2021 (10) TMI 954 - AT - Income Tax

Undervaluation of closing stock of free sugar, levy sugar and molasses on account of non-inclusion of education cess and higher education cess - Application of provision of section 145A - CIT-A directed the AO to consider the opening value of the stock for the next year which is the closing stock for the current year as per the revised valuation - HELD THAT - Since the ld. CIT(A), while deciding the issue has followed the order of his predecessor for A.Y. 2011-12 in assessee's own case and the ld. Counsel for the assessee could not throw any light as to the fate of such order, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the CIT(A) with a direction to find out as to what is the fate of the issue in A.Y.s 2008-09 and 2011-12. He shall decide the issue on the basis of the order for A.Y.s 2008-09 and 2011-12 which has been followed by the CIT(A) and as per fact and law, after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The Grounds of appeal No. 1 and 2 raised by the assessee are accordingly allowed for statistical purposes. Correct head of income - AO treating interest earned from Cooperative Societies and Bank as income from other sources instead of business income - HELD THAT - This ground of appea taken by the assessee is decided against the assessee by the order of the Tribunal in assessee's own case for AY 2001-02. In view of the above submission by the ld. Counsel for the assessee and in absence of any objection from the side of the ld. DR, the ground No. 3 raised by the assessee is dismissed.

Summary

Issues Involved:
1. Valuation of closing stock for Assessment Years 2010-11 and 2012-13.
2. Treatment of interest earned from Cooperative Societies and Banks as income from other sources instead of business income.

Analysis:

Issue 1: Valuation of Closing Stock for Assessment Years 2010-11 and 2012-13:

- The appeals were against the CIT(A) orders for the years 2010-11 and 2012-13 regarding the valuation of closing stock of free sugar, levy sugar, and molasses.
- The AO noted discrepancies in the valuation of closing stock concerning excise duty, education cess, and higher education cess.
- The AO found that the assessee undervalued the closing stock of free sugar, levy sugar, and molasses by not including education cess and higher education cess.
- The CIT(A) upheld the AO's action citing precedents from previous years.
- The Tribunal found merit in the assessee's contentions and directed the CIT(A) to reevaluate the issue considering the previous orders and facts, providing an opportunity to the assessee.
- The Tribunal allowed the grounds of appeal related to the valuation of closing stock for both assessment years.

Issue 2: Treatment of Interest Earned from Cooperative Societies and Banks:

- The assessee raised concerns about the treatment of interest earned from Cooperative Societies and Banks as income from other sources instead of business income.
- The Tribunal referred to a previous order where a similar issue was decided against the assessee.
- Considering the lack of objection from the Department, the Tribunal dismissed the grounds related to the treatment of interest earned.

In conclusion, the Tribunal partially allowed the appeals related to the valuation of closing stock for the Assessment Years 2010-11 and 2012-13. The Tribunal directed a reevaluation by the CIT(A) for the valuation issue and dismissed the grounds concerning the treatment of interest earned from Cooperative Societies and Banks based on previous decisions.