Income Tax Appellate Tribunal - Chandigarh
Indian Acrylics Ltd.,, Chandigarh vs Assessee on 25 May, 2009
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIG ARH BENCH ' A', CHANDIG ARH
BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND
Ms. SUSHMA CHOWLA, JUDICI AL MEMBER
ITA No. 797/Chd/2009
Assessment Year : 2005-06
M/s Indian Acrylics Ltd Vs. A.C.I.T. Circle 5(1)
SCO 49-50, Sector 26 Chandigarh
Chandigarh
ITA No. 765/Chd/2009
Assessment Year : 2005-06
A.C.I.T. Circle 5(1) Vs. M/s Indian Acrylics Ltd
Chandigarh SCO 49-50, Sector 26
Chandigarh
(Appellant) (Respondent)
Assessee by Shri Rajesh Garg
Department by: Smt. Jyoti Kumari
Date of hearing 3.12.2013
Date of Pronouncement 3.1.2014
O R D E R
PER T.R.SOOD, A.M
These cross appeals are directed against the order dated 25.5.2009 of the CIT(A), Chandigarh. The appeals were heard together and are being disposed off by this common order.
I T A N o . 7 9 7 / C h d / 2 0 0 9 - As s e s s e e ' s a p p e a l 2 In this appeal the assessee has raised following grounds:
"1 Th at th e L d. C om m is s i on er of I nc o m e T ax ( A pp e a ls ) , h as er r e d i n l aw as we l l as o n f a c ts of th e c as e i n c o nf ir m in g t h e d is a ll o wa nc e of Los s o n s a l e of i nv es tm e nts a m ou nt i n g t o Rs . 6 8, 0 00 /- an d m ak i ng t he ad d it i o n of Rs . 8 79 8 0/ - as s h or t ter m c a p it a l g a in on s a l e o f i nv es t me n ts .
2. Th at th e L d. C om m is s i on er of I nc o m e T ax ( A pp e a ls ) , h as er r e d i n c on f ir mi n g d is a l l ow a n c e u/s 1 4 A i n th e c as e of t he as s es s e e, w her e as S ec t i on 1 4 A is no t a pp l ic a b l e to t h e fac ts of t he pr es e nt c as e .
3. Th at th e L d. C om m i s s i on er of I nc o m e T ax ( A pp e als ) , is n ot j us t if i e d in c o nf ir m i ng th e d is a l l ow a nc e o f in t er es t ex p e ns es t o th e ex t e nt 2 of Rs . 7 0 ,9 8, 3 6 8/- a n d ot h er ex p e ns es t o t he ex t en t of Rs . 4 4 58 14 /- u/s 14 A . Th er ef or e, r e l i ef may pl e as e be al l ow e d t o th e as s es s ee .
4. Th at t he L d . C o m mis s i on er o f I nc o me Tax ( A pp e a ls ) has er r e d i n c on f ir mi n g d is a ll o wa n c e o f th e ex e m pt i on of agr ic u lt ur e i nc om e to t he ex t e nt o f 50 % o n es t i ma t ed b as is a nd tr e at i ng t h e s am e as I nc o m e fr o m O th er So ur c es .
5. Th at t h e L d. Co m m is s i on er of I nc o me T ax ( A pp e a ls ) gr os s ly er r e d i n l aw as w e l l as f ac t s in c on f ir m in g d is a l lo wa nc e u /s 4 0 A( 3) a m ou n ti n g to Rs . 4 6, 80 0 /- . T her e for e s a m e ne e ds to be d e le t ed .
6. Th at t he L d . C o m mis s i on er o f I nc o me Tax ( A pp e a ls ) has er r e d i n l aw as we l l as f ac ts i n c o n f ir m i n g t h e d is a l l ow anc e of Rs . 1 2 ,5 0 ,0 0 0/- i nc ur r e d o n ac c ou n t o f fi l i ng fe es f or i nc r e as e in au t hor i ze d c a p it a l by tr e at i n g th e s a m e as c ap i ta l ex p en d it ur e i ns t ea d o f r ev en u e ex pe n d it ur e .
7. Th at t he L d. C o m mis s i on er o f I nc om e Tax ( A pp e a ls ) has gr os s ly er r ed in c on f ir m i n g d i s a ll o wa nc e of Rs . 2 0, 00 0 /- i nc ur r e d o n ac c ou n t of c ons e nt f ee p a id t o P un j a b Po l l ut i o n C o ntr o l B oar d by tr ea t in g th e s am e as c a pi t al ex p e nd i tur e i ns te a d of r ev e n ue ex pe n d it ur e.
8. Th at t he L d. C o m mis s i on er o f I nc om e Tax ( A pp e a ls ) has gr os s ly er r ed i n la w as w el l a s fac ts i n c on f ir mi n g t he d is al l ow a nc e o f b u s i nes s pr o m ot i o n ex p ens es to th e ex t en t o f Rs . 6, 00 , 00 0/ - i nc ur r ed by t he as s es s e e for t h e b us in es s p ur p os e. T he a d d i ti o n m ay p le as e b e de l et e d.
9. Th at t he L d. C o m mis s i on er o f I nc om e Tax ( A pp e a ls ) has gr os s ly er r ed i n l a w as we l l as f ac ts i n c o nf ir m i ng t h e d is a l l ow a nc e of Rs . 67 , 57 ,7 6 3/- u /s 4 0( a) ( i a) inc ur r ed o n ac c o u nt of fr e ig ht p ay me nts ma d e to t h e tr u c k op er at or s un i on . Th e a d di t io n c onf ir m e d on th is a c c ou n t am o un t i ng t o Rs . 67 ,5 7, 7 63 /- n ee ds t o b e de l et ed .
10 . Th at t he L d. C o m mis s i on er o f I nc om e Tax ( A pp e a ls ) has gr os s ly er r ed i n c on f ir mi n g d i s a ll o wa nc e o f fr e i g ht ex p e ns es t o t h e ex t en t o f Rs . 85 4 45 2 /- u /s 40 ( a) ( i a) . T he a dd i t io n c on f ir m ed o n t h is ac c ou nt n e eds t o be de l et e d.
