2010 (12) TMI 1160 - AT - Income Tax

Summary

Issues involved: Appeal by revenue and cross objection by assessee against the order of CIT(A) for A.Y. 2006-07.

Issue 1: Addition made by AO u/s 2(24)(x) read with sec. 36(1)(va) on account of PF & ESIC.
- Revenue's appeal dismissed as disallowance was made prior to filing return of income.
- Decision based on Hon'ble Delhi High Court and Supreme Court rulings.

Issue 2: Addition made by AO u/s 2(22)(e) on account of deemed dividend.
- Assessee only beneficial owner, not registered owner of shares.
- CIT(A) deleted addition, citing legal and beneficial ownership criteria.
- Decision supported by Mumbai Special Bench ruling.

Issue 3: Acceptance of additional evidences in violation of rule 46A of I.T. Rule.
- CIT(A) erred in accepting additional evidences.
- Ground dismissed without further discussion.

Issue 4: Addition made by AO on account of under valuation of closing stock.
- AO observed under valuation but no impact on income.
- Assessee followed Accounting Standard AS-2 for stock valuation.
- AO admitted no impact on profit and loss account.
- Addition rightly deleted by CIT(A) as per Accounting Standard AS-2.

Conclusion: Revenue's appeal dismissed on all grounds. Cross objection withdrawn by assessee. Departmental appeal and cross objection both dismissed.