2019 (12) TMI 668

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.... cross objection of the assessee in CO. No. 204/Mum/2019 is against the order of CIT(A) deleting the addition of value of closing stock made by Assessing Officer being diminution in the value of closing stock and claiming depreciation therein. For this, Revenue has raised the following two grounds: - "1. Whether on the facts and circumstances of the case, the Ld. CIT(A) was right in deleting the addition of Rs. 7,94,91,740/- 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? 2. Whether on the facts and circumstances of the case, the Ld. CIT(A) was right in deleting the addition of Rs. 7,94,91,740/- 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 at a fixed rate 10% from the cost in respect of its obsolete stock, which is not the cash in hand?" The assessee has raised the following two grounds: - "Corresponding adjustment to value of current y....

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....ing stock valuation, therefore, the AO is directed to delete the above addition. The ground of appeal on this issue is treated as disposed off and allowed." 4. The learned counsel for the assessee took us through the Tribunals order for AY 2012-13 in ITA No.2333/Mum/2017 vide order dated 01.10.2019, wherein Tribunal after considering the diminution in value of closing stock on the basis of depreciation deleted the addition by observing in Para 6,7,11 & 12 as under: - "6. We have considered the rival submissions of the parties and perused the material available on record. During the assessment the Assessing Officer made addition of Rs.6,16,55,838/- by disallowing depreciation on closing stock holding that the depreciation on the closing stock is not eligible deduction. Before the ld. CIT(A), the assessee given the breakup of depreciation on various inventory, demo-vehicles, accessories and consumable Auto Parts in the following manner: Sr. No. Description Cost NRV Cost/NRV whichever is lower A. Inventories/ Demo-vehicles - - -   Sub-total 1,20,75,65762 1,15,19,43,005 1,15,19,43,005 B Accessories, Consumables and par....

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....uld consequently result in the adjustment to the opening stock of year No. 2. Further, we noted that the assessee has filed complete details of valuation of closing stock in its paper book along with statements showing details of subsequent sales with regard to the items of closing stock which were revalued to net reliable value along with sample copies of invoices with respect of subsequent sales. From those details it is clear that net reasonable value adoptable by the assessee for the purpose of value of closing stock in certain cases is as per the prevailing accounting practices as accounting standards 2. Hence, we find that no infirmity in the order of CIT(A) and respectfully following the Tribunals decision for AY 2012-13, we confirm the order of CIT(A) and deleting the addition. 6. The next issue in this appeal of Revenue in ITA No. 5792/Mum/2018 for AY 2013-14 is as regards to the adjustment made while computing book profit under section 115JB of the Act to the closing stock. For this, Revenue has raised the following ground No.3: - "3. Whether on the facts and circumstances of the case, the Ld. CIT(A) was right in deleting the addition of Rs. 7,94,91,740/-being....

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....see in CO. No. 205/Mum/2019 is against the order of CIT(A) deleting the addition of value of closing stock made by Assessing Officer being diminution in the value of closing stock and claiming depreciation therein. For this, Revenue has raised the following two grounds: - "1. Whether on the facts and circumstances of the case, the Ld. CIT(A) was right in deleting the addition of Rs. 5,94,98,161/- 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? 2. Whether on the facts and circumstances of the case, the Ld. CIT(A) was right in deleting the addition of Rs. 5,94,98,161/- 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 at a fixed rate 100/c from the cost in respect of its obsolete stock, which is not the cash in hand?". Assessee has raised the following grounds: - "Corresponding adjustment to value of current year opening stock Without....