11 . Th at t he L d . C o m mis s i on er o f I nc o me Tax ( A pp e a ls ) has er r e d i n c on f ir mi n g t h e dis a l l ow anc e of c l a i m of th e as s es s e e fo r Rs . 6, 8 6, 63 , 76 9/ - b e i ng s a le s t ax l i ab i l ity o n ac c o u nt o f s a les t ax ex e m pt i o n/s ubs i dy tr e at i ng t h e s a me as r e v en u e r ec e ip t, w h er e as , t h e s am e is a c a p it a l r ec e ip t. T h er ef or e , t h e a dd i t io n of R s . 6, 86 , 63 ,7 6 9/- may k in d ly b e d e le te d an d r e l i ef b e a l l ow ed t o th e as s es s ee . "
3 Ground No. 1 - After hearing both the parties we find that during assessment proceedings the AO noticed that the assessee has claimed business loss amounting to Rs. 68,000/- on account of disposal of current investments. On examination of the details, it was noticed that the assessee has purchased and sold various mutual funds during Financial Years 2003-04 & 2004-05. The Assessing Officer also called information from various companies for ascertaining applicability of provisions of section 94(7)(b). The assessee was confronted with these informations particularly regarding net gain from mutual funds. It was mainly contended that the losses available in view of the decision of Hon'ble Supreme Court in case of Apollo Tyres Ltd Vs. CIT, 255 ITR 273 (S.C).
3The Assessing Officer noted that this case was distinguishable on facts and the provisions of section 94(7) were clearly applicable because various units were purchased by the assessee within a period of 3 months prior to the record date and sold within 9 months after such date. Accordingly the losses were not allowed.
4 Before the ld. CIT(A) it was mainly contended that the provisions of section 94(7) are not applicable because the assessee has mainly purchased units of daily dividend scheme, weekly dividend scheme. The ld. CIT(A) did not find force in the same and confirmed the disallowance.
5 Before us, the ld. counsel of the assessee referred to provisions of section 94(7) and emphasized that this provision would come into operation only when a person buys or acquires units within a period of three months from the record date. Since the assessee has purchased units of daily dividend scheme, weekly dividend scheme and monthly dividend scheme, therefore, there cannot be record date in such schemes and as such this provision was not applicable.
6 On the other hand, the ld. DR for the revenue strongly supported the order of the Assessing Officer.
7 W e have heard the rival submissions carefully. Section 94(7) reads as under:
"Section 94(7) - W here -
(a) an y person buys or acquires any securities or unit within a period of three months prior to the record date;
(b) such person sells or transfers -
(i) such securities within a period of three months after such date; or
(ii) such unit within a period of nine months after such date;}
(c) the dividend or income on such securities or unit received or receivable by such person is exempt;
Then, the loss, if any, arising to him on account of such purchase and sale of securities or unit, to the extent such loss does not exceed the amount of dividend or income received or receivable on such securities or unit, shall be ignored for the purpose of computing his income chargeable to tax.} 4 It becomes clear from the above that provisions would be attracted only when the units have been purchased within a period of three months from the record date. The issue has been decided by the ld. CIT(A) vide para 1.3 which is as under:
" I h av e c ar e f ul ly c o ns i der e d t h e r iv a l s ub m i s s i ons . Dur i n g t h e c o ur s e o f he ar i ng , th e L d. C o un s e l of t he as s es s ee c ou l d n ot r e b ut t he f i n d in g of th e As s es s in g O f fic er th at t h e un i ts wer e p u r c has e d w it h in t hr ee mo n ths of t h e r ec or d da t e a n d a ls o s o ld w i t hi n 9 mo n ths of t h e r ec or d da t e. I t was ar gu e d by t h e Ld . C o uns e l t h at t her e i s n o r ec or d da t e in c as e o f da i ly d iv i de n d/ w e ek ly div i de n d, etc . Th is c on t en t io n o f t he as s e s s ee is no t ac c ep t ab l e th a t th er e has t o b e a r ec or d d at e or t i me f or d ec l ar a t io n of d iv id e nd . Ev en i f it is a da i ly d iv i d en d s c h em e , ev e n t h en t he r e wo u ld be a p ar tic u l ar t i m e f o r d ec lar a ti o n of d iv id e nd . T h at m e ans , be f or e t h at ti m e, t he p ar t ic u la r u n it wo u l d b e c u m- div i de n d an d af te r t h at t i me i t wo u ld ex - d iv id e nd . S i m il ar w ou l d be t he p os it i on i n r e gar d to we ek ly d iv i d en d , e tc . Th er e is no d is pu t e t ha t t h e a s s es s e e pu r c h as ed t h e u n its wi t hi n 3 m o nt hs of th e r ec or d da te a nd a ls o s o l d w i th i n 9 m o nt h s of th e r ec o r d d a te . T h er ef or e , pr ov is i o ns of s ec t io n 9 4( 7) ar e a pp l ic ab l e.
Since neither the Assessing Officer nor the ld. CIT(A) has examined the details of various schemes, whether any record date was involved or not and have decided the issue on assuming that there is a record date in these schemes. In our opinion, the details of the schemes need to be examined to find out whether any record date was involved or not and therefore, in the interest of justice, we set aside the order of the Ld. CIT(A) and remit the same back to the file of Assessing Officer with a direction to first find out whether any record date is involved and then decided the issue as per law.
8 Grounds No. 2 & 3 - These two grounds relate to disallowance made u/s 14A of Income Tax Act, 1961.
9 After hearing both the parties we find that during assessment proceedings the AO noticed that the assessee has shown dividend income of Rs. 21.78 Lakhs. It was further noticed that the assessee has made investment to the tune of Rs. 13 crores. The Assessing Officer further noticed that the assessee has incurred interest expenditure, therefore, he invoked provisions of section 14A and made proportionate disallowance amounting to Rs. 7,09,83,677/- on account of interest and Rs. 4,45,814/- on account of expenditure.
510 On appeal, the ld. CIT(A) confirmed the addition by following the decision of Special Bench of the Tribunal in case of ITO Vs. M/s Daga Capital Management (P) Ltd, 119 TTJ 289 (Mum) (SB).
11 Before us, the ld. counsel of the assessee submitted that the assessee had sufficient surplus funds for making investments. In any case proportionate disallowance is not possible because Rule 8D was not applicable in the present Assessment year i.e. Assessment year 2005-06. In this regard he relied on the decision of Hon'ble Bombay High Court in case of Godrej & Boycee Mfg. Vs. DCIT, 328 ITR 81 (Bom).
