ITAT Delhi-D: Appeal partly allowed on depreciation, provisions for dead stock justified.

The ITAT Delhi-D partly allowed the appeal, dismissing the disallowance of depreciation on houses purchased on hire purchase basis and addition under 'stores excess account'. However, the ITAT Delhi-D allowed the claim related to provisions made against dead and obsolete stock, finding the change in valuation method by the assessee justified and permanent.

---

---

Issues:
1. Disallowance of depreciation on houses purchased on hire purchase basis
2. Addition under 'stores excess account'
3. Disallowance of provisions made against dead and obsolete stock

Analysis:
1. The first issue pertains to the disallowance of depreciation on houses purchased on hire purchase basis. The assessee appealed against the order of the CIT(A) upholding the disallowance. The CIT(A) directed the Assessing Officer (AO) to consider the claim made by the assessee after giving them an opportunity to be heard. The ITAT Delhi-D endorsed the directions of the CIT(A) as the assessee cannot have a grievance when the claim was directed to be considered. Therefore, the appeal on this ground was dismissed.

2. The second issue involves an addition under the 'stores excess account'. The AO included an amount under this head while computing the assessee's income. The CIT(A) upheld the addition, stating that there was no evidence to support the claim made by the assessee. The ITAT Delhi-D agreed with the CIT(A) and dismissed the appeal, as there was no specified supplier related to the liability, thereby upholding the addition.

3. The final issue concerns the disallowance of provisions made against dead and obsolete stock. The AO and CIT(A) disallowed the claim, stating that the loss pertained to an earlier year and could not be charged on the profits of the current year. However, the ITAT Delhi-D found that the change in valuation method by the assessee was bona fide and aimed at obtaining correct business profit. The ITAT Delhi-D allowed the appeal on this ground, noting that the change in valuation method was permanent and justified, as supported by relevant case laws cited by the assessee's representative.

In conclusion, the ITAT Delhi-D partly allowed the appeal, upholding certain additions while allowing the claim related to provisions made against dead and obsolete stock.

---