ARISING OUT OF I.T.A NO. 555/COCH/2011) (ASSESSMENT YEAR 2008-09) M/S ALAPPAT JEWELLERY VS ACIT, CIR.2(1) MM.G. ROAD, ERNAKULAM KOCHI-18 (APPELLANT) (RESPONDENT) I.T.A NO. 430/COCH/2013 (ASSESSMENT YEAR 2007-08) ACIT, CIR.1(1) VS M/S ALAPATT FASHION JEWELLERY KOZHIKODE MAVOOR ROAD, KOZHIKODE PAN : AAEFA5537G (APPELLANT) (RESPONDENT) APPELLANTS BY : SHRI M ANIL KUMAR, CIT RESPONDENTS BY : SHRI R KRISHNA IYER / SHRI DAVIS CHAKKALAKKAL DATE OF HEARING : 23-07-2014 DATE OF PRONOUNCEMENT : 24-09-2014 2 ITA NO.555/COCH/2011 ITA NO.430/COCH/2013 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE REVENUE ARE DIRECTED AGAIN ST THE RESPECTIVE ORDERS OF CIT(A) IN RESPECT OF TWO INDEPENDENT ASSE SSEES. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN BOTH THE APPEALS, WE HEARD THE SAME TOGETHER AND DISPOSE OF THE SAME BY THIS COMMON ORD ER. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IN BOTH THE APPEALS IS WITH REGARD TO VALUATION OF CLOSING STOCK. 3. SHI M ANIL KUMAR, THE LD.DR SUBMITTED THAT THE A SSESSEE HAS VALUED THE CLOSING STOCK IN THE CASE OF ITA 555/COCH/2011 AT SIX YEARS AVERAGE PRICE. IN THE CASE OF 430/COCH/2013 IT IS THREE YE ARS AVERAGE PRICE. ACCORDING TO THE LD.DR, WHEN THE ASSESSEE ADOPTED S IX / THREE YEARS AVERAGE, IT IS EXPECTED TO PINPOINT THE OLD JEWELLE RY WHICH REMAINED UNSOLD FOR SUCH A LONG PERIOD. SINCE THE ASSESSEE COULD N OT IDENTIFY THE OLD JEWELLERY, ACCORDING TO THE LD.DR, TAKING AVERAGE O F SIX YEARS / THREE YEARS WOULD REDUCE THE PROFIT OF THE YEAR CONSIDERABLY. ACCORDING TO LD.DR, THIS IS A METHOD ADOPTED BY THE ASSESSEE TO REDUCE THE T AX LIABILITY AND AVOID TO PAY THE TAX. ACCORDING TO THE LD.REPRESENTATIVE , THE CHANGE OF METHOD OF ACCOUNTING WITHOUT ANY BONA FIDE REASON CANNOT BE A CCEPTED. THE LD.DR 3 ITA NO.555/COCH/2011 ITA NO.430/COCH/2013 SUBMITTED THAT THE GOLD PRICES ARE GOING UP YEAR AF TER YEAR, THEREFORE, THE CONTENTION OF THE ASSESSEE THAT IF THE CLOSING STOC K IS TAKEN AS OPENING STOCK FOR THE FOLLOWING YEAR THAT WOULD RESULT IN N EUTRALIZING PROFIT MAY NOT BE CORRECT. ACCORDING TO THE LD.DR, EVEN THOUGH TH E ASSESSEE IS TAKING THE CLOSING STOCK AS OPENING STOCK FOR THE PURPOSE OF C OMPUTATION IN VIEW OF THE INCREASE IN GOLD PRICE, IT MAY NOT REFLECT THE CORRECT VALUATION OF CLOSING STOCK. THE CHANGE OF METHOD OF VALUATION IS UNJUST IFIED. ACCORDING TO THE LD.DR, THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. 4. ON THE CONTRARY, SHRI R KRISHNA IYER, THE LD.REP RESENTATIVE FOR THE ASSESSEE IN ITA NO.555/COCH/2011 SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RETAIL GOLD JEWELLERY. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE VALUED THE CLOSING STOCK ON SIX YEARS AVERAGE PRICE. ACCORDING TO THE LD.REPRESENTTIVE, THE FASH ION OF JEWELLERY IS CHANGING VERY FAST, THEREFORE, THE ASSESSEE COULD N OT SELL THE OLD STOCK WHEN THE NEW FASHIONS ARE BROUGHT IN. THE FIRST CA ME FIRST GO RULE MAY NOT BE APPLICABLE TO THE JEWELLERY BUSINESS. ACCORDING TO THE LD.REPRESENTATIVE, THE CUSTOMERS PREFER THE LATEST DESIGN AND FASHION WHILE SELECTING THE JEWELLERY. THEREFORE, THE OLD STOCK REMAINS TO BE THE SAME. ACCORDING TO THE LD.REPRESENTATIVE, IN A RUNNING BUSINESS, THE C LOSING STOCK HAS TO BE 4 ITA NO.555/COCH/2011 ITA NO.430/COCH/2013 VALUED ON THE BASIS OF THE COST OR MARKET PRICE WHI CHEVER IS LESS. THE ASSESSEE UNIFORMLY FOLLOWED THIS METHOD. SINCE THE OLD STOCKS REMAINS, THE ASSESSEE HAS TAKEN SIX YEARS AVERAGE COST PRIC E FOR THE PURPOSE OF VALUING THE CLOSING STOCK. THE LD.REPRESENTATIVE F URTHER SUBMITTED THAT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION THERE WAS A STEEP INCREASE IN PRICE OF GOLD. ACCODING TO THE LD.REPRESENTATIVE, FOR THE YEAR ENDING 31-03- 2001, THE COST OF 8 GMS GOLD WAS RS.2,991. AT THE VERY SAME TIME FOR THE YEAR ENDING 31-03-2008 THE COST OF 8 GMS GOLD WAS R S.8,920. THE LD.REPRESENTATIVE SUBMITTED THAT IF THE GOLD IS PUR CHASED AND SOLD WITHIN A WEEK OR A MONTH, THE PROFIT OF THE ASSESSEE WILL BE 1%. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE HAS DISCLOSED A PRO FIT OF 18.47% FOR THE ASSESSMENT YEAR 2007-08 AND FOR THE YEAR UNDER CONS IDERATION, I.E. ASSESSMENT YEAR 2008-09 THE ASSESSEE HAS DISCLOSED A PROFIT OF 18.46%. FOR THE ASSESSMENT YEAR 2009-10 I.E. SUBSEQUENT ASS ESSMENT YEAR, THE PROFIT WAS 31.10%. FOR THE ASSESSMENT YEAR 2010-11 THE ASSESSEE HAS DISCLOSED THE PROFIT OF 37.11%. THIS SHOWS THAT TH E ASSESSEE HAS STOCK OF OLD JEWELLERY AND WHEN IT IS SOLD, THE MARGIN OF PR OFIT ALSO INCREASED TO THAT EXTENT. ACCORDING TO THE LD.REPRESENTATIVE, IF THE NEW STOCKS ARE AVAILABLE, THEN THE MARGIN WOULD NOT COME TO 31.10% IN THE NEX T YEAR. ACCORDING TO THE LD.REPRESENTATIVE, ESTIMATION OF CLOSING STOCK AT COST OR MARKET PRICE IS AN APPROVED METHOD OF VALUATION AND SETTLED PRINCIP LES. IN THE JEWELLERY 5 ITA NO.555/COCH/2011 ITA NO.430/COCH/2013 BUSINESS, SINCE OLD STOCKS ARE AVAILABLE AND CERTAI N ITEMS SHOULD NOT BE IDENTIFIED, ACCORDING TO THE LD.REPRESENTATIVE, EST IMATION OF AVERAGE PRICE OF SIX YEARS CANNOT BE FAULTED WITH ESPECIALLY WHEN TH E ASSESSEE IS DISCLOSING 31.10% OF MARGIN / PROFIT FOR THE SUBSEQUENT ASSESS MENT YEAR. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT THE CLOSIN G STOCK VALUED FOR THE YEAR UNDER CONSIDERATION IS TAKEN AS OPENING STOCK FOR THE NEXT YEAR. THEREFORE, THERE CANNOT BE ANY LOSS TO THE REVENUE. ACCORDING TO THE LD.REPRESENTATIVE, IT SHOULD BE A REVENUE NEUTRAL. IN ORDER TO BRING THE CORRECT PICTURE OF VALUATION AND AVAILABILITY OF ST OCK, ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE HAS VALUED THE STOC K AT AVERAGE PRICE OF SIX YEARS. THE LD.REPRESENTATIVE HAS PLACED RELIAN CE ON VARIOUS JUDGMENTS OF THE HIGH COURT AND DECISION OF THIS TRIBUNAL IN SUPPORT OF HIS CONTENTION. 