12 On the other hand, the ld. DR for the revenue strongly supported the order of ld. CIT(A).
13 After considering the rival submissions we find that Rule 8D is not applicable in Assessment year 2005-06 i.e. the year before us in view of the decision of Hon'ble Bombay High Court in case of Godrej & Boycee Mfg. Vs. DCIT (supra). However, at the same Hon'ble Bombay High Court also held that when Rule 8D is not applicable, reasonable disallowance can be made. W e further find that during the year the assessee has made investment only to the tune of Rs. 19.40 crores in various mutual funds whereas the assessee had cash profit for Rs. 20 crores, therefore, considering the overall circumstances we are of the opinion that lump sum disallowance of Rs. 5 lakh would meet the ends of justice. Therefore, we set aside the order of the Ld. CIT(A) and direct the AO to make disallowance of Rs. 5 lakhs u/s 14A of the Act.
14 Ground No. 4 - After hearing both the parties we find that during assessment proceedings the AO noticed that the assessee has shown agricultural income of Rs. 51,720/-. The assessee was asked to furnish the details. It was mainly submitted that the assessee has grown mustard crop and amla in the adjacent land at its plant site at Sangrur. The assessee earned income from sale of mustard seeds and ripe crop of amla. The Assessing Officer was of the opinion that full details 6 were not available, therefore, this income was treated as income from other sources.
15 On appeal, the submissions made before the Assessing Officer were reiterated and it was further submitted that the assessee is having about 120 acres of land at the plant site. The ld. CIT(A) noted that the assessee failed to furnished the details but at the same time the amount was very small and therefore, 50% of the agricultural income was accepted.
16 Before us, the ld. counsel of the assessee reiterated the submissions made before the lower authorities.
17 On the other hand, the ld. DR for the revenue strongly supported the order of ld. CIT(A) and submitted that in the absence of any details, the ld. CIT(A) has already granted reasonable relief.
18 After considering the rival submissions we are of the opinion that though it is possible for assessee to grow some crops in the vacant land but at the same time, some details should have been filed. In the absence of details, the ld. CIT(A) has already granted reasonable relief and his order does not require any further interference. Accordingly we confirm the order of the ld. CIT(A).
19 Ground No. 5 - After hearing both the parties we find that during assessment proceedings the AO noticed that the assessee has made certain payments in cash as under:
" Pa g e 1 9 of AO Na m e of Per s o n t o wh om Da te A mo u nt pay m en t m a de J a i K ar n i B ik a n er Ro a d li n es 27 . 12 2 00 4 10 , 00 0 A ga i ns t I nv o ic e N o. 1 7 3 da t ed 16 , 00 0 21 . 12 .0 4 f or Rs . 2 6 ,0 0 0/-
- - d o- - 27 . 12 .2 0 04 10 , 00 0 A ga i ns t I nv o ic e N o. 1 7 2 da t ed 16 , 00 0 21 . 12 .0 4 f or Rs . 2 6 ,0 0 0/-
- - d o- - 20 . 01 .2 0 05 10 , 00 0 A ga i ns t I nv o ic e N o. 2 0 9 da t ed 16 , 00 0 16 . 01 .0 5 f or Rs . 2 6 ,0 0 0/-
- - d o- - 22 . 01 .2 0 05 15 , 00 0 A ga i ns t I nv oic e of Rs .
10 , 47 0 26 , 00 0/- af ter de d uc t i ng T D S.
- - d o- - 22 . 01 .2 0 05 15 , 00 0 - - d o- -
10 , 47 0
- - d o- - 25 . 01 .2 0 05 15 , 00 0 - - d o- -
10 , 47 0
- - d o- - 29 . 01 .2 0 05 15 , 00 0 - - d o- -
10 , 47 0
- - d o- - 27 . 12 .2 0 04 10 , 00 0 A ga i ns t I nv o ic e N o. 1 7 4 da t ed
7
16 , 00 0 16 . 01 .0 5 f or Rs . 2 6 ,0 0 0/-
- - d o- - 27 . 12 .2 0 04 10 , 00 0 A ga i ns t I nv o ic e N o. 1 7 5 da t ed
16 , 00 0 16 . 01 .0 5 f or Rs . 2 6 ,0 0 0/-
Tot a l 2, 3 1, 88 0
The assessee was asked to explain the reasons of cash
payments exceeding Rs. 20,000 shown in the books by two vouchers of Rs. 10,000 and Rs. 16,000. Same was the position in respect of other vouchers. In this regard the assessee submitted its reply vice letter dated 15.11.2007 which is as under:
" In t h is r e g ar d it is s u bm i tt e d t ha t t he as s es s ee has m ad e t h e p ay me n ts to J a i K ar n i B ik a ner Ro ad l i n es t ow ar ds fr e i gh t no t ex c e ed i n g Rs .
20 , 00 0/- i n o ne t i me . E ac h p ay me nt h as t o be tr ea t ed as a n in d e pe n de n t c as h tr a ns ac t io n , t h e r ef or e, s ec t io n 4 0 A( 3 ) o f th e Ac t c ou l d n ot b e ap p l ie d bec a us e i n n o tr a ns ac t io n on e in d iv i du a l p ay m en t h as ex c ee d ed Rs . 2 0 ,0 0 0/- R e l i anc e is p l ac e d on th e j u d gm en t o f t he P un j a b & Ha r y an a Hi g h C o ur t i n t h e c as e o f C IT Vs . B a l Kr is hn a J ag d is h C ha nd 1 64 Tax ma n 4 59 ( c opy e n c l os e d) w her e i t is h e l d by t h e Ho n 'b l e H ig h Co ur t th at v ar i ous c as h p a y me n t m a de to o ne par ty on o ne day w e r e n o t r eq u ir ed to b e c l u bb e d a n d tr ea te d as o ne c as h pay m en t a n d f or t ha t r eas o n, to t al c as h p ay me n t ex c e ed i ng Rs . 2 0, 0 00 /- in a d ay to th a t p ar ty wer e n ot t o b e v i o la t iv e of s ec t i on 4 0 A( 3) .
