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of <h1>Tribunal Upholds CIT(A) Decisions on Stock Loss, Depreciation, and Business Expenses</h1> <h3>The Income Tax Officer, Ward 11 (3) (3), Mumbai Versus M/s Ventura Textiles Ltd.</h3> The Income Tax Officer, Ward 11 (3) (3), Mumbai Versus M/s Ventura Textiles Ltd. - TMI Issues Involved:1. Deletion of addition on account of loss of sales of stock.2. Allowance of depreciation despite no manufacturing activity.3. Deletion of disallowance of various expenses due to lack of business activity.Issue-wise Detailed Analysis:1. Deletion of Addition on Account of Loss of Sales of Stock:The Revenue challenged the CIT(A)'s decision to delete the addition of Rs. 40,35,22,309/- made by the AO due to the assessee not submitting any stock statement and the bank considering the stock as nil. The AO noted that the assessee's factory was closed due to a strike since December 2008, leading to the stock being damaged and sold as scrap for Rs. 32,46,632/-. The AO believed this created a fictitious loss to offset the capital loan waiver of Rs. 47,91,16,254/- and disallowed the loss claim. However, the CIT(A) reversed this, noting that the factory closure led to stock damage, and the stock was genuinely sold as scrap. The CIT(A) accepted the technical expert's report on the stock's condition and allowed the loss claim. The Tribunal upheld the CIT(A)'s decision, noting that the assessee provided detailed evidence of the stock and its sale as scrap, and the AO did not reject the books of accounts or summon the scrap dealers to verify the sale.2. Allowance of Depreciation Despite No Manufacturing Activity:The AO disallowed the depreciation claim of Rs. 76,10,671/- on the grounds that the assets were not put to use due to the factory's closure. The CIT(A) allowed the depreciation, stating that the assets were part of the block of assets, and depreciation was allowed in earlier years. The Tribunal upheld the CIT(A)'s decision, noting that the business was not closed but temporarily halted due to an illegal strike, and the intention to use the assets remained. Thus, depreciation could not be disallowed.3. Deletion of Disallowance of Various Expenses Due to Lack of Business Activity:The AO disallowed various expenses amounting to Rs. 70,12,999/- on the basis that there was no business or manufacturing activity. The CIT(A) allowed the expenses, stating that the business was temporarily halted due to the strike, but the business was not closed. The expenses were considered genuine and related to the business. The Tribunal upheld the CIT(A)'s decision, confirming that the business was not closed, and the expenses were justifiable.Conclusion:The Tribunal dismissed all the appeals of the Revenue, affirming the CIT(A)'s decisions on all issues. The stock loss was genuine, depreciation was allowable despite the temporary halt in manufacturing, and the business expenses were legitimate. The Tribunal emphasized the need for the AO to provide concrete evidence and not rely on assumptions.
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