1998 (9) TMI 695 - AT - Income Tax

Appellate Tribunal rules on trading additions and loss carry forward, considers late filing due to Govt. takeover

Deputy Commissioner of Income Tax Versus Mewar Textiles Mills Ltd.

Deputy Commissioner of Income Tax Versus Mewar Textiles Mills Ltd. - TMI Issues:1. Department's appeal regarding trading addition for asst. yrs. 1984-85 and 1985-86.2. Assessee's appeal for asst. yr. 1986-87: a) Rejection of claim for carry forward of loss. b) Disallowance of telephone expenses.Department's Appeals - Trading Addition:The Department's appeals focused on the deletion of trading additions due to excessive wastage claimed by the assessee. The CIT(A) consolidated the issue for both years, where the AO had made additions for asst. yrs. 1984-85 and 1985-86. The dispute arose from the assessee's claimed process loss of raw cotton and production variations compared to the previous year. The AO concluded that the assessee showed excessive wastage and made corresponding additions. However, the CIT(A) considered the assessee's submissions, highlighting the maintenance of regular books of accounts and strict oversight by the excise department. The CIT(A) found no defects in the books of account and deleted the additions for both years.Assessee's Appeal - Carry Forward of Loss:In the appeal for asst. yr. 1986-87, the first ground concerned the rejection of the claim for carry forward of loss. The AO disallowed the claim due to the late filing of the return. The CIT(A) upheld the disallowance, emphasizing the belated filing of the return beyond the prescribed deadline. The assessee argued that the delayed filing was due to extraneous circumstances related to the unit being taken over by the Government. The authorized representative contended that the return was filed within the extended period, making the claim allowable. The Tribunal agreed with the assessee, citing previous decisions and the Supreme Court's ruling in a similar context. The Tribunal allowed the appeal, directing the AO to permit the carry forward of the loss to the succeeding year.Assessee's Appeal - Disallowance of Telephone Expenses:The second ground in the assessee's appeal related to the disallowance of Rs. 2,050 from telephone expenses. During the hearing, the authorized representative did not press this ground, leading to its rejection. Consequently, this aspect of the appeal was dismissed.In conclusion, the Appellate Tribunal at Jaipur ITAT dismissed the Department's appeals regarding trading additions for asst. yrs. 1984-85 and 1985-86, while allowing the assessee's appeal for asst. yr. 1986-87 in part, specifically permitting the carry forward of loss to the succeeding year. The Tribunal's decision was based on detailed considerations of the factual and legal aspects presented during the proceedings, ensuring a thorough analysis of the issues involved in each appeal.