Th e as s es s e e has ma de th e p ay m en t o f fr e ig ht o ut war ds t o Rs . 83 .4 6 l ac s an d p ay m e nt o f Fr e i gh t for w ar d i n g & c l ear i n g ex p e ns es a m ou n ti n g to Rs . 3 9 3. 58 l ac s , t ot a l fr e i g ht ag gr eg at i n g to Rs . 4 7 7. 04 l ac s d ur i ng th e y ear , o ut of w h ic h p ay me n t of ap pr ox im a te ly Rs . 2 l ac s h av e b ee n ma de i n c as h i n m or e th a n on e i ns t a l lm e nt i n a s i ng l e day t ha t t o o for t he am o un t n ot ex c ee d in g Rs . 2 0, 0 00 /- i n s in g l e tr a ns ac t i on . T he r e was n o ma l a f i d e i n te nt i o n o n th e p ar t o f t he as s e s s ee to av o id tax es i n s uc h ma n ne r . O u t of t h e t o t a l pay m en t m ad e by c he q ues a m o un t in g t o Rs . 4 77 l ac s , t h e p ay me n t o f Rs . 2 l ac s m a d e i n c as h is v er y s m a l l. I t is n o t as c er t ai n a bl e a t th e mo m e nt t ha t why t h es e pay m e nts h av e be e n m ad e i n s uc h ma n ne r . Th es e ar e th e g e nu i n e pay me n ts m ad e by t h e c a s h ier at th e I AL S it e ac c or di n g t o h is ow n w is do m /b u s i nes s n ec es s ity .
Fur th er r eg ar d in g pay me n t m a de t o t he R a j es h K u mar , it is s ub m it te d th at th e s a i d p ay me n t h av e be e n m a de f o r th e d if f er e n t i nv o ic es , no t ag a i ns t a s i ng l e b il l . A l l t h e a f or es a i d p ay me n ts h av e be e n ma de a ft er de d uc t i on of d ue t ax . Co p ies of t h e v o uc her s of T e j a S i n gh , G ur me j S in g h, Pa w an Ku m ar a nd R a j es h Ku m ar ar e enc l os ed .
Fur th er s ub m it t ed t ha t s i nc e t h e tr a ns ac t io n is g e nu i e an d th e p ay e e 's i de nt i ty is es t ab l is he d, i t is r es p ec t f ul ly pr ay e d t h at i n v i ew of th e af or es a i d fac ts an d j ud g me n t of th e Ho n 'b le P u n ja b & Har y a n a H i g h Co ur t i n t h e c as e o f CIT Vs . B a l Kr is h na J ag d is h C ha n d 1 6 4 T ax m a n 45 9 , th e a for es a id ex p en d it ur e m ay p le as e b e a l lo we d t o th e as s es s ee . "
According to the Assessing Officer once the payment involved Rs. 26,000 it was in the knowledge of the assessee that this would be violative of Section 40A(3) and therefore, intentionally two payments have been shown by two vouchers.8
He also distinguished the case law relied on by the assessee and made a disallowance @ 20% amounting to Rs. 46,800/-.
20 On appeal the submissions made before the Assessing Officer were reiterated. However, the ld. CIT(A) did not find any merit in the same by observing that the decision of Hon'ble Punjab & Haryana High Court in case of CIT Vs. Bal Krishan Jagdish Chand, 164 Taxman 459 is distinguishable because in that case there was no finding that part payment has been done deliberately 21 Before us, the ld. counsel of the assessee strongly relied on the decision of Hon'ble Punjab & Haryana High Court in case of CIT Vs. Bal Krishan Jagdish Chand (supra).He further submitted that due to non availability of cash or other reasons, the payments have to be made in part.
22 On the other hand, the ld. DR for the revenue strongly supported the order of the ld. CIT(A).
23 After considering the rival submissions we find that Hon'ble Punjab & Haryana High Court in case of CIT Vs. Bal Krishan Jagdish Chand (supra) had confirmed the finding of the Tribunal wherein following the decision of Hon'ble Orissa High Court in case of CIT Vs. Aloo Supply Co., 121 ITR 680 (Orissa), the Tribunal held that when part payments are made the same cannot be aggregated for disallowance of Section 40A(3). W e further find that Hon'ble Orissa High Court in case of CIT Vs. Aloo Supply Co. (supra) has held as under:
" The w or d " s u m " h as no s t a tu tor y de f in i t io n a n d mus t h av e th e c om m o n par l a nc e me a ni n g. W hil e l e g is l a ti n g, Pa r l ia m e nt tr i es t o c o n v ey its i nt en t io n t hr o u gh ex p r es s wor ds . I t is o ne of t h e w e l l s et t le d r u les o f i nt er p r e ta t io n t ha t w h er e a wor d us e d i n a s ta tu t e c ar r ies mor e t ha n o n e me a n in g , th at me a n i ng w h ic h m ak es t h e pr ov is io n w or k ab l e an d is ne ar es t to t h e l e g is la t i v e i nt e nt i o n, h as t o b e ad op t ed . Th e w or d " s um " i n s .4 0 A( 3) , s ec o nd pr ov is o, o f t h e I.T . Ac t, 1 96 1 , is us ed o n ly to i nd ic at e an am o un t of mo n ey a nd do es n ot r ef er to t h e to t al i ty of t h e ex pe n d it ur e .
Th er e f or e , i f a n as s es s ee mak es p ay me n ts at d i ff er en t t im es d ur i ng t h e day an d he has no i d ea th at h e h as t o p ay to t he s a me pe r s o n o n m or e th a n o n e oc c as i o n, h e c an n ot b e s ub j ec t e d t o t he s t at ut or y pr ov is i o n c on t ai n ed in s . 4 0 A( 3) o f t h e Ac t, u n les s an y o ne pay m en t is a b o v e Rs . 2, 5 00 . T h e s ta t ut or y l i m it o f Rs . 2 ,5 0 0 u nd er s . 4 0 A( 3 ) of t he Ac t a pp l i es to pay m en t m a de to a p ar ty at a t im e a n d no t to th e a g gr eg at e of t he pay m en ts m ad e t o a par ty i n t he c o ur s e o f th e day as r ec or d e d i n t h e c as h bo ok . "9
It is to be noted that law was amended later on w.e.f. 1.4.2009 by Finance Act, 2008 by which the expression was changed from "sum exceeding Rs. 20,000/-" to "expenditure in respect of which a payment or aggregate of payment made to a person in a day." Thus it is clear that because of decision of Hon'ble Orissa High Court and other High Courts law has been amended only w.e.f. 1.4.2009. Therefore, in the present year i.e. Assessment year 2005-06 we are bound to follow the decision of Hon'ble Punjab & Haryana High Court in case of CIT Vs. Bal Krishan Jagdish Chand (supra). Accordingly we set aside the order of the Ld. CIT(A) and delete the addition of Rs. 46,800/-.
