2022 (7) TMI 551
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.... of Apex Court in "National Thermal Power Co. Ltd. vs Commissioner Of Income Tax" 4. Because, the following observations of the learned CIT (Appeals) in the order are perverse, arbitrary, baseless and misleading ("Relevant to Grounds of Appeal No-1 " provision for Inventory Obsolescence"):- (a) " ........The appellant has created the provision for the write-off of obsolete material without any documentary evidence like certification of the expert etc." (Refer Para 11.3 of page 15) (b) " I find that in the present case before me, the appellant has not given any details as to which method was followed by it for identification of unusable stock" 5. Because, appellant have proper basis/method for identification of obsolete material which is also supported by report of quality control test conducted at laboratory by the expert. ("Relevant to Grounds of Appeal No-1 " provision for Inventory Obsolescence"). 3. Ground No. 1, 4 & 5. The Ld. Counsel for the assessee submitted that, the Ld.CIT(A) erred in confirming the disallowance of Rs. 84,47,051/- on account of provision inventory obsolescence. Further, submitted that, the assessee Company has also written off the obsolete invent....
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....ing standard issued by ICAI should be allowed for the purpose of the Act. Further, the Jurisdictional High Court in the case of HOTLINE TELE TUBE & COMPONENTS LTD. 175 Taxman 286 held that the provisions for diminution in value of stock was allowable as deduction. The similar view has also been taken by the Jurisdictional High Court in CIT Vs. Huges Communication India Ltd. 215 Taxman 136. In view of the above discussions, we are of the opinion that provision for inventory obsolescence of Rs. 84,47,051/-for the year under consideration is allowable deduction. Accordingly, we allow the Grounds of Appeal No. 1, 4 & 5 of the assessee. 8. The Ground No. 2 & 3, are on rejecting amounting to Rs.9,85,02,263/- the claim of the assessee by treating the excise duty subsidy as capital receipt. The Ld. AR submitted that, the assessee has set up manufacturing unit in the state of Jammu, Kashmir) (now, Jammu, Kashmir & Laddakh). The said unit due to their presence in the notified area have availed the benefit in the form of excises duty subsidy of Rs. 9,85,02,263/- Therefore, the Ld. A.O and the CIT (A) should have allowed the claim of the assessee by treating the excise duty, subsidy as capita....
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....ordinate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitation if any prescribed by the statutory provisions. In the absence of any statutory provisions to the contrary the Appellate Authority is vested with all the plenary powers which the subordinate authority may have in the matter. 10. The Hon'ble Apex Court has also held that if the Appellate Assistant Commissioner is satisfied he would be acting within his jurisdiction in considering the question so raised in all its aspects. Of course, while permitting the assessee to raise an additional ground, the Appellate Assistant Commissioner should exercise his discretion in accordance with law and reason. He must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The satisfaction of the Appellate Assistant Commissioner depends upon the facts and circumstances of each case and no rigid principles or any hard and fast rules can be laid down for this purpose. 11. The similar proposition has reiterated by the Hon'ble Apex Court while dealing with the similar issue in t....
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....ays tax on an item of amount which is not taxable in accordance with the provisions of the Income Tax Act, the assessee would have every right to pray for right taxation of his taxable income. 13. Thus, it can be said that the claim of the assessee has to be considered based on the fact that whether the amounts in question or taxable or not, notwithstanding the fact that the assessee has suo-moto offered the amounts to taxation already. For determination of the issue whether the Assessing Officer or the Tribunal empowered to consider the plea of the assessee, the provisions of the Act are examined. 14. Year-1989 -- The provision sub-section (3) was substituted by the following provision by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1st April 1989, which read as follows "(3) On the day specified in the notice issued under sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total....
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....ritannia Industries Ltd in ITA No. 03/2013 vide order dated 13.07.2017 held that even if it (accepting the fresh claim of the assessee) results in an assessment below the returned income and consequently refund arises, it is valid as per law. 19. The Hon'ble High Court has also held that there is no conflict between the Gurjargravures Private Ltd. and Goetze (India) Ltd. In the former a claim for exemption was for the first time put up before the Appellate Assistant Commissioner who rejected the claim as not made before the I.T.O. This rejection was set aside by the Tribunal with direction upon the Appellate Assistant Commissioner to entertain the question of relief under section 84, claimed by the assessee in that case. The Supreme Court held that it was not competent for the Tribunal to have done so. The distinction between the two authorities eliminating any conflict is that in Gurjargravures Private Ltd. the competence of the Tribunal to direct the Appellate Assistant Commissioner to entertain a claim not made before the I.T.O was found to be lacking. In Goetze (India) Ltd. the Supreme Court held that the assessing Authority's power was limited but not that of the Tri....
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....eceived excise refund and interest subsidy, etc which it claimed to be a capital receipt. In the alternative, it was claimed that the same was eligible for deduction u/s 80-IB. The AO, CIT (A) and Tribunal rejected the claim and held the receipts to be revenue on the ground that the subsidy (i) was for established industry and not to set up a new one, (ii) it was available after commercial production, (iii) it was recurring in nature, (iv) it was not for purchasing capital assets and (v) it was for running the business profitably. On appeal by the assessee, the High Court (333 ITR 335) reversed the lower authorities and held as follows: (i) The ratio of Sahney Steel 228 ITR 253 (SC), Ponni Sugars 306 ITR 392 (SC) and Mepco Industries 319 ITR 208 (SC) is that to determine whether incentives & subsidies are revenue or capital receipts, the purpose underlying the incentives is the determinative test. If the object of the subsidy scheme is to enable the assessee to run the business more profitably then the receipt is on revenue account. On the other hand, if the object of the subsidy scheme is to enable the assessee to set up a new unit or to expand the existing unit then the receipt....