TaxTMI 
TaxTMI 
2021 (10) TMI 1202
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....as these are non-abated assessments. "A.Y. 2007-08 The A.O., while making the assessment order u/s.153A, has discussed the various additions made in para 4, 5, 6 and 7 of the assessment order. From the perusal of the above said paras, it is observed as under :- (i) in para 4, addition of Rs. 22,80,195/- has been made on the basis of the order of Addl. CIT (TP)-I(2), Mumbai dated 24.12.2014 making ALP adjustment of the said amount on interest charged on loans given to A.Es. On this issue, an addition of Rs. 28, 65,408/- was made to the total income of the appellant in light of the order of the TPO-II(2), Mumbai dated 31.05.2010. In the second order dated 24.12.2014, the TPO has worked out total adjustment on account of interest to be charged from Associated Enterprises at Rs. 51,48,603/- and has computed the additional adjustment of Rs. 22,80,195/- after considering the adjustment of Rs. 28,68,408/- on the basis of first TPO order dated 31.05.2010. The TPO and the A.O. have not referred to any incriminating material on the basis of which a higher adjustment on account of interest to be charged from Associated Enterprises at Rs,51,48,603/-has been worked ou....
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....ils given in the Balance Sheet and not on any incriminating material found in the course of search. From above discussion, I am of the considered opinion that except for the addition on account of scrap sale, the other three additions discussed above are not based on any incriminating material found in the course of search. Therefore, relying on the decision of the ITAT Mumbai Special Bench and the jurisdictional High Court in the case of All Cargo Global Logistics Ltd. (supra), it is held that the following additions, made in the order u/s.153A of the Act, are without jurisdiction and the same are deleted. 2008-09 The submissions of the Learned Counsel have been carefully considered. As already discussed the original return of income for AY 2008-09 was filed by the assessee on 25.06.2009 declaring total income of Rs. 6,37,28,944/- and book profit of Rs. 36,03,03,386/-. A search and seizure action u/s 132 of the IT Act was conducted on the group on 29.08.2011. Consequent to the search, notice u/s 153A was issued to the assessee on 30.04.2013. Assessment u/s 143(3) r.w.s. 153A of the IT Act was completed on 31.03.2016. The AO has confirmed that this is not....
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....092/-. However, the AO did not make addition on this account as the assessee had offered the same in the return of income filed u/s 153A. As the other three additions which are additions on account of ALP adjustment, disallowance of deduction u/s. 10B and disallowance of exceptional items written off, are not based on any incriminating material found during the search, in view of the judgments of the jurisdictional ITAT and jurisdictional High Court referred to supra, the additions made by the AO cannot be sustained. The AO has directed to delete these additions. 2009-10 The submissions of the Learned Counsel have been carefully considered. As already discussed the original return of income for AY 2009-10 was filed by the assessee on 30.09.2009 declaring total income of Rs. 9,13,41,226/- and book profit of Rs. 30,28,01,935/-. A search and seizure action u/s 132 of the IT Act was conducted on the group on 29.08.2011. Consequent to the search, notice u/s 153A was issued to the assessee on 30.04.2013. Assessment u/s. 143(3) r.w.s. 153A of the IT Act was completed on 31.03.2016. The AO has confirmed that this is not an abated assessment. In case of an unabated assessm....
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....mpany, correspondence made by the city bank with the assessee confirming the moneys received from the said entity. However, this was not acceptable to the AO who held that the identity and the creditworthiness of the company was not proved by the assessee and made an addition of Rs. 8,97,50,000/- u/s. 68 of the IT Act. It is seen that this addition has been made on the basis of the return filed by the assessee and has no relevance/connection to the search conducted or any incriminating material found during the search. 7.5 As all the three additions which are addition on account of ALP adjustment, disallowance of deduction u/s. 10B and disallowance of share capital written off, are not based on any incriminating material found during the search, in view of the judgments of the jurisdictional ITAT and jurisdictional High Court referred to supra, the additions made by the AO cannot be sustained. The AO is directed to delete these additions." 4. Against the above order the Revenue has filed appeal before us. 5. We have heard both the parties and perused the records. It is not disputed by the revenue that on the aforesaid items of addition, no incriminating material was ....
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....mpany was valuing its inventory of finished goods lying at marketing units at trade price (i.e. transfer price) minus estimated margins. During the year the company changed the method of valuation of products lying at marketing units and has valued the same at cost so as to include cost in accordance with AS-2. As the opening balance of inventory valuation as on 1st April, 2009 was at trade price less estimated margins, the impact thereof was in the current year's Profit & Loss a/c. However due to this change the company wanted to show this amount of extra ordinary expense in Profit & Loss account separately and the same was not recurring in nature, the company reduced the value of excess of cost and its Trade Price less margin valuation from the Opening Balance of inventory and the same was shown as exceptional item in the financial statements. There is no impact on profitability during the year as Rs. 3741.29 lacs were reduced from the current year's consumption and the same was shown as an exceptional item in the financial statements. Assessee has submitted the stock valuation statement as on 31.03.2009 in support of its claim. Assessee's submission is consi....