24 Ground No. 6 - After hearing both the parties we find that during assessment proceedings the AO noticed that the assessee has debited a sum of Rs. 12,50,000/- for fees paid to the Registrar of Companies for filing of Form 5 for increase of authorized capital from 125 crore to 150 crore. In response to the query it was mainly explained that the fees was paid for the purpose of existing business and not for the new business. The share capital was required to be increased to meet the stipulation of financial institutions under the Corporate Debt Restructuring (CDR) scheme. Reliance was placed on the decision of Hon'ble Karnataka High Court in case of Hindustan Machine Tools Ltd. Vs. CIT, 175 ITR 220 (Kar) and Federal Bank Ltd Vs. CIT, 180 ITR 241 (Ker).
25 The Assessing Officer found no force in these submissions and observed that such expenditure has to be treated as capital expenditure in view of the decision of Hon'ble Supreme Court in case of Punjab State Industrial Development Corporation Ltd. Vs. CIT, 225 ITR 792 (S.C).
26 On appeal the order of Assessing Officer was confirmed by the ld. CIT(A) in view of the decision of Hon'ble Supreme Court.
27 Before us, the ld. counsel of the assessee reiterated the submissions made before the Assessing Officer.
1028 On the other hand, the ld. DR for the revenue strongly supported the order of ld. CIT(A).
29 After considering the rival submissions we find that this issue is squarely covered against the assessee by the decision of Hon'ble Supreme Court in case of Punjab State Industrial Development Corporation Ltd. Vs. CIT(Supra) as well as in case of Brooke Bond India Ltd Vs. CIT, 225 ITR 798 (S.C). The head note of the decision reads as under:
" W hen an ex pe n di t ur e is ma d e n ot o n ly o nc e a n d f or al l , b u t w it h a v ie w to br i n gi n g i nt o ex is t enc e a n as s et or a n a dv a n ta g e for t h e e nd ur i ng be n ef i t of a tr ad e , t he r e is v er y g o od r eas o n ( i n t h e a bs e nc e o f s pec i a l c ir c ums t anc es l e a di n g to a n o p pos i te c onc l us io n) f or tr e at i ng s u c h a n ex p e nd i tu r e as pr o pe r ly at tr i bu ta b l e no t to r ev e n u e bu t to c a p it a l. Bu t th is is n o t a s tr a i t- j ac k e t fo r m u l a an d t h e qu es ti o n w il l h av e t o be de t er m i n ed in th e b ac k dr o p o f t he fac ts o f e ac h c as e . Th e t es t l ai d d ow n c an a t bes t be a g u id e f or d et er m in i ng w h e th er a par t ic u l ar ex pe nd i tur e for ms p ar t of r ev e nu e ex p e nd i tu r e or c ap i ta l ex p e nd i tu r e .
Th e f e es pa i d to t h e R eg is tr a r of C om p an i es fo r ex p a ns i o n of t he c ap i ta l bas e of a c om p any is d ir ec t ly r e l at e d t o t h e c ap i ta l ex pe n d it ur e i n c ur r ed by t h e c om p any a n d al th o ug h i nc i d e nt a lly t h at w ou l d c er t a in ly h e lp i n t h e bus i n es s of th e c o m pa ny a n d m ay a ls o he l p i n pr o f it- m ak i n g, it s t i l l r et a ins t h e c h ar ac te r o f c ap i ta l ex p en d it u r e s i nc e t h e ex p e n di tur e is d ir ec t ly r e la t ed t o t he ex p a ns io n o f th e c a p it a l bas e o f th e c o m pa n y . "
Following the above we decide this issue against the assessee.
30 Ground No. 7 - After hearing both the parties we find that during assessment proceedings the AO noticed that the assessee during the year has paid a sum of Rs. 20,000 as consent fees to Punjab Pollution Control Board (PPCB) for enhancement of plant capacity from 38500 to 45000. On enquiry it was submitted that this was in the nature of revenue expenditure. However, the Assessing Officer observed that since the same was paid for enhancement of capacity, therefore, the expenditure in the nature of capital expenditure and not allowable.
31 On appeal, the addition was confirmed by the ld. CIT(A).
32 Before us, the ld. counsel of the assessee submitted that this expenditure was of recurring nature and was allowable and in this regard he relied on the decision of Hon'ble Punjab & Haryana High Court in case of CIT Vs. Industrial Cables (India) Ltd. 209 CTR 167.
1133 On the other hand, the ld. DR for the revenue supported the order of the ld. CIT(A).
34 After considering the rival submissions we find that similar expenditure was held to be allowable by Hon'ble Punjab & Haryana High Court in case of CIT Vs. Industrial Cables (India) Ltd. (supra) wherein pollution certificate was valid for 15 years but still the expenditure was held to be allowable. Following this decision we set aside the order of the Ld. CIT(A) and delete the addition.
35 Ground No. 8 - After hearing both the parties we find that some business promotion expenditure was disallowed by the Assessing Officer. Out of which some items have been allowed by the ld. CIT(A) which have not been challenged by the Revenue. Now the dispute is in respect of Rs. 5 lakhs paid to Government for conducting Indo Pak Games and Rs. 1 lakh was paid to Mother India Foundation. A sum of Rs. 5 lakh was disallowed by the Assessing Officer because no details were furnished. Further no tax was deducted u/s 40(a)(ia). In respect of addition for a sum of Rs. 1 lakh paid to Mother India Foundation, whole amount was disallowed. However, 50% deduction was allowed u/s 80G of Income Tax Act. Both these actions have been confirmed by the ld. CIT(A).
36 Before us, it was mainly submitted that the amounts were paid for promotion of business and are in the nature of revenue expenditure or can be considered as development expenses.
37 On the other hand, the ld. DR for the revenue strongly supported the order of the ld. CIT(A).
38 W e have heard the rival submissions carefully. First of all the assessee has not submitted any details regarding a sum of Rs. 5 lakh towards Indo-Pak Games. In any case no TDS has been deducted and therefore Section 40(a)(ia) is also applicable and these payments are not allowable. As far as payment to Mother India Foundation is concerned, same is eligible for deduction u/s 80G and 50% deduction has been allowed by the Assessing Officer then this amount cannot be 12 allowed even as business expenditure. Therefore, we find nothing wrong with the order of the Ld. CIT(A) and confirm the same.
39 Grounds No. 9 & 10 - After hearing both the parties we find that during assessment proceedings the AO noticed that the assessee has made payment to Truck Operators Union (TOU) amounting to Rs. 67,57,763/-. The assessee was asked to furnish the details of payment and TDS. In response it was stated vide letter dated 12.12.2007 as under:
"The payment has been made to the truck operators union against the different goods receipts of various truck owners. Since not a single goods receipt exceeds Rs. 20,000/- no TDS has been deducted fromteh payment. Copies of specimen vouchers along with support is enclosed."