5. SHRI DAVIS CHAKKALAKKAL, THE LD.REPRESENTATIVE F OR THE SSESSEE IN ITA 430/COCH/2013 SUBMITTED THAT THE PRICE OF THE GOLD IS PUBLISHED IN THE NEWSPAPER EVERY DAY, THEREFORE, THE CUSTOMER IS AWA RE OF THE RULING RATE. THE PROFIT MARGIN IS 1% IN THE REGULAR COURSE OF BU SINESS. HOWEVER, FOR THE ASSESSMENT YEAR 2008-09, THE ASSESSEE HAS DISCLOSED MUCH HIGHER PROFIT. THE ASSESSING OFFICER FOUND THAT THE NET PROFIT FOR THE YEAR UNDER CONSIDERATION WAS GONE DOWN TO 6.79 LAKHS COMPARED TO PROFIT OF 63.20 LAKHS FOR THE IMMEDIATELY PRECEDING YEAR. ACCORDIN G TO THE 6 ITA NO.555/COCH/2011 ITA NO.430/COCH/2013 LD.REPRESENTATIVE, THOUGH THERE WAS A REDUCTION IN THE PROFIT FOR THE YEAR UNDER CONSIDERATION, WHEN THE CLOSING STOCK WAS TAK EN AS OPENING STOCK FOR THE NEXT YEAR, THE PROFIT WILL GO UP FOR THE NE XT YEAR. IN FACT, THE PROFIT OF THE IMMEDIATE SUBSEQUENT YEAR IS MUCH MORE THAN THE EARLIER YEARS. THEREFORE, THE REVENUE IS NOT GOING TO LOOSE ANYTHI NG. ACCORDING TO THE LD.REPRESENTATIVE, THE REDUCTION IN PROFIT FOR THE YEAR UNDER CONSIDERATION WOULD RESULT IN INCREASE IN PROFIT FOR THE NEXT YEA R WHEN THE SAME FIGURE IS ADOPTED AS OPENING STOCK IN THE SUBSEQUENT YEAR. R EFERRING TO THE DECISION OF THE TRIBUNAL IN ITA NO.1787(COCH)/1987 ORDER DATED 09 TH OCTOBER, 1992 IN THE CASE OF M/S P.T. ANTONY & SONS , COPY OF WHICH IS FILED BY THE ASSESSEE, THE LD.REPRESENTTIVE SUBMITTED THA T BY FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL IN ITA NO.570(COCH/86 IN THE CASE OF SHRI P.R. BALAKRISHNAN VS ITO THE TRIBUNAL FOUND THAT THE REA L PROFIT OF THE ASSESSEE CANNOT BE ASCERTAINED BY MERELY RISING THE VALUE OF THE CLOSING STOCK WITHOUT TAKING INTO CONSIDERATION SIMILAR VALUATION FOR THE OPENING STOCK FOR THE YEAR UNDER CONSIDERATION. THE TRIBUNAL PLACED ITS RELIANCE ON THE JUDGMENT OF PRIVY COUNCIL IN THE CASE OF NEW COTTON MILLS CO LTD 4 ITC 245. ACCORDINGLY, THE TRIBUNAL DIRECTED THE ITO TO COMPUTE THE VALUE OF THE OPENING STOCK ALSO ON THE SAME LINE ADOPTED BY THE ASSESSEE FOR VALUING THE CLOSING STOCK. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, WHEN THE ASSESSEE ADOPTED THE VALUE OF THE CLOSING STOCK AS VALUE OF THE 7 ITA NO.555/COCH/2011 ITA NO.430/COCH/2013 OPENING STOCK FOR THE SUBSEQUENT YEAR, THE REVENUE CANNOT HAVE ANY GRIEVANCE AT ALL. IF AT ALL THERE IS ANY DIFFERENT BETWEEN THE VALUATION OF THE CLOSING STOCK AND THE OPENING STOCK, THEN THE DIFFE RENCE SHOULD BE TAKEN AS INCOME. ACCORDING TO THE LD.REPRESENTATIVE, THE RE IS NO DIFFERENCE BETWEEN THE CLOSING STOCK FOR THE YEAR UNDER CONSID ERATION AND THE OPENING STOCK FOR THE NEXT YEAR. THEREFORE, THE RE VENUE CANNOT HAVE ANY GRIEVANCE ON THE METHOD ADOPTED BY THE ASSESSEE. T HE LD.REPRESENTATIVE HAS ALSO PLACED HIS RELIANCE ON THE JUDGMENT OF THE