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TMI Blog2013 (8) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... s fully justified in deleting the disallowance to the extent of Rs. 5,55,033/-, which related to the annual insurance expenses – Revenue appeal rejected – Decided against the Revenue. Valuation of closing stock - The facts related to this issue in brief are that the Assessing Officer noticed that the assessee had shown closing stock of Rs. 2,15,95,145/- in the trading account of IMFL/Beer - The permit fees, which was payable on per bulk liter basis had not been included in the valuation of closing stock – Held that:- Assessing Officer was not justified in treating the permit fee relating to the transmission of the stock from godown to the shops as a part of the closing stock. Moreover, whatever permit fee was paid by the assessee that was for the sale materialised, therefore it could not have been added while valuing the closing stock, which was to be surrendered/ returned on the next day following the end of the year to the Excise Department/distillery at cost price – Revenue appeal dismissed – Decided against the Revenue. Depreciation on written down value of the carats - Assessee in the revised depreciation chart claimed the depreciation at Rs. 37,000/- on carats, based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n various overdrafts accounts, therefore, the assessee was asked to explain the reasons for not charging the interest on loans/funds advanced to various other AOPs and parties. The assessee submitted that basically, it was withdrawals by the members of the existing AOP from their capital contribution, on which no interest has been paid by the assessed but for convenience of the accounting procedure, it was debited to the new AOP. It was further submitted that in addition to the member's capital, the assessee was also having non interest bearing funds. The A.O. did not find merit in the submissions of the assessee by observing that the assessee was suffering huge interest burden on one hand and it has advanced interest free loans to other AOPs and individuals, on the other hand. The Assessing Officer had given a chart showing date, amount, cumulative amount, number of days and rate of interest charged at pages 3 to 5 of the assessment order, wherein the amount of interest on advances made to the parties had been worked out at Rs. 6,44,515/-. The said amount was disallowed out of the interest claimed by the assessee and added to the total income. 3. Being aggrieved, the assessee ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and registration expenses. The facts related to this issue in brief are that the Assessing Officer during the course of assessment proceedings, noticed that the assessee had debited Rs. 12,73,967/- under the head vehicle registration and insurance expenses and the details filed by the assessee revealed that the entire amount was related to the insurance and registration charges paid for new vehicles purchased during the year, therefore, it should have been capitalised. When confronted, the assessee submitted that the vehicle insurance and registration expenses were incurred for new assets purchased during the year, the assessee AOP was formed for one year only as the contract for sole selling right of liquor was awarded to the assessee for one year and the assets purchased during the year were used wholly and exclusively for its business purposes. It was further stated that the assessee could not claim depreciation on capitalisation of the next year, therefore, debited all the expenses in the profit and loss account treating the same as business expenditure u/s 37 of the Act. However, the Assessing Officer was of the view that the assessee claimed the expenses on the registration a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l appeal. 11. The next issue vide ground No. 3 relates to the deletion of addition made by the Assessing Officer on account of under valuation of closing stock. The facts related to this issue in brief are that the Assessing Officer noticed that the assessee had shown closing stock of Rs. 2,15,95,145/- in the trading account of IMFL/Beer. He asked the assessee to furnish details of valuation of closing stock. From the said details, the Assessing Officer noticed that the permit fees, which was payable on per bulk liter basis had not been included in the valuation of closing stock. He was of the view that permit fees paid was a part of purchase price and ought to have been included in arriving at the value of closing stock. The reliance was placed on the judgment of the Hon'ble Supreme Court in the case of CIT Vs. British Paints India Limited 188 ITR 44. The Assessing Officer, accordingly made the addition of Rs. 10,98,197/-. 12. The assessee carried the matter to the learned CIT(A) and submitted that the assessee was engaged in liquor wholesale and retail trading business and in this type of business, stock has to be transferred from godown to its shops according to their requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide ground no. 4 relates to the depreciation on written down value of the carats. The facts relating to this issue in brief are that the Assessing Officer during the assessment proceedings, noticed that the assessee in the revised depreciation chart claimed the depreciation at Rs. 37,000/- on carats, based on the adjustment made on account of excess depreciation claimed in the assessment year 2005-06. He further noticed that the assessee had claimed depreciation on carats @ 100%, however, it was allowable @ 50%. He accordingly, added the difference of Rs. 1,26,924/- to the income of the assessee. 18. The assessee carried the matter to the Learned CIT(A) and submitted that some disallowances were made on account of depreciation on carats and accordingly written down value of fixed assets was changed as on 31/3/2005 and as the assessee filed its income tax return for the assessment year 2006-07 on 13/3/2007 i.e. before finalisation of the scrutiny assessment for the assessment year 2005-06, therefore, it could not take effect of the above change in written down value of the fixed assets in the return of income for the assessment year 2006-07. However, during the course of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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