It was further stated that freight charges for each of the truck was less than Rs. 20,000/-. However, the truck union was sending the invoices on weekly basis that is why the amount shown was more. The Assessing Officer further noted that perusal of the bill shows that payments were being made by the assessee to the TOU and not to the individual truck owner. Each of the payment was in excess of Rs. 20,000/- though the bill stated that many trucks were supplied. In these circumstances, provisions of section 194C were applicable and the assessee was required to deduct the tax. Since no tax has been deducted, he invoked provisions of section 40(a)(ia) and disallowed a sum of Rs. 67,57,763/-.
40 Further it was also noted that the assessee has made payment of Rs. 8,54,452/- to M/s Chenab Textile on account of freight on which no tax was deducted. It was stated that the payment was made by way of reimbursement of expenses and therefore, the TDS provision was not applicable. It was noted that the assessee was selling goods to Chenab Textile and the goods were dispatched to the said party by different trucks. M/s Chenab Textile made freight payments. M/s Chenab Textile used to send a debit note against the assessee and the amount was paid to them without deduction of TDS. According to the Assessing Officer the freight payment was more than Rs.
1350,000/- and therefore, provisions of section 194C was applicable. Since the assessee has not deducted the tax, therefore, this amount was disallowed.
41 On appeal it was mainly stated that payment was made to the TOU and no element of profit was involved therefore, tax was not deductible. Reliance was placed on the decision of Hon'ble Punjab & Haryana High Court in case of CIT Vs. United Rice Land Ltd., 322 ITR 594 (PH).
42 The ld. CIT(A) considered the submissions and did not find force in the same. He referred to the decision of Hon'ble Supreme Court in case of Associated Cement Co. Ltd. Vs. CIT, 201 ITR 435 (S.C) and confirmed the action of the Assessing Officer.
43 Before us, the ld. counsel of the assessee reiterated the submissions made before the lower authorities and strongly relied on the decision of Hon'ble Punjab & Haryana High Court in case of CIT Vs. United Rice Land Ltd. (supra).
44 On the other hand, the ld. DR for the revenue strongly supported the order of ld. CIT(A) and also relied on the decision of Hon'ble Supreme Court in case of Associated Cement Co. Ltd. Vs. CIT, (supra).
45 W e have heard the rival submissions carefully and do not find force in the submissions of the ld. counsel of the assessee. The decision of Hon'ble Punjab & Haryana High Court in case of CIT Vs. United Rice Land Ltd. (supra) is totally distinguishable. In that case the assessee was engaged in the business of manufacturing and export of rice and for sending the goods to the Ports the assessee used to engage trucks through transporters. The consideration was charged by the transporter from the truck owner and or operator and hire charges were paid by the assessee directly to the truck owner and therefore, it was held that there was no contract between the assessee and local purchaser and truck owner. But in case before us, the payment has been made directly to the TOU from whom the trucks have been arranged most probably at fixed 14 rate therefore, the contract has to be assumed between the assessee and the TOU because all the payments have been made to the TOU. Even the bills were issued by the TOU are not in respect of trip but they are in terms of Rs. 50,000 for various trucks put together. Since the assessee has not submitted further details therefore, only assumption is that the assessee had a contract with the TOU and paid freight accordingly. therefore, we confirm the addition of Rs. 67,57,763/-.
46 As far as the payment to M/s Chenab Textile is concerned a different legal principle would be applicable. In that case the assessee was selling goods to Chenab Textile and the goods were sent on FOR basis but the freight was paid by M/s Chenab Textile which in turn was raising debit notes to the assessee against the payment of freight. Therefore, what ever TDS was required to be deducted from the truck that should have been deducted by M/s Chenab Textile. As far as the assessee is concerned, it was only reimbursement of expenditure incurred by M/s Chenab Textile and therefore, no TDS was required to be deducted and therefore, we set aside the order of the Ld. CIT(A) and delete the addition of Rs. 8,54,452/-.
47 Ground No. 11 - After hearing both the parties we find that during assessment proceedings the AO noticed that the assessee has attached a note along with the income tax return which read as under:
" Not e: 1. T h e c o mp a n y has b e en g r a nt e d s a l e tax ex e m pt i on f or a per i o d of 1 0 y e ar s fr o m 1 9 . 01 . 19 9 9 t o 1 8. 0 1. 2 00 9 by t he Ex c is e & T ax a t io n De pt t. T h e a b ov es a id s al es t ax ex e m pt i on has b ee n gr a nt e d u nd er t he In d us tr i a l I nc en t iv e S c he m e 19 9 6 of G ov t . of P u n ja b wi t h a v i ew t o pr o m ot e gr o wt h of i n dus tr y in t he s ta t e. Th is s a l es t ax ex e m p ti o n is bas e d up o n t h e fix e d c a pi t al inv es t m e nt . T he a m ou n t has b ee n s et o ff ag a i ns t n o ti o na l s al es tax l i ab i l ity . T he n o t i on a l s a l es t ax l i ab i l ity of Rs . 6, 8 6, 63 , 76 9/ - i n r es p e c t of s a l es o f f in is h ed go o ds f or t he pr ev i o u s y ear 20 0 4- 05 be i n g i n t h e na t ur e of s u bs i dy is a c ap i ta l r ec e i pt n ot l i ab l e t o tax . As p er l e ga l a dv ic e a nd in v ie w of t h e d ec is i o n of t h e T r i b un a l i n t he c as e o f D CIT v s . R e l ia nc e I n dus tr ies L td . IT AT, Mu m b a i 'J ' S pec i a l B enc h 82 TTJ 76 5 , a nd H on 'b l e IT AT D el h i 'F ' B e nc h i n th e c as e o f B hus a n S t ee ls & St r i ps L td . Vs . DC IT, 91 T TJ 1 0 8 a n d Ho n 'b l e Ch a nd i ga r h T r i b un a l i n t h e c as es of A bh is h ek I n dus tr ies Lt d . Vs . AC IT i n IT AT No . 10 1 7, 1 0 81 / Ch d/ 9 7 an d V ir e ndr a A gr o C h em ic a ls Lt d. V s . AC IT i n I TA N o. 1 9 ,1 4 2, 3 47 /C h d/ 9 7, t he d e du c ti o n of n ot i o na l s a l es t ax l ia b i l ity is be i n g c l ai m ed by th e as s es s e e . "15
