2015 (10) TMI 1417 - AT - Income Tax

Tribunal Upholds CIT(A) Decision on Inventory Write-Off Addition for AY 2008-09

Dy. Commissioner of Income Tax Versus Suzuki Motorcycle (India) Pvt Ltd

The Tribunal upheld the CIT(A)'s decision in favor of the assessee regarding the deletion of an addition under 'inventory written off' for the assessment ... Addition under the head 'inventory written off' - CIT(A) deleted the addition - Held that:- High Court of Delhi in assessee’s own case i.e. Suzuki Motorcycle (India) Pvt. Ltd. vs CIT (2013 (1) TMI 67 - DELHI HIGH COURT) and submitted that similar kind of issue of inventory written off has been allowed in favour of the assessee. Ld. DR fairly accepted that similar kind of issue for AY 2008-09 has been allowed by Hon’ble High Court in favour of the assessee and the relevant figures for verification on this limited issue for limited purpose have been remitted to the AO for verification - We clearly observe that the CIT(A) has also followed order of Hon’ble High Court and has directed the assessee to verify the percentage of inventory written off as claimed by the assessee - Decided against revenue. Issues:Appeal against deletion of addition under 'inventory written off' - CIT(A) erred in law and on facts - Verification of percentage of inventory written off - High Court order in assessee's favor - Tribunal's direction to AO for verification - Revenue's appeal dismissed.Analysis:The appeal before the Appellate Tribunal ITAT DELHI stemmed from the CIT(A)'s order concerning the deletion of an addition under the head 'inventory written off' for the assessment year 2008-09. The revenue challenged the CIT(A)'s decision, contending that the deletion of Rs. 1,05,78,032 was erroneous both in law and on facts.During the proceedings, the senior counsel for the assessee referred to a previous order of the Hon'ble High Court of Delhi in the assessee's own case, where a similar issue regarding inventory written off had been decided in favor of the assessee. The Departmental Representative (DR) for the revenue acknowledged that a comparable issue for the same assessment year had been decided in favor of the assessee by the High Court. Consequently, the Tribunal directed the Assessing Officer (AO) to verify the relevant figures related to the inventory write-off for the limited purpose of this specific issue.The High Court's order emphasized the accepted method of inventory valuation based on the principle of 'cost or net realizable value, whichever is lower,' as well as the relevance of AS-2 issued by the Institute of Chartered Accountants of India. The High Court directed the AO to verify the figures provided by the assessee to support the write-off factor of 8.50%. The Tribunal, after carefully examining the CIT(A)'s order and the High Court's directive, concluded that the sole issue in the appeal was decisively covered in favor of the assessee by the High Court's order. As a result, the Tribunal upheld the CIT(A)'s decision, finding no valid reason to intervene.Ultimately, the Tribunal dismissed the revenue's appeal, affirming the CIT(A)'s order in favor of the assessee. The decision was pronounced in an open court session on 8th May 2015, bringing the matter to a close.