TaxTMI 
TaxTMI 
2016 (1) TMI 361
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....this appeal is as to whether an addition of Rs. 12,54,947/- could be made towards valuation of stock of scrap in the facts and circumstances of the case. 2.1. The brief facts of this issue is that the assessee is a partnership firm deriving income from trading business of Iron and Steel and Commission Income. The partnership firm was dissolved on 30.6.2005. Hence the return of income in the name of the firm was filed by considering the transactions in the firm for the period 1.4.2005 to 30.6.2005. This partnership firm was converted into proprietorship concern with effect from 1.7.20005 and accounts for the period 1.7.2005 to 31.3.2006 are prepared separately. The main product traded by the assessee is M.S.Round and Scrap. The assessee had....
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....ts long term contract with effect from 1.7.2005 and brought down the rate per MT substantially. Taking into account the same, the closing stock as on 30.6.2005 was valued by the assessee at Rs. 85,11,544/- being the lower of cost or net realizable value. The Learned AO did not appreciate the contentions of the assessee and made an addition of Rs. 12,54,947/- ( being the arrived value of Rs. 97,66,491/- by Learned AO and declared value of Rs. 85,11,544/- by assessee) towards difference in valuation of closing stock of M.S.Scrap. On first appeal, the same was deleted by the Learned CITA duly appreciating the contentions of the assessee by giving a clear finding. Aggrieved, the revenue is in appeal before us on the following ground:- "1. For....
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.... less than the cost, then the effect is to state the profit on the goods which actually have been sold at the incorrect figure. From this rigid doctrine one exception is very generally recognized on prudential grounds and is now fully sanctioned by custom, viz. the adoption of market value at the date of making up accounts, if that value is less than cost. It is of course an anticipation of the loss that may be made on those goods in the following year, and may even have the effect, if prices rise again, of attributing to the following year's result a greater amount of profit than the difference between the actual sale price and the actual cost price of the goods in question. While anticipated loss is thus taken into account, anticipated pr....
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....ion of Rs. 23,00,000/- towards commission in the facts and circumstances of the case. 3.1. The brief facts of this issue is that the assessee made payment of commission to the following two parties and claimed the same as deduction :- "Sl. No. Name of the concern Amount 1 M/s. Tirupati Industires 14/2 Old China Bazar Street Kolkata Rs.10,00,000/- 2. M/s. Roto Flux Printing & Laminates Co.(P) Ltd Andul Road, Chunavati More Howrah-711 109 Rs.13,00,000/- Rs.23,00,000/-" The Learned AO in order to verify the genuineness of the claim issued summons u/s. 131 of the Act to the aforesaid two parties. No response was received from one party and in respect of another party the notice had returned unserved. Th....
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.... the veracity of the claim. With regard to the alternative claim of non compliance of TDS provisions, the Learned CITA held as follows:- "5.3 The AO has also taken an alternative ground for disallowing commission of Rs. 23,00,000/-. According to the AO, the appellant has not deducted tax on commission payment and therefore the same was not allowable as per the provisions of section 40(a)(ia). The Ld. AR argued before me that the firm was dissolved and was taken over as going concern by one of the partners with effect from 01-07-2005. The appellant has accounted for the amount of Rs. 23,00,000/- payable to the said parties to determine the actual income of the appellant relevant to the period of its existence. The appellant has neither cre....
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....ission was made by the successor concern and it has duly complied with the provisions of section 40(a)(ia), I am of the opinion that no disallowance u/s. 40(a)(ia) could be made in the hands of the appellant. In view of the above facts and also the amended provisions of section 40(a)(ia) are not applicable in the case of the appellant. The AO is directed to delete the disallowance of Rs. 23,00,000/-." The Learned CIT(A) also found that the TDS was indeed remitted by the successor concern i.e proprietary concern of the assessee on 31.5.2006 which is well within the due date of filing the return of income u/s 139(1) of the Act and hence the disallowance u/s 40(a)(ia) of the Act could not be made on that account. Accordingly, the Learned CIT....