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2013 (12) TMI 1554 - AT - Income TaxValue adopted by the Assessee for part of the stock in accordance with the order of the Hon ble Bombay High Court - Held that - Even the stock of iron ore at that time was also divided. The liability arising due to the order of the Hon ble Bombay High Court, in our opinion, cannot be a business liability as the price realized by the Assessee can also not be the market price but the price put by the Hon ble Bombay High Court is for the purpose of settling the dispute mutually among the family members and distribute the various assets and liabilities by putting certain value to them. It cannot be regarded to be sale at the open market. If any loss is incurred by the Assessee, that cannot be regarded to have been incurred during the course of the business. Commissioner (Appeals) was not correct in directing the Income-tax Officer to revalue the opening stock also consistently along with the closing stock when the assessee wanted to adopt the works cost method for the relevant assessment year. Direction to be given to the assessing officer to take the opening stock of ROM and screened fines for the assessment year 2007-08 in consequence of making an adjustment to the closing stock as on 31.3.2006 - Held that - Value of the closing stock of the impugned assessment year will become the value of the opening stock of the succeeding assessment year. Since the appeal before us relate to the assessment year 2006-07 our jurisdiction are limited to give the finding in respect of the ground of appeal relating to the impugned assessment year we cannot decide the grievance of the assessee relating to the assessment year 2007-08. This issue can be taken by the assessee during the assessment year 2007-08 in accordance with the law before the appropriate authorities. As we have already confirmed the addition in the valuation of the closing stock for the A.Y 2006-07, we direct the assessing officer to take the same value of the opening stock as on 1.4.2006 for determining the profits and gains of the business of the assessee for computing the taxable income.
Issues Involved:
1. Adjustment of closing stock for the stock returned to third parties. 2. Assessability of M/s. Marriott International Inc. USA in India. 3. Tax deduction at source for payments made to M/s. Marriott International Inc. 4. Valuation of closing stock of ROM and Screened Fines. Issue 1: Adjustment of Closing Stock for the Stock Returned to Third Parties The Revenue contended that the CIT(A) erred in directing the Assessing Officer (AO) to allow the assessee to reduce its closing stock by the amount of stock returned to third parties in the assessment year in which it is returned. The Tribunal upheld the CIT(A)'s order, noting that the assessee's declaration was conditional on the deduction being allowed in the year the stock was returned. Since no contrary evidence was presented, the Tribunal dismissed the Revenue's ground. Issue 2: Assessability of M/s. Marriott International Inc. USA in India The Revenue argued that CIT(A) erred in holding that M/s. Marriott International Inc. USA was not assessable in India. The Tribunal found that CIT(A) did not hold that Marriott International was not assessable in India, and thus, the ground did not arise from CIT(A)'s order. Consequently, this ground was dismissed. Issue 3: Tax Deduction at Source for Payments Made to M/s. Marriott International Inc. The Revenue contended that the CIT(A) erred in allowing the assessee's argument that the Indo-US DTAA exempts the assessee from deducting tax at source for payments to M/s. Marriott International Inc. The Tribunal noted that the services provided by Marriott were not in the nature of "fees for included services" or royalty under the Indo-US DTAA. The Tribunal upheld CIT(A)'s decision, noting that the services did not involve transfer of technical knowledge, experience, skill, etc., and thus, no tax was deductible at source. Issue 4: Valuation of Closing Stock of ROM and Screened Fines The assessee challenged the addition of Rs. 4,91,26,733 to the closing stock of ROM and Screened Fines, arguing that the valuation should be based on the High Court order. The Tribunal found that the High Court's price was not the market price, as it was determined for family settlement purposes and not influenced by market forces. The Tribunal upheld the AO's valuation of the stock at cost, as it was lower than the market value. The Tribunal also addressed the assessee's alternate plea to adjust the opening stock for the subsequent year, directing the CIT(A) to decide this issue after considering submissions from both parties. The Tribunal dismissed the ground for adjusting the opening stock for 2007-08, stating that the issue should be raised in the appropriate assessment year. Conclusion: - The Tribunal dismissed the Revenue's appeals and partly allowed the assessee's appeal for 2006-07 for statistical purposes, directing the CIT(A) to re-evaluate the opening stock issue. - The Tribunal allowed the assessee's appeal for 2007-08, directing the AO to take the adjusted closing stock value from 2006-07 as the opening stock for 2007-08. Order Pronouncement: The order was pronounced in the open court on 23.12.2013.
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