The assessee was asked to justify this deduction and in response it was stated vide letter dated 16.8.2007 as under:
" " S a l es T ax I nc e nt iv e Rs . 68 6 .6 4 l ac s Re g ar d i n g th e c l a i m of s a l es t ax ex e m pt i o n of Rs . 6 86 . 64 lac s by th e as s es s e e d ur in g t he y ear . It is s u bm i tt e d as un d er :-
To bu i l d a c o nd uc t iv e in d us tr i a l c li m at e to at tr ac t fr es h inv es t m e nt an d a ls o f ac i l i ta te t he gr o wt h an d ex p a ns io n of i nd us tr y in t he s t at e an d of f s et t in g t h e l oc at i on a l dis a dv a n ta g es o f t h e s t at e, c r e at i ng m or e j o bs op p or t u n it i es f or th e y ou t h, th e P u n ja b S ta te G ov er nm e nt h as an n o unc e d a nu m ber o f inc e nt iv e pac k a ges u nd er I n dus tr ia l P o l ic y an d In c en t iv e Co d e 1 9 96 , on e of w h ic h is th e S a les Tax S ubs i dy Sc he m e. U n der t he s a id s c h e me , t h e c om pa ny h as be e n gr a nt e d s al es t ax ex e m pt i on for a per i o d o f 1 0 y e ar s fr o m 19 .0 1 .1 9 99 to 18 . 01 .2 0 09 . T he s a l es t ax ex e m pt i o n h as b ee n g r an t ed un d er t he In d u s tr i a l I nc en t iv e Sc he m e 1 99 6 of G ov t . of Pu n j ab w i t h a v i e w to pr o m ot e gr ow th of in d us tr y in t h e s tat e. Th is s a l es tax ex e m pt i on is b as e d u p on t h e f ix ed c a p it a l i nv es t m en t. Th e am o un t h as b e e n s e t of f ag a ins t n ot i on a l s a l es t ax l i ab i l ity . T h e n ot i on a l s a les t ax l i a bi l i ty of R s . 68 6 .6 4 l ac s i n r es p ec t o f s a l es of f i n is h e d g oo ds for t he pr ev i ous y e ar 20 0 4- 05 b e in g i n t h e na t ur e o f s ubs i dy is a c a pi t al r ec e i pt an d t hus no t ta x ab l e i n t he h a nds of t he as s es s e e.
It is fur t her s ub m i tt ed th at t h e is s ue h as a lr ea dy b e en d ec i d ed i n fav o ur of t h e as s es s ee by t he Ld . C IT( A pp e a ls ) , Ch an d i gar h, i n a pp e a l n o. 36 1 /0 5- 06 for th e A. Y . 20 0 3- 0 4 v id e its or d e r da te d 20 .0 9 .2 0 06 . C opy of th e or d er is e nc l os e d for y o ur r ef er enc e p le as e . C o py of th e S a le s Tax Ex em p ti o n Ce r t if ic at e is a ls o enc l os ed y our per us a l p le as e. "
The Assessing Officer further confronted the assessee that why the issue should not be decided against the assessee in view of the decision of Hon'ble Punjab & Haryana High Court in case CIT V. Abhishek Industries Ltd. 286 ITR 1 (PH). The assessee submitted that though the issue has been decided by the Hon'ble High Court against the assessee but a Special Leave Petition has been filed before the Hon'ble Supreme Court. The Assessing Officer did not find force in this submission and following the decision of Hon'ble Jurisdictional High Court in case of CIT V. Abhishek Industries Ltd. (supra) decided the issue against the assessee. Action of the Assessing Officer was confirmed by the ld. CIT(A).
48 Before us, the ld. counsel of the assessee reiterated the submissions made before the Assessing Officer.
49 On the other hand, the ld. DR for the revenue relied on the order of the ld. CIT(A). He also referred to the decision of CIT V. Abhishek Industries Ltd. (supra).
1650 W e have heard the rival submissions carefully. Since an identical issue has been decided by the Hon'ble Punjab & Haryana High Court in case of CIT V. Abhishek Industries Ltd. (supra), wherein it was held as under:
" ( i i) Th at t he b e n ef it u n de r r u l e 4 A of t h e P un j ab G en er a l S al es T ax ( De fe r m e nt an d Ex e m pt i on) Ru l es , 1 99 1 ac c r ue d f or a p er io d of 10 y ear s fr o m t he d a te o f pr od u c ti o n a nd t he qu a nt u m w as fix e d at 3 0 0 p er c en t of th e f ix ed c ap i ta l i nv es tm e nt f or c at eg or y A i nd us tr i es an d 1 5 0 p er c en t o f th e f ix e d c a p it a l inv e s tm e nt for c a te g or y B i nd us t r i es to b e av a i l ed of wi t hi n 7 y ea r s . B es i d es t his , t her e w as n o ot h er d oc u m en t or m at er ia l t o s ubs t an t ia te t h e as s e s s ee 's c o nt e nt i on t h at th e s a l es t ax s u bs idy of t h e k i nd un d er c o ns i der a ti on s h ou l d b e tr e at e d as c a p it a l r ec e i pt an d no t a r ev e n u e r ec e i pt or to s ho w th at t he k in d of s ubs i dy un d er c ons i d e r at i on was g iv e n t o t he as s es s e e f or c r e at i on o f c a p it a l as s e ts as a n a i d to s et t in g u p o f th e u n it . R at h er , i t was ev i d en t th at t h e s ubs i dy was a n op er at i o na l s ubs i dy pr ov id e d by t h e S t at e a f ter th e i n d us tr y ha d b ee n s et up an d c o m m enc e d c o m mer c i a l pr o duc t io n. In t h e a bs e nc e o f m at er ia l t o s ho w t ha t t he s ubs i dy was t o e na b l e i t to c ar r y o ut c ap i ta l inv es t me n t i t c ou l d n ot b e pr es um e d t ha t s uc h a s u bs idy w as a c a p it a l s ubs i d. "
Following the above, we decide this issue against the assessee.
51 In the result, appeal of the assessee in ITA No. 797/Chd/2009 is partly allowed.
ITA No. 765/Chd/2009 - Revenue's appeal52 In this appeal the revenue has raised the following grounds:
"1 On the facts and in the circumstances of the case and law, the ld. CIT(A) has erred in allowing appeal of the assessee without appreciating the facts of the case.
2 On the facts and in the circumstances of the case and law, the ld. CIT(A) has erred in deleting an additions of Rs. 6,99,08,597/- u/s 145A as the assessee was not routing various duties /taxes through profits and loss account.
