2010 (10) TMI 758

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.... declaring a loss of Rs.76,20,687/-. The Assessing Officer noticed that the assessee had paid an interest of Rs.19,13,139/- on total loans of Rs.2,65,02,903/-, but he also noted that in assessment year 2002-03 interest proportion on work in progress had been disallowed by taking the rate of interest on loan at 8.69%. He noted that the closing stock of WIP was Rs.83,72,789/- and, therefore, on the said amount he disallowed the proportionate interest Rs.7,27,595/- calculated at 8.69%.   3. The learned CIT(Appeals) deleted the addition taking note of the fact that the valuation of work in progress had been done as per AS-2 issued by the Institute of Chartered Accountants of India and, accordingly, there was no question of including the....

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.... was incurred in relation to construction activities. Therefore, Accounting Standard-2 is applicable in the present case and not the Accounting Standard-7, dealing with accounting of construction contracts. The assessee had filed its opening and closing WIP based on direct cost. The interest was not included in the valuation of WIP.   6. From para 12 of the Accounting Standard-2 dealing with valuation of inventories, it is evident that interest and other borrowing costs are not required to be included in the valuation of inventories. Therefore, since, the valuation had been done as per Accounting Standard-2, the same was required to be accepted in view of the provisions of section 145(2), wherein Accounting Standard-2 has been notif....

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....assessee's contention and made addition of Rs.17,34,958/-, inter alia, observing that the assessee could not justify its claim of bad debts by furnishing relevant documents, efforts taken for recovery of the said sum etc.   11. He further observed that the burden of proof is on the assessee that the debts which it had claimed as bad debts had indeed become bad. The learned CIT(Appeals), following the decision of assessment year 2004-05 in assessees' own case, deleted the addition. We find that this issue is covered in favour of the assessee by the decision of the Hon'ble Supreme Court in TRF Limited vs ACIT, wherein, Their Lordships have observed thus "This position in law is well-settled. After 1st April, 1989, it is not necessary ....