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TMI Blog2013 (8) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the respective additions in the three years to the file of the Assessing Officer for examination of facts and to decide accordingly. Assessee should be given due opportunity for explaining the above contentions - Decided in favour of assessee. Addition towards incorrect accounting of stock - Held that:- The MOU between the assessee and the VSSC, a Government organization, was examined and there is no dispute with reference to the fact that assessee is maintaining a metal bank for procuring strategic raw-material and using them as and when there was order from VSSC for its supply. It is also on record that the VSSC is providing funds and assessee only procures them on behalf of the VSSC and keeps sufficient stock in its godown. Just because the stock was procured by the assessee, it does not mean that it has ownership on the stock, which pertained to VSSC - While accepting that the assessee is maintaining the stock of material on behalf of others and only charging fixed amount for this service, and as such, apparently, there is no need to admit the same in their books as stock in trade, he confirmed the same holding that the assessee did not specify how the balance figures ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spatches to the sub-contractors and accordingly the Assessing Officer brought the same to tax. It was informed that the assessee has recognized income on concluded contracts during the year and also income on estimated basis on despatches to sub-contractors on percentage completion method which are in various stages of completion and these two streams of income were already accounted as income in the Profit Loss Account. The Assessing Officer erroneously took the difference for bringing to tax. For example, it was submitted that the assessee has accounted the sale in respect of Long Production Cycle Contract concluded during the year and included in the sales at Rs.45.18 crores and further shown deemed sale at Rs.37.68 cores. The Assessing Officer brought to tax the difference of Rs.7.50 crores of the above amounts as income, whereas the entire amount of Rs.82.86 crores was offered as income, and therefore, the addition does not survive because the amounts were already offered as income. The detailed note submitted by the learned counsel before us explaining the facts reads as under:- "1. M/s,Mishra Dhatu Nigam Ltd.(hereinafter referred to as the appellant- company) has explain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.29.14 crores. During the course of assessment proceedings, the assessee-company was asked about the discrepancy of RS.5.25 crores regarding despatches to sub-contractors." 4. The amount of RS.29.14 crores is not the amount of despatches to sub- contractors, but it is the amount of concluded sales in this year in respect of Long Production Cycle Contracts. 5. However, in response to the query, the appellant-company has explained about the method of accounting which it has been following consistently for several years in the recognition of income in respect of despatches to sub- contractors. However, the Assessing Officer felt that the appellant-company has suppressed the sales in respect of despatches as he compared the concluded sales in respect of Long Production Cycle Contracts with the figures of deemed sales in respect of despatches to sub-contractors With this impression, the Assessing Officer made the following additions for the Assessment Years 2006-07, 2008-09 and 2009-10:- Particulars Assessment Year 2006-07 2008-09-2009 Deemed Sale shown 13.6 23.89, 37.68 Sales in respect of Production Cycle c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted by the Assessing Officer in treating the difference between the concluded sales and estimated sales on despatches made to sub-contractors as not accounted, whereas both the streams of income were already taken to the Profit Loss Account. If this aspect is found to be correct, there is no need to make any addition, as the assessee has offered both the streams of income in the respective Profit Loss Accounts. Since there seems to be a mistake committed in the course of assessment proceedings and also first appellate proceedings, in the interests of justice, we set aside the issue to the file of the Assessing Officer to examine the contentions of the assessee and in case it is found that the assessee has already accounted for the income as stated above, the question of making any further addition does not arise at all. With these directions, we restore the respective additions in the three years to the file of the Assessing Officer for examination of facts and to decide accordingly. Assessee should be given due opportunity for explaining the above contentions. 7. Second issue, which arises only in the appeal for assessment year 2009-10, containing in grounds Nos.12 to 20 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks and the value of the stocks should be credited. As pointed out by the Assessing Officer, the closing value of stocks is being shown neither in the books of appellant nor in the books of M/s. VSSC. The present confirmation filed by the appellant form M/s.VSCC show that the item-wise quantity of stocks shown by the appellant is matching with their records, accounted and taken in their books of account. However, this does not specify how the balance figures are shown in the books of M/s. VSSC and what is the effect of this confirmation. In the absence of these details, not much credence can be given to this confirmation filed now from M/s.VSSC. Therefore, I am not inclined to accept the submissions of the appellant on this aspect and accordingly, I confirm the addition of Rs.20,91,10,000/- made by the Assessing Officer. 9. Before us, learned counsel for the assessee reiterated the contentions urged before the Revenue authorities, whereas the Learned Departmental Representative relied upon the orders of the Assessing Officer and the CIT(A). 10. On perusing the facts placed on record and the rival contentions, we are unable to agree with the action of the Assessing Officer and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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