TaxTMI 
TaxTMI 
2014 (2) TMI 320
X X X X Extracts X X X X
X X X X Extracts X X X X
....bunal) in ITA No.1282/CHD/2010 for the assessment year 2006-07, claiming following substantial questions of law:- (i)Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in law in deleting the addition of Rs. 75,00,000/- made by Assessing Officer on account of under valuation of closing stock of the land as the civil suit was filed in the civil court near the end of the Financial Year i.e. 18.3.2006, which would have no impact on the value and that the events that took place in the subsequent year would have no bearing on the value of closing stock as on 31.3.2006? (ii)Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in law in deleting the addition of Rs. 75,00,000/- made by A.O.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ails of deviation if any'. Not satisfied with the order, the revenue filed appeal before the Tribunal. Vide order dated 27.11.2012, Annexure A.III, the appeal was dismissed. Hence the present appeal by the revenue. 3. Learned counsel for the revenue submitted that the civil suit was filed by M/s Amritsar Rayon and Silk Mill Pvt. Limited on 11.3.2006 in which the assessee was made respondent No.4 and the same was still pending at the end of the financial year i.e. as on 31.3.2006 and therefore, in such a situation, the valuation of the closing stock shown by the assessee by making reduction of Rs. 75 lacs was improper. The CIT(A) and the Tribunal had erred in granting the benefit of the same. 4. On the other hand, learned counsel for t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ell into legal dispute as one M/s Amritsar Rayon Silk Mills (P) Limited filed a suit against the assessee stating that they had already paid sum of Rs. 70 lacs as byana for the same property and therefore, claimed that the registration executed in assessee's favour was not correct. On the strength of the agreement M/s Amritsar Rayon & Silk Mills (P) Limited made further agreement to sell the same land to M/s Futuristic Solutions Limited and received a sum of Rs. 70 lacs from them. A stay was granted to M/s Amritsar Rayon & Silk Mills (P) Limited by virtue of which assessee was debarred from making the sales of any land. Assessee paid Rs. 70 lacs and a further sum of Rs. 70 lacs was kept in bank FDR. Later on Court and then the Hon'ble Punja....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ussed above and detailed submission of the assessee, I am of the opinion that Assessing Officer was not right in rejecting assessee's various contentions and making the addition of Rs. 75 lacs. It is a fact that there was a legal dispute over the land which was in front of a big piece of land on which assessee wanted to develop a colony. Unless the legal dispute is resolved assessee could not have developed the colony which as claimed by the assessee would have caused huge losses to the assessee. It is not a case of pure legal dispute over land but court had also granted the stay which was confirmed by the Hon'ble Punjab and Haryana High Court. Assessee had paid Rs. 70 lacs to M/s Amritsar Rayon & Silk Mills (P) Limited and another Rs. 70 l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e has stated that there is no change in the method of valuing of closing stock. It has consistently been following method of valuing closing stock as Cost or Market price whichever is less. Infact tax audit report for the assessment year 2006- 07 copy of which has been filed in the course of appeal proceedings shows method of valuation of closing stock as Cost or net realizable value whichever is less. Against the column 'Details of deviation, if any from the method of valuation prescribed under Section 145A and effect thereof on the profit and loss' it is clearly mentioned Nil. It is therefore clear that there is no change in the method of valuation of closing stock as alleged by the Assessing Officer. In any case Assessing Officer has not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by this Court as well. In such a situation, the assessee was justified in reducing the valuation of the closing stock. The assessee had reduced the closing stock and the same was taken as opening stock for the assessment year 2007-08 which was accepted by the Assessing Officer while framing assessment under Section 143(3) of the Act. Thus, no loss to the revenue had been caused. Further this Court in Fazilka Cooperative Sugar Mills Limited's case (supra) had noticed as under:- "We think that the plea is untenable. If the assessee had claimed the benefit, the revenue would have contended before the Tribunal that the assessee has accepted the addition. Otherwise, the Revenue does not give the benefit. So, it wants the best of both the side....