TaxTMI 
TaxTMI 
2011 (1) TMI 14
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....oss loss incurred, the assessee explained that the cost of material Rs. 8,33,750, consisted of (I) Chromium carbide; (ii) Ferro Tranium Powder and (iii) HCC metal powder, which are basically Ferro alloys. The assessee pointed out that these were exposed to rain and weather, and, therefore, got spoilt and become un-sellable. For this reason, the stocks. were sold of completely for much lower price than the cost price. The Assessing Officer pointed out that the assessee has not brought out any details about the part to wham the stock was allegedly sold for almost half the price. He. further noted that the assessee neither has any godown nor any branch for storing the goods. Further, no warehouse or godown charges were debited. In the absence of any material to support the holding of the stock and its damages, as alleged, the Assessing Officer treated the entire sale transaction as unproved and held that the entire opening value of Rs.8,33,750 as undisclosed investment and made an addition of Rs. 3,44,537 being the difference between the value of opening stock and sale consideration disclosed by the assessee. 3. In appeal, the learned CIT (A) confirmed the Assessing Officer's ac....
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....r the assessee further referred to Pages-31 to 52, where the copy of sales tax is contained and further to Pages-33 to 55, wherein the sales tax assessment orders are contained. Learned Counsel further referred to Pages-56 to 57, wherein the certificate of Chartered Accountants is contained certifying the various impugned items in opening stock were sold to Sam Industries Ltd., as per the details of invoices given in the certificate. Learned Counsel finally referred to Page-6 of the paper book to demonstrate the complete details of purchase and sales from financial year 1998-99 to 2002-03. Learned Counsel pointed out that the assessee had purchased 2,44,065 kgs. of material in financial year 1998-99 and sold Rs.2,40,065 kgs. of the material in the same year. Only 4,000 kgs. of stock was left, out of which 2,500 kgs. were sold in financial year 1999-2000. Thus, only 1,500 kgs. of material was left in closing stock in financial year 1999-2000, out of which 300 kgs. was sold in financial year 2000-01 and 50 kgs. sold in 2001-02. Thus, during the year under consideration, the assessee was left with only 1,150 kgs. of material which it had sold at loss. The assessee has filed complete d....
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....les being effected at loss after five years of holding the chemicals. There is no gain saying that chemicals loose their quality with the passage of time and, therefore, whatever assessee could realize by sale of the same, could not be doubted. We, accordingly, set aside the order of the learned CIT (A) and allow the ground of appeal raised by the assessee. 9. Grounds no.2, 3 and 4d "2. On the facts and in the circumstances of the case and in law, the learned CIT (A), Mumbai, in confirmation of addition of Rs. 26,647 as inflated expenses even though all the necessary details with proof was filed before him during the course of the appellate proceedings. 3. On the facts and in the circumstances of the case and in law, the learned CIT (A), erred in confirming additions of Rs. 54,289 on account of salary expenses genuinely incurred by the appellant company. 4. On the facts and in the circumstances of the case and in law, the learned CIT(A), erred in confirming addition of Rs.10,948 on account of telephone expenses genuinely incurred by the appellant company." 10. The Assessing Officer disallowed the excess debit of Rs. 36,471 [Rs. 1,14,038 (-) 77,567]. Further, the Asse....
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....d CIT(A), is concerned, we do not find much substance in the submissions of the learned Counsel because the telephone, admittedly, was in the name of the director and the assessee has not produced any board resolution to demonstrate that the telephone was to be specifically used for the assessee's business. Under such circumstances, we are of the opinion that considering the entirety of the facts and circumstances of the case, it is in the interest of justice to allow 50% out of the assessee's claim as being towards business purpose. We direct accordingly. 16. Ground no.5, reads as under:- "5. On the facts and in the circumstances of the case and in law, the learned CIT (A), erred in confirming addition of Rs. 3,72,847 on holding that all the debts outstanding above 3 years are automatically turned Into non-est liabilities." 17. Brief facts, apropos this issue are that, the Assessing Officer noticed that the outstanding expenses were shown in the balance sheet under current liabilities at Rs. 3,83,505=50 as against Rs,. 3,73,289=50, shown in the preceding year. He noted that out of this opening liability of Rs. 3,72,847=50, pertained to the financial years 1997-98 and 1998....