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2018 (1) TMI 1380 - AT - Income TaxValuation of stock - advertisement Expenditure Legal 15.65 Lacs 14.80 lacs are hit by the clause (d) of Para 13 of AS 2 and the remaining amount of 11, 84, 600/- is hit by the clause (c) of Para 13 of AS 2. These contentions were raised before CIT (A) also and were noted by CIT (A) on page 5 of his order but while deciding the issue as per Para 9.3 of his order learned CIT (A) has decided the issue without examining and deciding the applicability of clauses (c) and (d) of Para 13 of AS 2. Hence set aside the order of CIT (A) on this issue and restore the matter back to his file for a fresh decision. - Decided in favour of assessee for statistical purposes.
Issues:
Assessment Year 2012-13 - Classification of Expenses - Advertisement Expenditure, Legal & Professional Fees, Site Administrative Expenditure - Applicability of Accounting Standard (AS) 2 on Inventory and Section 145A of Income Tax Act. Analysis: The appeal pertains to the Assessment Year 2012-13 and concerns the classification of three types of expenses incurred by the assessee: Advertisement Expenditure amounting to ?15.65 lacs, Legal & Professional Fees of ?14.80 lacs, and Site Administrative Expenditure of ?11,84,600. The CIT (A) determined that all these expenses should be capitalized to Inventory as per AS-2 on Inventory in conjunction with section 145A of the Income Tax Act. The assessee raised arguments before the CIT (A) regarding the nature of these expenses, emphasizing that certain expenses should be excluded based on the provisions of Para 13 of AS-2. However, the CIT (A) made a decision without thoroughly examining the applicability of clauses (c) and (d) of Para 13 of AS-2. The ITAT Judge, Shri A.K. Garodia, upon considering the submissions of both the assessee's representative and the Revenue's representative, set aside the CIT (A)'s order on this issue. The matter was remanded back to the CIT (A) for a fresh decision with a detailed and reasoned order specifically addressing the applicability of clauses (c) and (d) of Para 13 of AS-2 after providing both parties with a fair opportunity to present their case. In conclusion, the ITAT Bangalore allowed the appeal of the assessee for statistical purposes, emphasizing the need for a comprehensive review of the applicability of accounting standards and provisions of the Income Tax Act to determine the treatment of the expenses in question. The decision highlights the importance of a thorough analysis and reasoned order in tax matters to ensure proper application of relevant laws and standards.
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