TaxTMI 
TaxTMI 
2019 (11) TMI 353
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....ue has raised the following grounds of appeal: • "Whether on the facts and circumstances of the case, the Ld. CIT(A) was right in deleting the addition of Rs. 6,16,55,838/- being diminution in the value ~ of closing stock and claiming depreciation thereon, without appreciating that the A.O. has given categorical finding in the assessment order on the said issue?" • "Whether on the facts and circumstances of the case, the Ld. CIT (A) was right in deleting the addition of Rs. 6,16,55,838/- by relying on the judgement in the case of Alfa Laval (India) Ltd. 295 ITR 451 is totally distinguishable on the facts and circumstances of the case, as in the said case,' the issue was that the assessee had reduced the value a....
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....015, wherein the assessee stated that closing stock is valued in accordance with accounting slandered -2(AS-2), the closing stock was valued at cost or Net Realizable Value (NRV), whichever is lower. The contention of assessee was not accepted by Assessing Officer. The Assessing Officer made addition of Rs. 6,16,55,838/- in valuation of stock as on 31.03.2012 (being difference between the cost and NRV) holding that the depreciation on closing stock is not allowable. The Assessing Officer also made addition of the disallowed amount while computing book profit under section 115JB. On appeal before the ld. CIT(A), the action of Assessing Officer was reversed. Aggrieved by the order of ld. CIT(A), the revenue has filed the present appeal before....
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....tion of closing stock as on 31.03.2012 in respect of each category of closing stock was furnished. The ld. AR of the assessee submits that the breakup of depreciation claimed was furnished by assessee to the lower authorities. The ld. CIT(A) has recorded the breakup of the depreciation in para-3.1 of his order. The Assessing Officer failed to appreciate that as per AS-2 issued by Institute of Chartered Accountants in India (ICAI), valuation of stock is to be done at the cost or NRV whichever is lower, the relevant extract of AS-2 is placed on record. The assessee is consistently valuing its closing stock at lower of the cost or NRV since past several years following the rule of consistency. The deduction in value of cost of inventory repres....
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....ver is lower A. Inventories/demovehicles Sub-total 1,20,75,65,762 1,15,19,43,005 1,15,19,43,005 B. Accessories, Consumables and parts Sub-total 12,27,19,312 11,66,86,232 11,6,86,232 C. Service Wip-TML Sub-total 1,33,46,22,303 1,27,29,66,467 1,27,29,66,467 7. On the basis of aforesaid tabulation, the assessee explained that there is a difference of Rs. 6,16,55,838/- reported in the cost price and NRV. The ld. CIT(A) accepted the contention of assessee holding that the assessee has not claimed the depreciation as conceived by Assessing Officer. It is a classificatio....
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....ock, it is open to the assessee to value it at the cost or market value, whichever is lower, a method of accounting adopted by tax payer consistently and regularly cannot be discarded by the departmental authorities on the view that he should have adopted a different method of keeping accounts or valuation. 9. The Hon'ble Delhi High Court in CIT vs. Hughes Communication India Ltd. (supra) held that the diminution of closing stock on account of impairment and effect is allowable, if the same method of valuation consistently followed. 10. Further, the Hon'ble Delhi High Court in CIT vs. Indian Sugar & Gen. Industry Export Import (supra) while considering the question of law whether the finding of Income-Tax Appellate Tribunal was right ....