M/s.Herbalife International India Private Limited, Bangalore V. Deputy Commissioner of Income Tax, Bangalore

MA 93/BANG/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2781 (ITAT-BANGALORE)
• Duration Of Justice: 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-09-2022
• Assessment Year: 2002-2003
• Appeal Filed On: 29-08-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND MS. S. PADMAVATHY, ACCOUNTANT MEMBER MP No.93/Bang/2022 (in ITA No.1723/Bang/2016) Assessment Year : 2002-03 M/s. Herbalife International India Private Limited, #14, Commissariat Road, Bengaluru – 560 025. PAN : AAACH 8025 R Vs. DCIT, Circle – 3(1)(2), Bengaluru. APPELLANT RESPONDENT Assessee by :Shri.Padam Chand Kincha, CA Revenue by:Shri. Sankar K.Ganesan,CIT(DR)(ITAT), Bengaluru. Date of hearing:16.09.2022 Date of Pronouncement:19.09.2022 O R D E R Per N. V. Vasudevan, Vice President :. V. Vasudevan This is a Miscellaneous Petition (MP) filed by the assessee under section 254(2) of the Income Tax Act, 1961 (hereinafter called ‘the Act’), praying for rectification of errors apparent on the face of the Order of the Tribunal. 2. It has been pointed out in the MP that the assessee claimed deduction of Rs.12,54,31,371/- towards inventory written off during Assessment Year 2002-03. The claim of the assessee for deduction was rejected both by the AO and the CIT(A). The assessee had raised grounds 1 to 1.4 against the order of the CIT(A) confirming the disallowance made by the AO, which reads as follows: MP No.93/Bang/2022 (in ITA No.1723/Bang/2016) Page 2 of 4 Disallowance of Rs 12,54,31,371/- claimed on account of write off of obsolete inventory 1 Erred in upholding the order of the Learned Assessing Officer ["AO"] by disallowing an amount of Rs 12.54,31,371/- claimed on account of obsolete and slow moving inventory written off 1.1 Failed to appreciate that the Appellant has consistently followed the method of valuation of stock at cost or net realisable value, whichever is lower as prescribed under "Accounting Standard 2 — Valuation of Inventories", prescribed by the Institute of Chartered Accountants of India; 1.2 Erred in not appreciating the fact that such inventory is actually written off in the books of account and is not a mere provision as contemplated by the Learned AO; 1.3 Without prejudice to the above. even if it is treated as a provision of obsolete inventory. the same ought to have been allowed as deduction: 1.4 Without prejudice to the above. the write-off ought to be allowed as a deduction in the subsequent year (AY 2003-04) as accepted by the Learned CIT(A). 3. The Tribunal upheld the order of the CIT(A). The Tribunal however did not adjudicate ground No.1.4 which was an alternative ground raised by the assessee in the event of deduction not being allowed in Assessment Year 2002-03, it has to be allowed in Assessment Year 2003-04 as was accepted by the learned CIT(A). It was submitted that the non-adjudication of ground No.1.4 raised by the assessee is a mistake apparent on the face of the record which should be suitably rectified. 4. We have heard the rival submissions and we find that the CIT(A) has concluded on the above issue in page 12, para 7 of his order as follows: MP No.93/Bang/2022 (in ITA No.1723/Bang/2016) Page 3 of 4 “Therefore, I agree with the conclusion of the assessing officer that the deduction for inventory write off was not allowable in the present assessment year. The allowability of inventory write off could only have been considered in the following assessment year relating to financial year 2002-03.” 5. Non adjudication of Ground No.1.4 is a mistake apparent on the face of the order of the Tribunal and it requires to be rectified. We are of the view that it would be just and appropriate to direct the AO to consider the claim of the assessee for deduction on account of writing off of an inventory in Assessment Year 2003-04. Therefore, we amend the order of the Tribunal by inserting the following sentence at the end of para 12.1 of the Order of the Tribunal viz., “ The AO is however directed to consider the allowability of inventory write off in the following Assessment Year i.e., Assessment Year 2003-04 after due opportunity of being heard afforded to the assessee”. 6. In the result, MP of the assessee is allowed to the extent indicated above. Pronounced in the open court on the date mentioned on the caption page. Sd/- (S. PADMAVATHY) Sd/- (N.V. VASUDEVAN) Accountant MemberVice President Bangalore, Dated: 19.09.2022. /NS/* MP No.93/Bang/2022 (in ITA No.1723/Bang/2016) Page 4 of 4 Copy to: 1.Appellants2.Respondent 3.CIT4.CIT(A) 5.DR 6. Guard file By order Assistant Registrar, ITAT, Bangalore.