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TMI Blog2013 (12) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the assessment year 2006-07 filed shows method of valuation of closing stock as cost or net realizable value whichever is less - Against the column 'details of deviation, if any from the method of valuation prescribed under section 145A and effect thereof on the profit and loss' it is clearly mentioned nil – This shows that there was no change in method of valuation of closing stock – Decided against Revenue. - ITA No. 1282/CHD/2010 with CO.No. 47/CHD/2010 - - - Dated:- 27-11-2012 - Ms. SUSHMA CHOWLA AND SHRI MEHAR SINGH, JJ. For the Appellant : Shri N. K. Saini For the Respondent : Shri Sudhir Sehgal Order Mehar Singh (Accountant Member).- The present appeal filed by the Revenue and the cross-objections filed by the assessee, are directed against the order dated August 30, 2010, passed by the learned Commissioner of Income-tax (Appeals) under section 250(6) of the Income-tax Act, 1961 (in short "the Act"). 2. In appeal, the Revenue has raised the following grounds of appeal : "1. That the learned Commissioner of Income-tax (Appeals) has erred in law and on facts in deleting the addition of Rs. 75,00,000 made by the Assessing Officer on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Amritsar, as mentioned at Nos. 3 and 5 at page 7 of the impugned assessment order, pertains to dispute of undervaluation of closing stock of land. The learned Departmental representative, further, stated that a civil suit against the assessee-appellant was filed on March 18, 2006 by M/s. Amritsar Rayon and Silk Mills P. Ltd. However, there was no verdict of the Court up to March 31, 2006, the date of valuation of closing stock of land. The learned Departmental representative submitted that there was no interim stay in respect of such land from the court up to March 31, 2006. The learned Departmental representative, further, referred to paragraph 2.3 at page 10 of the order passed by the Commissioner of Income-tax (Appeals) dated August 30, 2010 which contains findings of the learned Commissioner of Income-tax (Appeals). The learned Departmental representative was of the opinion that in the absence of any interim stay by the court, the valuation of the land in question cannot be done, as has been done by the assessee. The learned Departmental representative also referred to pages 72, 74, 77, 89 and 90 of the paper book to refer to certain documents in the matter. The learned Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) on November 23, 2007 at total income of Rs. 45,47,330. Consequent to order under section 263 dated November 18, 2008, the Assessing Officer framed assessment under section 143(3) of the Act on October 13, 2009 at an income of Rs. 1,20,47,330. The Assessing Officer made an addition of Rs. 75,00,000 on account of undervaluation of the closing stock of land by the assessee. 7. The learned Commissioner of Income-tax (Appeals) reversed the findings of the Assessing Officer, as is evident from the findings reproduced hereunder : "2.3 I have considered the facts of the case and submission of the authorised representative. The assessee is dealing in real estate. During the year after taking into account the opening stock, purchases, sales, the Assessing Officer noticed that the assessee has undervalued its closing stock of land by Rs. 75 lakhs. The working of these details have been stated by the Assessing Officer on pages 7 and 8 of the assessment order should not be made. The assessee submitted its reply which has been reproduced by the Assessing Officer in the assessment order. The assessee contended before the Assessing Officer that land purchased from Balwinder Singh a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission of the assessee, I am of the opinion that the Assessing Officer was not right in rejecting the assessee's various contentions and making the addition of Rs. 75 lakhs. It is a fact that there was a legal dispute over the land which was in front of a big piece of land on which the assessee wanted to develop a colony. Unless the legal dispute is resolved the assessee could not have developed the colony which as claimed by the assessee would have caused huge losses to the assessee. It is not a case of pure legal dispute over land but the court had also granted the stay which was confirmed by the hon'ble Punjab and Haryana High Court. The assessee had paid Rs. 70 lakhs to M/s. Amritsar Rayon and Silk Mills P. Ltd. and another Rs. 70 lakhs were kept on bank fixed deposit receipt to cover further losses. In fact as claimed an amount of Rs. 2.30 crores was paid to settle the dispute. From what is stated above it cannot be said the assessee did not have a clear title over the land and the same was not free from all encumbrance. Land was encumbered by legal dispute which had made a dent in the price of land. Regarding the Assessing Officer's contention that suit was filed on March 18, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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