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.... F.Y. 2005-06 & 2006-07. The list also contains the information regarding the investments written off in subsequent years. It is observed that the assessee had written off investment of Rs. 12,00,000/- made in M/s Lyka Labs Ltd. during the year under consideration. Assessee's A.R. was asked to explain the same. Assessee in its submission dated 08.03.2016 has stated that M/s Lyka Labs was the debtor of the assessee. As they were not in a position to pay the amount due to the assessee, the debtors amount was converted into debentures. Finally the company did not pay any amount to the assessee as it became defunct. Due to this reason the assessee wrote off this investment from the books of accounts. Assessee has included the investment write off under the head debtors written off and debited it to the P & L account as exceptional item. Assessee has not furnished any details regarding the names and addresses of the C&Fs and C&As, no details regarding when the materials were sent to them on consignment and in which year these sales were included in the income by the assessee. Assessee has also not furnished any details on what efforts were made to collect the amounts outsta....
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....ition merely for the reason that the names and addresses of the C&Fs and C&As were not furnished and the details of the consignments sent to them were not given. Also the efforts that were made to recover the debts have also not been established. However, during the appellate proceedings, the Learned Counsel for the appellant submitted all these details by way of additional evidences. He had given the names and addresses of the debtors along with the details of the invoices raised date wise and copies of the ledger accounts of all the debtors. In spite of all this, in the remand report the AO stated that the assessee has not submitted ledger accounts of the entities and also that the assessee failed to demonstrate how the deduction claimed as bad debts has actually become bad. It is clear that the ledger accounts and sales invoices along with a detailed chart has been furnished by the assessee which demonstrates that he debts have been offered as income in the earlier years. As for the AO's contention that the assessee has not demonstrated how the debts have become bad or efforts taken for recovery, it is clarified that the Income Tax Act does not mandate any such demonstration....
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.... i.e. AY 2010-11, the assessee has changed to AS-2 Valuation of inventories issued by ICAI which prescribes that the inventories of finished goods should be valued at lower of cost or market value where the cost should comprise of cost of purchase, cost of completion and the other costs incurred in bringing the inventories to their present location and condition. Accordingly, for AY 2010-11, the assessee has valued its inventories as per AS-2. Due to this change, the valuation of closing stock as on 31.03,2010 was not on the same and comparable with the value of opening stock as on 01.04.2009; the concept of matching principle was violated. In order to bring out the effect of this change in the method of accounting, the assessee had reduced the effect which is Rs. 37.41 crores from the consumption which would decrease valuation of opening stock and increase the profit. In order to negate this effect the assessee had debited the same amount i.e. Rs. 37.41 crores to the P&L account as exceptional items written off. Thus there is no effect on the P&L account. The assessee had not tinkered with the opening stock. The assessee has reduced the value of opening stock by a sum of Rs. 3741.....
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.... 31-03-2009 Opening Stock - Stock in Progress 158.64 945.92 - Finished Goods 9521.96 3884.47 Less: Valuation Difference as per AS-2 3741.29 - 6. Note no. 4 to Notes to accounts as per Page No. 31 of the Paper book is as under: "During the year the Company has changed its accounting policy in respect of the following items: a. Changed the method of valuation of finished goods lying at marketing units: i. Hitherto the company was valuing its inventory of finished goods lying at marketing units at Trade Price i.e. (Transfer Price) minus estimated margins. ii. During the year the company has changed the method of valuation of products lying at marketing units and has valued the same at cost so as to include cost in accordance with AS-2 issued by the ICAI. The impact of the change of method of valuation of stock as per AS-2 of Rs. 3741.29 lakhs has been shown under the head of exceptional items." 11. We have carefully heard both the parties and perused the records. Apropos issue of Sundry debtors written off :- 12. We note that learned CIT(A) has given a finding that the asse....
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....venue's appeal." 13. Accordingly in the background of the aforesaid decision and precedent, we do not find any infirmity in the order of learned CIT(A). Apropos issue of finished goods written off :- 14. As detailed above in the order of learned CIT(A) as well as submission of the assessee there is an error on the part of the Assessing Officer in appreciating the facts. The assessee in order to bring out the opening stock valuation in accordance with change in the method for closing stock valuation has arrived at a figure Rs. 3741.29 crores. But the entry passed in this regard has not affected the profit computed by the assessee. Hence, the Assessing Officer has erred in tinkering with the figures here. The Assessing Officer has observed that he has not able to comprehend the assessee's explanation. According to his understanding due to change of valuation of stock during the year, the value of opening stock had increased by Rs. 3741.29 lakhs and the same was reduced from the current year's consumption. Hence, as per the Assessing Officer further debiting the same amount in the profit and loss account under exceptional item has resulted in excess claim of expenses ther....