Tribunal Upholds Commissioner's Decisions on Stock Write-Off and Land Valuation

The Tribunal dismissed the Revenue's appeal, upholding the Commissioner's decisions on two issues: provision for write off of obsolete stock and valuation of land at Ambattur Industrial Estate. The Tribunal agreed with the Commissioner's reasoning and found the decisions reasonable. The orders were pronounced on 9th August 2012 in Chennai.

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Issues involved: Appeal filed by Revenue against order of Commissioner of Income-tax(Appeals)-III, Chennai u/s 143(3) of Income-tax Act, 1961 for AY 2008-09.

First Issue - Provision for write off of obsolete stock:
The Revenue contended that the Commissioner of Income-tax(Appeals) erred in deleting the addition made by the Assessing Officer against the provision for write off of obsolete stock claimed by the assessee at Rs. 86,88,663/-. The Commissioner held that the stock should be valued at cost or market price, whichever is lower, and the assessee adopted the lower market price. The Tribunal agreed that this issue is akin to valuation of stock-in-trade and upheld the Commissioner's decision, stating no reason for disallowance or addition.

Second Issue - Valuation of land at Ambattur Industrial Estate:
The Revenue challenged the direction of the Commissioner of Income-tax(Appeals) to adopt the value of land at Ambattur Industrial Estate at Rs. 50/- per sq. ft. The assessee claimed a fair market value of Rs. 108/- per sq. ft. as on 1.4.1981, supported by reports of two independent valuers. However, the Assessing Officer adopted a value of Rs. 5/- per sq. ft. based on guideline value from the office of Additional Sub-Registrar. The Commissioner found the Assessing Officer's value too low compared to the guideline value of Rs. 536/- per sq. ft. as on 1.4.2007 and directed adoption of fair market value at Rs. 50/- per sq. ft., which the Tribunal deemed reasonable.

Conclusion:
The Tribunal dismissed the appeal by Revenue, upholding the Commissioner's decisions on both issues. The orders were pronounced on 9th August 2012 in Chennai.

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