TaxTMI 
TaxTMI 
2017 (3) TMI 256
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....le making the original assessment. The appeal was admitted on the following questions of law:- "(A) Whether on the facts and in the circumstances of the case, the learned ITAT is justified in deleting the addition of Rs. 1,84,00,096/- on account of valuation of closing stock of sugar as made by the Assessing Officer and confirmed by the Commissioner of Income Tax (Appeals) ignoring the fact that the assessee failed to produce stock registers and supporting evidences in support of applying different rates for valuation of stock for levy and free sale sugar relating to different years during the course of assessment proceeding. (B) Whether on the facts and in the circumstances of the case, the learned ITAT was legally justified in ignoring the production of the stock register and supporting evidences while allowing the appeal filed by the assessee or accepting the claim of the assessee." Brief facts of the case are that the return of income was filed by the assessee showing net loss of Rs. 6,86,55,130/- on 16.10.2006. The Assessment was completed u/s 143(3) of the I.T. Act, 1961 on 18.12.2007 on a total income of Rs. Nil setting off the losses for the Assessme....
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.... price of free sale sugar. Hence, the addition made by the AO and confirmed by the CIT(A) by valuing the levy sugar also at the sale price of free sale sugar is deleted. Accordingly, ground No. 1 is allowed." We have heard Sri Ashish Agarwal, learned counsel for the Revenue and Sri Shakeel Ahmad, learned counsel for the assessee-respondent as also perused the record. The assessee is a manufacturer of sugar which is controlled commodity and the manufacturing process whereof is regulated by law. Being commodities subjected to excise duty the record of manufacture is also maintained and verified by the Excise Authorities at different stages. Also, it is a matter of common knowledge and in the particular facts of the case it has been stated by the assessee from the very beginning before all authorities that out of total sugar manufactured by it, levy sugar had been apportioned and fixed quantity of sugar had been set apart to comply with the requirement of levy sugar supplied to the Government for Public Distribution System. Undisputedly, levy sugar price is considerably lower than free sale sugar price by about 40%. While assessee appears to have maintained and produced its book....
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....zed position of valuation is given below:- Free Sugar Bags Rate Amount Season 2003-04 37893 1660/- 62902380 2004-05 19442 1600/- 31107200 2005-06 157792 1740/- 274558080 215127 368567660 Levy Sugar 2002-03 16618 1330.77 21981658.86 2003-04 588 1330.77 782492.76 2004-05 1816 1330.77 2416678.38 19022 25180830.00 Against the Learned AO has adopted a uniform rate of Rs. 1760.95 per bags disregarding the method of valuation of closing stock followed consistently by appellant. Relevance is placed on following judgment of ITAT High Court relating to valuation of stock. In the light of above, the addition so made deserves to be deleted." The CIT (Appeal) however rejected the contention of the assessee by relying on the earlier order passed by the tribunal in the case of the assessee for the assessment year 1990-91 wherein, from a reading of the order of the tribunal it appears the entire quantity of the sugar stock was free sale sugar only and there was no component of levy sugar in t....
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....nications issued by the Ministry of Consumer Affairs and Public Distribution for supply of sugar to be made by the assessee to the Public Distribution System by creating stock of levy sugar. The evidence in this regard referred to in the order of tribunal has not been disputed and its correctness has not been doubted by the revenue. Thus it has been established that in the year in question i.e. assessment year 2006-07 the assessee was under an obligation to create stock of levy sugar which was duly certified by the Tax Auditor and according to those reports and certificates the assessee had available with it quantities of levy sugar for the year 2002-03, 2003-04 and 2004-05. This stock of levy sugar could then not have been valued at free sale sugar price in view of the fact that there was a legal obligation on the assessee to supply the such stock of sugar at the controlled levy price through the Public Distribution System. The fact that in earlier order closing stock had been valued at higher price namely free sale sugar price, is not relevant in the present appeal in view of the finding returned by the tribunal that in the earlier years the assessee had no liability toward....