3 On the facts and in the circumstances of the case and law, the ld. CIT(A) has erred in deleting an addition on account of disallowance of expenses on business promotion.
4 It is prayed that the order of the ld. CIT(A) be set aside and that of the Assessing Officer may be restored."
53 After hearing both the parties we find that during assessment proceedings the AO examined the issue of valuation of stock and treatment of MODVAT and ultimately found that the Excise duties and other dues etc. have not been included in the valuation closing stock, therefore, he included 17 these sums in the closing stock but refused to add the same in the opening stock. However, the ld. CIT(A) deleted the addition by following the decision of Hon'ble Punjab & Haryana High Court in case of CIT Vs. Nahar Spinning Mills Ltd. in ITA No. 503 of 2007.
54 Before us, the ld. DR for the revenue referred to the provisions of section 145A and submitted that the provision was of mandatory nature. He further submitted that the decision in case of CIT Vs. Nahar Spinning Mills Ltd. (supra) was rendered for Assessment year 1999-2000 and Section 145A was introduced w.e.f. 1.4.1999. In that decision amended provision of the Act was not considered. The amended provision has been duly considered by the Hon'ble Delhi High Court in case of CIT Vs. Mahavir Alluminium Ltd. 297 ITR 77 (Delhi). This decision was followed by Hon'ble Bombay High Court in case of CIT V. Mahalaxmi Glass W orks P Ltd. 318 ITR 116 (Bom).
55 On the other hand, the ld. counsel of the assessee strongly supported the impugned order and also relied on the decision of Hon'ble Punjab & Haryana High Court in case of CIT Vs. Nahar Spinning Mills Ltd. (supra). Alternatively he contended that if the value of excise duty etc. is held to be includible in the closing stock then the opening stock should also be held to be adjusted accordingly.
56 W e have considered the rival submissions carefully. Section 145A of the Act reads as under:-
" 14 5 A. No tw i ths ta n d i ng any th i n g to t h e c on tr ar y c on ta i n ed in s ec t i on 14 5 ,--18
( a) th e v al u at i o n o f p ur c h as e a nd s a l e o f go o d s an d i nv e n tor y f or th e p ur pos es of de te r m in i n g t he i nc o m e c har g e ab l e u n der th e h e ad " Pr of its an d ga i ns o f b us in es s or pr o f es s i o n " s h a l l be --
( i) i n ac c or da nc e w it h th e m et h o d o f ac c ou n ti n g r e g u lar ly em p l oy e d by t h e as s e s s ee ; a nd ( i i) fur th er a d jus te d to i nc l ud e th e a mo u nt of a n y tax , du ty , c es s or f ee ( by w h at ev er na m e c a l le d) ac t u a lly p ai d or i nc ur r e d by t h e as s es s ee to br in g t h e g oo d s to t h e p lac e of its l oc at i on an d c o n d it i on as on t h e da t e o f v a lu at i o n.
Ex pl a n at i on .-- For th e pur pos es o f t h is s ec ti o n, any t ax , du ty , c es s or f ee ( by w h at e v er n a m e c a l l ed) u nd e r any l aw fo r t he ti m e b e i ng i n f or c e , s h a ll i nc lu d e a l l s uc h pay m e nt no tw i ths t an d in g a ny r i gh t ar is i n g as a c o ns eq u enc e to s uc h pay m en t.
( b) i nt er es t r ec eiv e d by a n as s es s ee o n c om p ens a t io n or on en h anc e d c o m pe ns at i on , as th e c as e ma y be , s h a l l b e de e me d t o b e th e i nc o me of t he y ear in w h ic h i t is r ec e iv e d . "
57. The plain reading of the above provision would show that it is of mandatory nature and mandates that any tax, duty etc. has to be included in the value of the closing stock. However, at the same time the Hon'ble Delhi High Court in the case of CIT Vs. Mahavir Aluminum Ltd (supra) held as under;-
" He l d, d is m is s in g th e a pp e a l, t ha t par a gr a ph 2 3 .1 3 of t h e gu i d anc e no te o n t ax au d it un d er s ec t i on 44 A B is s ue d by th e I ns t i tu te of Ch ar ter e d Ac c o un ta n ts o f In di a ma d e i t c l ear th at wh e nev er any ad j us t m en t is ma d e i n t he v a lu at i o n of i nv en to r y , t h is w il l a ff ec t b o th th e o pe n in g as we l l as th e c l os i ng s to c k . If any ad j us t m e nt was r eq u ir ed to be ma d e by a s t at ut e, ef fec t s h ou l d b e g iv e n t o i t ir r es p ec tiv e o f a ny c ons e qu e nc es on t h e c om p ut at i o n of i nc o m e f or t ax p ur p os es . S ec t i on 1 45 A be g i ns w it h a n on obs t an te c la us e a nd t her e for e t o g iv e e ff ec t t o s ec t i o n 14 5 A, i f t he r e is a c h a ng e i n t he o pe n in g s to c k as o n Mar c h 31 , 19 9 9, t her e m u s t n ec es s a r i ly b e a c or r es p o nd i n g ad j us t m e nt m a de in t h e o pe n in g s t oc k as o n Apr i l 1 , 19 9 8. Th us , th e qu es ti o n o f do u b le d ed uc t i o n d i d no t ar is e s i nc e no a dj us tm e nt was m ad e by t he as s es s e e i n t he pr of i t a n d l os s ac c o u nt f or t he y ear en d i ng Mar c h 3 1, 19 9 8. "
58 The above clearly shows that adjustment to be made u/s 145A is to be made both in respect of opening stock as well as closing stock. The same view has been taken even by the Hon'ble Bombay High Court in the case of CIT Vs Mahalaxmi Glass W orks P. Ltd (supra). Following these decisions, we set aside the order of Ld. 19 CIT(A) and direct the Assessing Officer to adjust the value of opening as well as closing stock and only the net difference should be added to the income of the assessee.
59 In the result, appeal of the revenue in ITA No. 765/Chd/2009 is partly allowed.
60 In the result, both the appeals of the assessee and the Revenue are partly allowed.
Order pronounced in the open court on 3.1.2014 Sd/- Sd/-
(SUSHMA CHOWLA) (T.R. SOOD)
JUDICI AL MEMBER ACCOUNTANT MEMBER
Dated : 3.1.2014
SURESH
Copy to: The Appellant/The Respondent/The CIT/The CIT(A)/The DR