9911796707
TMI Blog2012 (11) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of additional income on account of gross profit on sale of stock." 3. The assessment order reveals that the assessee is a company engaged in the business of trading of cloth. It filed e-return of income on 15-11-2007 declaring total loss of Rs.17,14,793/-.The case was selected for scrutiny and the assessment was framed u/s. 143(3) and taxable income was determined at Rs.4,75,140/-. 4. On scrutiny of the details furnished by assessee the A.O. observed that assessee had transferred closing stock of 3,37,000 meters valued Rs.1,48,36,961/- at cost to its sister concern (Airr Xmedia Ltd. ).The assessee submitted that the assessee had transferred the materials as it had stopped operations since long and the design and colours of materials o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant argued that since such a small quantity has been sold, it shows that cloth was not easily saleable in the market. From this argument, it is also seen that the stock was not entirely non-saleable also. The appellant's sister concern has sold almost 1/3rd of the total stock and hence the appellant transferred this stock to the sister concern at book value which is not totally justifiable. However, this is not a question of undervaluation, the valuation of closing stock where the valuation can be corrected as per law. This is not a question of booking of loss or payment of expenses where provisions of Section 40A(2)(b) can be invoked. It is a case of sale to a sister concern. If the sale is at price less than the market value, no ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case is that the assessee had transferred the stock of old stock of cloth at book value to its sister concern which according to the A.O. should have been transferred at cost plus profit. The assessee's submission is that the stock was old and non-moveable stock which it had been carrying forward from earlier years has not been disputed by the Revenue by bringing any material to the contrary on record. Further, it is a settled law that Revenue cannot claim to put itself in the armchair of the businessman and assume the role to decide as to how to run the business. A businessman cannot be compelled to maximise its profits. CIT (A) has also given a finding that the case of the Revenue is that it is of a sale to sister concern at a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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