TaxTMI 
TaxTMI 
2015 (7) TMI 910
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....einafter) for assessment year (A.Y.) 2003-04. I.T.A. No. 2250/Mum/2010 (Assessee's Appeal) 2. The principal issue, raised per its ground no.1, is in respect of disallowance of provision made for a loss (at Rs. 1285.64 lacs) on account of a firm purchase contract. The assessee-company, in the business of manufacturer of chemicals, entered into an agreement on 19.03.2003 (which stood revised on 25.03.2003) with M/s. Kolmer Petrochemicals, A.G., Switzerland [Kolmer] for the purchase of 6,000 MT of raw material, Paraxylene, used in the manufacture of the finished product, DMT, at $ 882 (Rs. 44,267/08) per MT, i.e., at a cost of Rs. 27.82 cr. The goods were to arrive at Mumbai, the location of delivery, between April 23 and 25, 2003, while its....
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....lfields Ltd. V ACIT (27 DTR 226)(ITAT Nagpur) v) ITO v SBI DHFL Ltd. (35 taxmann.com 184)(ITAT Mumbai) vi) Securities Trading Corporation of India Ltd. V Addl. CIT (ITA No.449 - 973/M/2009)(ITAT Mumbai) The Revenue's case: The Revenue dismisses the assessee's claim as contingent. The goods are likely to arrive only in the next year, whereat only, the property in the goods shall pass to the assessee, for it to take cognizance of or recognize the loss arising to it on the fall in the market price of the raw material and, resultantly, its net realizable value, worked backwards on the basis of the estimated realizable value of the finished product, whose price declines in sympathy. True, the assessee is to provide for all known losses/liabi....
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.... the market price of Parxylene and, resultantly, DMT, the finished product. Admittedly, the price of rawmaterial started falling only in May/June 2003, i.e., after the end of the relevant year on 31.03.2003. This fact was confirmed by the Bench from the ld. counsel during hearing, who fairly conceded to it being in fact so. True, all known losses and liabilities have to be provided for following the fundamental accounting principle of conservatism and prudence, which stand since statutorily incorporated per AS1 issued by CBDT u/s.145 of the Act. Market prices being volatile, a loss can be said to arise on the basis of movement therein, firstly, only where they exhibit a secular, irreversible downward trend. Clearly, where likely to reverse....
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.... providing for loss/liability that has not arisen during the relevant year or, in any case, by the end of the relevant year. Events after the balance-sheet date can only be taken into account in so far as they inform about the conditions prevailing during the relevant year, so as to enable a correct assessment of the operating results for the year and the state of affairs as at its close. There is nothing to show that the market price of the raw-material or the finished products had declined, much less to any substantial extent, up to 31.03.2003, the relevant year end. The assessee's claim, in view of foregoing, is without merit. The decisions relied upon would be of little moment, even as clarified during hearing, in view of our specific ....
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....orities below, and towards which reference was made to pages 18 and 19 of the assessee's paper-book. Under the circumstances, we have no hesitation in confirming the impugned disallowance. We may, however, elaborate further. That an expenditure is allowable, where mercantile system of accounting, as in the present case, is adopted, even though no payment has been made, which is claimed to have been during the subsequent year, is undisputed and not in issue. Reference, therefore, to the decision by the apex court in CIT vs. U.P.State Industrial Development Corporation [1997] 225 ITR 703 (SC) would be of no moment. The question is of the basis on which it could be said or concluded that expenditure to that extent had in fact accrued, and whic....
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....2010] 327 ITR 305 (SC). We, accordingly, set-aside the matter back to the file of the AO for working the book profit u/s. 115JB in terms of the said decision. We decide accordingly. I.T.A. No. 3193/Mum/2010 (Revenue's Appeal) 10. The appeal raises two effective grounds, i.e., grounds 2 and 3, which we shall take up in seriatim; ground 1 being general in nature, warranting no adjudication. 11. Ground 2 of the Revenue's appeal is in respect of an addition qua unutilized MODVAT credit in the sum of Rs. 354.40 lacs. While the AO made the addition as in his view the unutilized MODVAT credit was required to be added u/s. 145A, the ld. CIT(A) directed for including the said credit in the value of the opening stock, purchases, sales and closing ....