AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 1528
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....ances of the case, in confirming disallowance made by the Ld Assessing Officer 9(3) (the A.O.,) of Rs. 53,43,830/- as bad debts or write offs under Section 36(1)(vii), Section 36(2)(i) and/or Section 37 of the Income Tax Act 1961 (Hereinafter referred to as "the Act"). 2. The CIT(A)-21 erred in law, on facts and under the circumstances of the case in confirming addition by the Ld A.O., of Rs. 54,11,304/- on the ground that the appellant erred in taking international rate in valuation of closing inventory, purchased from MMTC-the channelized agency, instead of prevailing domestic rate at the year end. 3. The appellate crave leave to add, alter, modify or submit, resubmit afresh any or all the grounds of appeal or any supporting evidenc....
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....alances appearing in the debit side of the Balance Sheet at Rs. 53,43,830/- and the net result of Rs. 65,51016/- was offered as other income. The AO, while accepting the sundry balances written off appearing in the credit side of the Balance Sheet disallowed the sundry balances appearing in the debit side of the Balance Sheet on the ground that the conditions prescribed under Section 36(1)(vii) r.w.s. 36(2) are not fulfilled. In so far as the difference in value of closing stock it was submitted that it has purchased gold by importing, out of which unsold portion of the goods has been valued by supplier's methodology of billing by considering the international prevailing market rate of gold as on the date of valuation. However, the AO has a....
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....rate on which the applicable taxes and other cess have been added to arrive at the cost to compare the market rate which is not in accordance with the prescribed method for valuation of closing stock as per the Accounting Standard. The CIT(A) further observed that the cost per kg. of gold as per assessee's books of account works out to Rs. 2,08,385/- and the market value in the Indian local market is Rs. 21,18,000/- per kg. The assessee has adopted the cost per kg. at Rs. 20,81,859/- in respect of closing stock of gold imported through MMTC even though the cost works out to Rs. 21,08,385/-. Therefore the AO was right in rejecting the valuation of closing stock by the assessee and adopting cost or market rate as per the Indian market whichev....
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.... the gold imported through MMTC Ltd of Rs. 20,81,859/- per kg. In these facts, there is no basis for interference in the assessment order and ground of appeal No.2 is dismissed." 6. The first issue came up for consideration in assessee's appeal is disallowance of sundry balances written off and claimed as bad debts under Section 36(1)(vii) of the Act. The AO disallowed bad debt claim on the ground that the assessee failed to prove bad debt written off in the books of account are arisen out of sales made in the earlier years and same has been offered for taxation. According to the AO, the assessee has written off certain balances appearing in the Balance Sheet under the head 'Loans and Advances' without any evidence to prove that such adva....
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....alance Sheet, there is no reason for the AO to reject the sundry balances written off appearing in the debit side of the Balance Sheet only on the ground that the assessee has failed to file necessary evidence to prove that such debts are arisen out of the sales made in the previous financial year. We further observe that when the assessee has written off debit as well as credit balances, the net result of which may be debit or credit, it has to be treated either as income or expenses. We further observe that the assessee has filed certain evidences to prove that such advances are outstanding for more than six years and are arisen out of normal course of business like advances for expenses and other advances which are irrecoverable. Therefo....
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....rd issued for valuation of closing stock. 10. Having heard both the sides and considering the material on record we find that the assessee has adopted cost or market rate whichever is less method for valuing closing stock. Further, for valuation of imported gold it has considered the prevailing market rate available in the international market as on valuation date and then adopted that cost to determine the value of closing stock. For valuing the closing stock in respect of goods procured in domestic market it has followed cost or market rate in domestic market as on valuation date. There is no dispute in the method followed by the assessee for valuation of closing stock. The dispute is with regard to the prevailing market rate adopted by ....