2009 (3) TMI 902

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....1. These appeals are directed against the orders of the (Appeals)-I at Trivandrum, both dated November 17, 2006. As far as the appeal arising out of the regular assessment is concerned, the Revenue has raised a solitary ground that the Commissioner of Income-tax (Appeals) has erred in deleting the disallowance made on account of valuation of damaged stock amounting to Rs. 1,04,512 relying on the decision of the Delhi High Court in CIT v. Bharat Commerce and Industries Ltd. [1999] 240 ITR 256. In the appeal, which arises out of the income escaping assessment, the solitary ground is that the Commissioner of Income-tax (Appeals) ought to have noted that the valuation of damaged stock due to transit relating to over a period of years amou....

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....loss related not only to the impugned assessment year but for the earlier assessment years as well. Therefore, we have to consider two issues even though the same relates to the valuation of the closing stock of damaged furniture. Regarding the damaged stock, there is no evidence in the hands of the Department against the contentions advanced by the assessee. The assessee has maintained all the details of damaged and unsaleable furniture. The Department has no grievance on the quantitative details of damaged furniture, furnished and claimed by the assessee. Therefore, the factum of damaged stock has to be accepted as such for the purpose of the impugned assessment. Once the damaged stock is physically ascertained, the next step is to ....

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....years could be allowed as deduction or not. We find that the argument of the Revenue is not a sound one. The loss is ascertained by the assessee at a particular point of time. As far as this case is concerned, that point of time happened to be the last day of the previous year relevant to the impugned assessment year. Therefore, it is to be seen that the loss by way of damaged stock is ascertained by the assessee at the end of the previous year relevant to the assessment year under appeal. Therefore, the loss as such is applicable in considering the income of the impugned assessment year. Another important aspect is that for all the earlier assessment years, the value of the subject stock had been accounted by the assessee in the credit ....