APEX COURT IN CIT VS REALEST BUILDERS & SERVICES LTD (2008) 307 ITR 202 (SC). ACCORDING TO THE LD.REPRESENTATIVE, UNLESS AND UNTIL THE ASSESSI NG OFFICER GIVES THE FIGURE AND FACTS WITH REGARD TO THE RATE OF PROFIT, THE AS SESSING OFFICER CANNOT REJECT THE METHOD ADOPTED BY THE ASSESSEE. THE LD. REPRESENTATIVE HAS ALSO PLACED RELIANCE ON THE DECISION OF THE CHANDIG ARH BENCH OF THIS TRIBUNAL IN ITO VS GOPI CHAND KISHORI LAL (1980) 9 TTJ) 267. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE C ASE IN ITA NO.555/COCH/2011 THE ASSESSEE IS VALUING THE GOLD J EWELLERY AT SIX YEARS AVERAGE COST. IN THE CASE OF ITA 430/COCH/.2013 TH E ASSESSEE IS VALUING THE CLOSING STOCK AT THREE YEARS AVERAGE COST. IT IS AN ADMITTED FACT THAT 8 ITA NO.555/COCH/2011 ITA NO.430/COCH/2013 THE GOLD PRICE IS FLUCTUATING YEAR AFTER YEAR. IN FACT, THE GOLD PRICES ARE FLUCTUATING N HOURLY BASIS DEPENDING UPON INTERNATI ONAL MARKET. THE CUSTOMERS ALSO PREFER THE NEW DESIGN AND FASHION WH ILE SELECTING THEIR GOLD ORNAMENTS. THEREFORE, THE OLD FASHIONED AND D ESIGNED JEWELLERY WILL REMAIN AS SUCH. THE ASSESSEE HAS TO NECESSARILY RE DESIGN THE JEWELLERY TO SUIT THE CHANGING FASHION AND TREND IN THE MARKET. WHEN THE ASSESSEE EITHER KEEPS THE GOLD JEWELLERY AS SUCH OR CHANGES THE MODELS TO SUIT THE CHANGING TREND, THEN THE VALUE OF OLD GOLD REMAIN T HE SAME AT THE PURCHASE COST. IN A RETAIL BUSINESS IT MAY BE VERY DIFFICULT TO IDENTIFY EACH AND EVERY JEWELLERY WITH PURCHASE DATE. THEREFORE, TAKING AVERAGE OF THE PRICE IS ONE OF THE POSSIBLE METHODS IN ARRIVING AT THE VALUE OF THE STOCK. WHEN THE STOCK WAS VALUED IN A PARTICULAR METHOD AN D THE FIGURE OF VALUATION IS ARRIVED AT, THE VERY SAME FIGURE SHOUL D BE TAKEN AS AN OPENING STOCK FOR THE FOLLOWING ASSESSMENT YEAR. NO DOUBT, THE YEAR IN WHICH THE METHOD WAS CHANGED WOULD RESULT IN REDUCTION OF PRO FIT. HOWEVER, IN THE NEXT YEAR, THE PROFIT WOULD GO UP SINCE THE OPENING STOCK WILL BE THE CLOSING STOCK OF THE YEAR UNDER CONSIDERATION. IN FACT, TH E ASSESSEE IN ITA NO.555/COCH/2011 HAS DISCLOSED A PROFIT OF 31.10% F OR NEXT YEAR WHICH IS AN ABNORMAL PROFIT RATIO IN THE GOLD JEWELLERY RETA IL BUSINESS. IN FACT, FOR THE ASSESSMENT YEAR 2010-11, THE ASSESSEE HAS DISCLOSED THE PROFIT OF 37.11%, THEREFORE, AS RIGHTLY SUBMITTED BY THE LD. REPRESENTATIVES FOR THE 9 ITA NO.555/COCH/2011 ITA NO.430/COCH/2013 ASSESSEES THERE WOULD BE A REVENUE NEUTRAL. THEREF ORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION, THE REVENUE CANNOT HAVE ANY GRIEVANCE AT ALL. 7. WE HAVE ALSO CAREFULLY GONE THROUGH THE DECISION OF THIS BENCH OF THE TRIBUNAL IN P.T. ANTONY & SONS (SUPRA). THE AS SESSEE BEFORE THE TRIBUNAL ENGAGED IN THE BUSINESS OF SALE OF GOLD JE WELLERY. THE ASSESSEE VALUED THE CLOSING STOCK AT RS. 95 / RS.100 PER GM; HOWEVER, OPENING STOCK WAS VALUED AT RS.70 PER GM. THE