TaxTMI 
TaxTMI 
2021 (2) TMI 886
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....cting the disallowance on account of excess shortage/ breakage to 30% merely following appellants own case decided by the ld CIT (A) in subsequent years (AY 2008-09). The contention in the ground of appeal of the assessee is that ld CIT(A) has failed to appreciate that the expenditure incurred by the appellant due to pulling back of inventory from the market on account of expiry of product are normal business expenditure allowable as deduction in accordance with the provisions of the Act. 2. Brief facts of the case shows that the assessee is a company engaged in the business of trading of non-alcoholic beverages. It filed its return of income on 30.11.2006 declaring a loss of Rs. 25,80,27,830/-. The issue in this appeal is disallowance o....
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....roduct. The fact of the matter is that in this type of business every year there would be products having expired shelf life. This is a normal shortage, which arises to all the companies engaged in this type of trade. The assessee company did not produce any evidence to show that the risk of stock was its own. It never produced any agreement with its distributors to show that it was obliged to even bear losses on account of sales already made to the distributors for best before date stock. In these circumstances and further with no evidence produced to actually substantiate the claim that these stocks were really called back from the market and in absence of any claim being made on the manufacturing company which is normal in such type of b....
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....se, it was observed that the appellant had made similar claim in A.Y. 2008-09 wherein Ld.crr(A)-XV, New Delhi in the appellant's own case in A.No.386/10-11 dt. 27-01-2014 for A.Y. 2008-09 have given the following findings: "On careful consideration of the facts of the case, I find that keeping in view the nature of the products of the appellant company i.e. bottling and sale of various beverages of the Coca Cola brand, breakage of bottles in transit cannot be ruled out. Such breakage is also due to mishandling, and in terms of BDD policy of the company, certain products which have out-lived the prescribed expiry date, need to be destroyed. The appellant has furnished details of such losses incurred during the current year and i....
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....es the entire claim of the appellant cannot be allowed. At the same time keeping in mind the quality of the product it cannot be denied that the practice adopted by the appellant was necessary for maintaining the brand quality and market value of the product. Therefore, it would be reasonable and justified if the inventory loss claimed by the appellant is restricted at 70% of its claim as upheld by the Ld.CIT(A)-XV, New Delhi. The A.O. is directed to recompute the quantum of disallowance on this count. The appellant gets consequential relief. This ground of appeal is partly allowed." 4. Therefore, the assessee is in appeal before us. 5. We have heard Shri Sachit Jolly, ld AR on behalf of the assessee and Ms. Meenakshi Goswami, CIT DR,....
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....) clearly noted the BDD policy of the assessee company. He further noted that the assessee furnished the details in respect of loss of finished goods. The BDD policy necessarily applies to the finished goods only. The ld CIT (A) further accepted that possibility of having the inventory loss in the business of the appellant cannot be ruled out. He further considered annual turnover of the assessee and stated that claim of inventory loss is not significant. It was further noted that the ld AO has not brought on record any adverse evidence still he reached at a conclusion to allow only 70% of such loss. Even otherwise, the assessee has claimed such loss on account of passing of the of the expiry date of the finished product of the assessee. Th....