2020 (1) TMI 122

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....action of ld. CIT in invoking revisionary jurisdiction u/s.263 of the Act as well as the issue adjudicated therein on merits. 3. We have heard rival submissions. We find that the brief facts of this appeal are that the return of income for the A.Y.2007-08 was filed by the assessee on 30/10/2007 declaring total income of Rs.Nil under the normal provisions of the Act and book profit of Rs. 25,02,24,129/- computing u/s. 115JB of the Act. The taxes payable u/s. 115JB of the Act were duly paid by the assessee. The assessment was completed u/s.143(3) of the Act on 30/12/2010 determining the total income at Rs.Nil under normal provisions of the Act and book profit of Rs. 25,02,24,129/- u/s.115JB of the Act. In the income determined under normal....

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....nt that the ld. CIT nowhere in his order had mentioned that the order of the ld. AO was erroneous and prejudicial to the interest of the revenue. With this preliminary objection, he argued that the ld. CIT ought not to have invoked the revisionary jurisdiction u/s.263 of the Act. But we find that the ld. CIT had given detailed finding by stating that the ld. AO had failed to conduct necessary enquiries with regard to the above mentioned items while framing the assessment u/s.143(3) of the Act and there is also a categorical finding by the ld. CIT that in view of the non-enquiry of the above mentioned items by the ld. AO, the assessment order is erroneous and prejudicial to the interest of the revenue. We find that the ld. AR categorically a....

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.... counter was specially designed and was to be set up as per uniform global standards to attract customers and create awareness of the new and different range of Lancome products. It was submitted that since the company does not engage in any direct retail, this counter would be placed under any retailer selling the products of the assessee company. We find that towards the said advertisement counter, the assessee company imported various items comprising of in-built furniture (knock down condition) and accessories and incurred various other costs like customs duty etc., No complete fixed assets in direct usable formed part of these imported components. The assessee debited capital work in progress account while purchasing these items. It wa....

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....06 Hanging Mirror 97,698 29.11.2006 S/C Bar 112,515 29.11.2006 Furniture and fixture packing cost 112,120 04.12.2006 Bar Maquillage Grand Modele Asia 141,928 04.12.2006 Bar Soin Grand model for the boutique 133,610 Total   3,125,442 4.1. From the aforesaid list, it could be seen that the majority of the items comprises of cost of furniture and fixtures, its customs duty, its freight charges, drawing and design of the counter etc., among others. From the list of expenses incurred above, it could be seen that some items would certainly carry enduring benefit to the assessee in the capital field in as much as those items could be certainly utilised by the assessee in its regular course....

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....CIT, the same represents amounts set aside as provision for diminution in value of any asset. We find that the assessee had made a categorical statement before the ld. CIT that this sum of Rs. 16,07,149/- represents amounts debited to the profit and loss account towards doubtful debts and simultaneously the same amount has been reduced from the value of debtors on the asset side of the balance sheet and hence, such provision needs to be construed as write-off of an actual debt. 5.1. We find from the schedule-14 of the financial statements as on 31/03/2007 of the assessee company, which is enclosed in page 8 of the paper book, the assessee has debited a sum of Rs. 16,07,000/- towards provision for doubtful debts (net) and sum of Rs. 4,70,....

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....ourt in the case of Hindustan Zinc Ltd. reported in 291 ITR 391 and British Paints India Ltd., reported in 188 ITR 44. It was pleaded that the concept of market price / net realizable value also envisages reducing the cost of inventories appropriately in cases where they are damaged, or if they have become wholly or partially obsolete, or if their selling prices have declined or they are non-moving. The assessee in this regard placed reliance on the decision of the Hon'ble Delhi High Court in the case of Hotline Teletube and Components Limited reported in 175 Taxman. 286. We find that assessee had reduced the value of inventories by using the accounting terminology "provision towards obsolescence / slow moving stock". In other words, we fin....