ASSESSING OF FICER FOUND THAT THE AVERAGE SELLING RATE OF THE GOLD DURING THE RELEVAN T PERIOD WAS RS.160 PER GM. THEREFORE, THE ASSESSING OFFICER CALLED FOR EX PLANATION OF THE ASSESSEE REGARDING THE VALUATION. THE ASSESSEE EXP LAINED THAT THE ENTIRE GOLD WAS PURCHASED DURING THE PREVIOUS YEAR WAS SOL D IN THE SAME YEAR. REJECTING THE EXPLANATION OF THE ASSESSEE THE ASSES SING OFFICER FOUND THAT THE STOCK IN GOLD RELATED TO PAST FIVE YEARS AND IF THE AVERAGE 5 YEARS IS TAKEN, THE CLOSING STOCK WOULD BE AT RS.119.06 PER GM. ACCORDINGLY, THE CLOSING STOCK WAS VALUED AT THE AVERAGE PURCHASE RA TE. CONSIDERING THE FACTS OF THE CASE, THE ASSESSING OFFICER ENHANCED T HE VALUE OF THE CLOSING STOCK OF RS.10 PER GM AND ADDED THE DIFFERENCE OF R S.3,90,400. ON APPEAL BY THE ASSESSEE, THE CIT(A), BY PLACING RELI ANCE ON THE DECISION OF THIS TRIBUNAL IN SHRI P.R. BALAKRISHNAN VS ITO ITA NO.570(COCH)/86 FOUND THAT THE OPENING STOCK ALSO SHOULD BE VALUED ON THE SAME LINE ADOPTED FOR 10 ITA NO.555/COCH/2011 ITA NO.430/COCH/2013 VALUING THE CLOSING STOCK. ON FURTHER APPEAL BY TH E REVENUE BEFORE THE TRIBUNAL, THE TRIBUNAL BY PLACING RELIANCE IN THE E ARLIER CASE IN P.R. BALAKRISHNAN (SUPRA) FOUND THAT THE DIRECTION OF TH E CIT(A) WAS IN ORDER AND NO REASONS TO INTERFERE WITH THE ORDER OF THE C IT(A). IN THE CASE OF SHRI P.R. BALAKRISHNAN (SUPRA) WHICH WAS RELIED UPON BY THE TRIBUNAL, THE TRIBUNAL RELIED UPON THE JUDGMENT OF THE PRIVY COUN CIL AND DIRECTED THE ASSESSING OFFICER TO RE-COMPUTE THE VALUE OF OPENIN G STOCK ALSO ON THE SAME LINE ADOPTED BY THE ASSESSEE FOR VALUING THE C LOSING STOCK AND DIFFERENCE IF ANY COMES THAT IS TO BE TAKEN AS INCO ME. FROM THE ABOVE, IT IS OBVIOUS THAT THE AVERAGE PRICE OF PAST FIVE YEARS I S ALSO ONE OF THE METHODS FOR VALUING THE CLOSING STOCK. WHAT IS TO BE SEEN IS WHETHER THE SAME METHOD IS FOLLOWED FOR VALUING THE OPENING STOCK AL SO. IF THE ASSESSEE VALUES THE CLOSING STOCK AND OPENING STOCK BY FOLLO WING THE VERY SAME METHOD BY TAKING EITHER AVERAGE OF SIX YEARS OR THR EE YEARS, AS THE CASE MAY BE, THEN, WHAT IS TO BE ADDED TO THE INCOME OF THE ASSESSEE IS THE DIFFERENCE IN SUCH VALUATION AFTER FOLLOWING THE UN IFORM METHOD FOR BOTH CLOSING AND OPENING STOCK. THEREFORE, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE ADOPTED A UNIFORM ME THOD OF TAKING AVERAGE PURCHASES OF SIX YEARS AND THREE YEARS, AS THE CASE MAY BE, AND ALSO ADOPTED THE VERY SAME METHOD FOR VALUING THE O PENING STOCK, THERE CANNOT BE ANY GRIEVANCE TO THE REVENUE SINCE THE RE SULTANT FIGURE WOULD BE 11 ITA NO.555/COCH/2011 ITA NO.430/COCH/2013 REVENUE NEUTRAL. IN THIS CASE, IT IS NOT IN DISPUT E THAT THE ASSESSEE IS ADOPTING THE SAME METHOD FOR VALUING THE CLOSING ST OCK AS WELL AS THE OPENING STOCK. ONCE SUCH METHOD IS ADOPTED, EVEN T HOUGH THE PROFIT WOULD BE LITTLE REDUCED FOR THE YEAR UNDER CONSIDER ATION IT WILL COMPENSATE IN THE SUBSEQUENT ASSESSMENT YEARS. IN FACT, IN BO TH THE CASES, THE PROFIT WAS INCREASED CONSIDERABLY IN THE SUBSEQUENT YEARS. