TaxTMI 
TaxTMI 
2015 (7) TMI 608
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....8D of the I.T. Rules, 1962 (hereinafter referred to as "the Rules") and also an increase in value of stock. For this, Revenue has raised following grounds No. 1 & 2:- "1. Whether the facts and circumstances of the case, Ld. CIT(A), Siliguri was justified in deleting the addition of Rs. 51,12,814/- on account of increase in value of stock. In the audited accounts the assessee had shown value of opening stock at Rs. 1,48,50,000/- and closing stock of Rs. 1,99,62,814/-. Thus there was an increase of Rs. 51,12,814/- in the value of the stock during the year as shown by the assessee itself in its return of income. In the scrutiny proceedings, the AO has taken the same amount only in his revised adoption of special method by which income from sale of tea grown and manufactured could be computed in terms of Rule 8 of Income Tax Rules 1962. The Ld. CIT(A) could not point out any defect in the said computation of the AO but simply stated that the AO was wrong invading Rs. 51,12,814/- towards increase in stock without appreciating that the AO had simply adopted the figure (closing stock Rs. 1,99,62,814/-, opening stock Rs. 1,48,50,000/-) by the assessee itself. Thus the Ld. CIT(A) was wrong....
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.... : Rs. 55,05,697.29 (ii) Repair and maintenance Rs.53,97,650.38 (iii) Staff and labour welfare Rs.21,37,229.30 (iv) Administrative expenses Rs.35,72,119.25 (v) Interest paid Rs.20,62,050.86 (vi) Depreciation Rs.30,40,105.00 (vii) Power, Fuel, Packing and Others: Rs.1,54,28,219.33 Rs. 3,71,43,071.41 Rule 8 of the Income Tax Rules, 1962, outlines a special method by which income from sale of tea grown and manufactured cold be computed. The Rule....
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..... 11,51,788.06 Add: Increase in stock: Rs.51,12,814.00 As per Rule 8 40% of loss for income tax (-) Rs. 11,51,788.06 Add : Increase in stock : Rs.51,12,814.00 Rs.39,61,025.00 Add: profit from tea made out of green leaves Purchased Rs. 20,22,889.23 Rs. 59,83,914.23 Add: 40% of interest received from NABARD and WBSEB Rs. 56,644.00 Revised total income Rs. 60,40,558.23 4. Aggrieved, against the action of AO, assessee preferred appeal before CIT(A), who after considering the submissions of assessee deleted the addition by observing as under:- "I have carefully considered the submissions of the Ld. AR and also perused the assessment order. I have al....
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....come to the tune of Rs. 62,91,510/-. The Ld AO has not explained in the assessment order who increase in stock to the tune of Rs. 51,12,814/- was added. Even in the remand report dated 22.08.2012 the Ld AO has not commented on the addition of increase in stock to the tune of Rs. 51,12,814/-. The Ld AR in his written submission dated 10.09.2012 has contested the addition of increase of stock sating that the addition on account of increase stock is not warranted as per the principles of accountancy or under the law. Closing stock is always valued under the settled principles of law of accountancy i.e. cost or market value whichever is lower. The Ld. AR has stated that the Auditor has already certified the value of closing stock in his Audit Report and the said value has been taken in the audited accounts in arriving at the gross profit of the business. The increase or decrease in closing stock as compared with the last year cannot be a basis for making any addition under the above head. I agree with the Ld. AR that the Ld. AO should not have made such addition. The opening stock of 246806 kgs. Of tea valued at Rs. 1,48,50,000/- is clearly reflected in the audited accounts. The closin....
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....se in closing stock as compared with the last year cannot be a basis for making any addition under the above head and assessed income is at Rs. 62,91,510/- and the addition on account of increase in closing stock is Rs. 51,12,814/- and if this addition is deleted then the assessed income will stand at Rs. 11,78,696/- and the returned income of assessee was at Rs. 20,28,108/-. Ld. counsel for the assessee strongly raised that the formula adopted by the AO is unscientific and CIT(A) did not accept the said formula but for argument sake if the formula accepted then the net profit as per the above formula will be much lesser then the returned income of assessee and in that case there will be a revenue loss to the government. 6. But we find the total expenditure incurred for manufacture of tea out of green leaf purchased by assessee as per calculation of the AO is erroneous, hence profit on tea manufacture out of our own leaf is also erroneous. And the formula adopted by the AO gives distorted figures for profit made out of the assessee's own leaf and bought leaf. We find from the facts that the assessee during appellate proceedings tried to give figure and calculation as per the formu....
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....ssue of revenue's appeal is dismissed. 7. Next issue in this appeal of Revenue is against the order of CIT(A) in granting rebate u/s 33AB of the Act. For this, Rev has raised following ground No.3:- "3. Whether the facts and circumstances of the case the Ld. CIT(A) was justified in granting rebate of Rs. 12,00,000/- u/s 33AB of the I.T. Act. In the assessment order the AO has clearly brought out the facts on the basis of which closing stock was determined and other details regarding the computation of income of the assessee. Thus, the order of the Ld. CIT(A) is not based on facts but merely on whims and fancies." 8. We have heard rival contentions and gone through the facts and circumstances of the case. We find that AO did not allow the rebate u/s 33AB of the Act in view of the fact that there was a loss after determination of composite income of the assessee. Aggrieved, assessee preferred appeal before CIT(A) who allowed the rebate. Aggrieved, now Revenue is in second appeal before the Tribunal. 9. We find that assessee in its return income claimed deduction of Rs. 12 lakhs u/s 33AB of the act and assessee filed a receipt dated 1809.2008 evidencing deposit of Rs. 12 lakh with....