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT( A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. THIS TRIBUNAL DO NOT FIND A NY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE SAME IS C ONFIRMED. 8. NOW COMING TO CROSS OBJECTION IN C.O. NO.35/COCH /2011, THE FIRST GROUND OF APPEAL IS WITH REGARD TO VALUATION OF THE CLOSING STOCK. SINCE THIS HAS BEEN DISCUSSED IN THE REVENUE APPEAL AND ORDER OF THE CIT(A) IS CONFIRMED, THERE IS NO NEED FOR SEPARATE ADJUDICATI ON IN THE CROSS OBJECTION. 9. THE NEXT GROUND IS WITH REGARD TO CAR EXPENSES. THE ASSESSING OFFICER DISALLOWED RS.36,929 TOWARDS CAR EXPENSES. WE HEARD THE LD.REPRESENTATIVE FOR THE ASSESSEE AND THE LD.DR. 12 ITA NO.555/COCH/2011 ITA NO.430/COCH/2013 10. THE ASSESSEE CLAIMED TOTAL EXPENDITURE OF RS.5, 49,375. THE ASSESSEE ALSO PAID FRINGE BENEFIT TAX ON THE CAR EX PENSES. THE ASSESSEE HIMSELF DISALLOWED 10% OF THE EXPENDITURE TOWARDS P ERSONAL USE OF THE CAR, HOWEVER, THE ASSESSING OFFICER ESTIMATED THE PERSON AL EXPENSES AT 15% AND THE DIFFERENCE WAS ADDED TO THE EXTENT OF RS.36 ,926. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE HI MSELF DISALLOWED 10% OF THE TOTAL EXPENDITURE TOWARDS PERSONAL USE OF TH E CAR AND ALSO PAID FRINGE BENEFIT TAX, THERE IS NO NEED FOR ESTIMATING THE EXPENDITURE TOWARDS PERSONAL USE OF THE CAR AT 15%. ACCORDINGLY, THE O RDER OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ADDITION OF RS.36 ,926 IS DELETED. 11. THE NEXT GROUND OF CROSS OBJECTION IS WITH REGA RD TO ADDITION TOWARDS TRADEMARK REGISTRATION TO THE EXTENT OF RS.51,891. 12. WE HEARD THE LD.REPRESENTATIVE FOR THE ASSESSEE AND THE LD.DR. THE ASSESSING OFFICER MADE A DISALLOWANCE OF RS.51,891 TOWARDS REGISTRATION OF TRADEMARK. HOWEVER, THE ASSESSING OFFICER TREATED THIS EXPENDITURE AS CAPITAL AND ALLOWED DEPRECIATION @25%. TRADEMARK B EING AN INTANGIBLE CAPITAL ASSET, THIS TRIBUNAL IS OF THE CONSIDERED O PINION THAT THE ASSESSING OFFICER HAS RIGHTLY TREATED THE SAME AS CAPITAL EXP ENDITURE. THEREFORE, 13 ITA NO.555/COCH/2011 ITA NO.430/COCH/2013 THERE IS NO REASON TO INTERFERE WITH THE ORDER OF T HE LOWER AUTHORITY. THE CIT(A) HAS RIGHTLY CONFIRMED THE SAME. 13. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH SEPTEMBER, 2014. SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 24 TH SEPTEMBER, 2014 PK/- COPY TO: 1. DY.CIT, CIR.2(1), RANGE-2, KOCHI / ACIT, CIRCLE 1(1), KOZHIKODE 2. M/S ALAPATT JEWELLERY, M.G. ROAD, ERNAKULAM / M/ S ALAPATT FASHIION JEWELLERY, KOZHIKODE 3. THE COMMISSIONER OF INCOME-TAX, KOCHI / & CIT, K OZHIKODE 4. THE COMMISSIONER OF INCOME-TAX(A)-II, KOCHI & CI T(A), KOZHIKODE 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH