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TMI Blog2014 (2) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... o.126 of 2013 (O&M) - - - Dated:- 21-1-2014 - Ajay Kumar Mittal And Gurmeet Singh Sandhawalia,JJ. For the Appellant : Mr. Rajesh Katoch, Advocate. For the Respondent : Mr. S. K. Mukhi, Advocate. ORDER Ajay Kumar Mittal,J. 1. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short, the Act ) against the order dated 27.11.2012, Annexure A.III passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A' Chandigarh (in short, the Tribunal) in ITA No.1282/CHD/2010 for the assessment year 2006-07, claiming following substantial questions of law:- (i)Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in law in deleting the addition of Rs. 75 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and deleted the entire addition by relying upon the documentary evidence. It was further held that there was legal dispute between the assessee and M/s Amritsar Royon and Silk Mill Pvt. Limited. The said firm had filed suit on 11.3.2006 against the assessee and as such the assessee had valued the closing stock at cost price or net realization value whichever was less. It was further held that the assessee had not changed the method of valuing the closing stock as was evident from the Audit report 'Details of deviation if any'. Not satisfied with the order, the revenue filed appeal before the Tribunal. Vide order dated 27.11.2012, Annexure A.III, the appeal was dismissed. Hence the present appeal by the revenue. 3. Learned counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed that assessee has undervalued its closing stock of land by Rs. 75 lacs. The working of these details have been stated by the Assessing Officer on page 7 and 8 of the assessment order. Assessing Officer asked the assessee to explain why addition of Rs. 75 lacs should not be made. Assessee submitted its reply which has been reproduced by the Assessing Officer in the assessment order. Assessee contended before the Assessing Officer that land purchased from Balwinder Singh and Harjinder Singh fell into legal dispute as one M/s Amritsar Rayon Silk Mills (P) Limited filed a suit against the assessee stating that they had already paid sum of Rs. 70 lacs as byana for the same property and therefore, claimed that the registration executed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ift the tax liability of a particular year to a subsequent year. In view of above Assessing Officer rejected various contentions of the assessee and made addition of Rs. 75 lacs. 2.5 Assessee in the course of appellate proceedings has filed its detailed reply which has been reproduced above. Assessee after repeating the facts and history of the case has stated that as a result of legal dispute price of land had gone down which has been given effect while valuing closing stock. From what is discussed above and detailed submission of the assessee, I am of the opinion that Assessing Officer was not right in rejecting assessee's various contentions and making the addition of Rs. 75 lacs. It is a fact that there was a legal dispute over the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter was settled at Rs. 2.30 crores. In fact, M/s Amritsar Rayon Silk Mills (P) Limited had filed a suit for recovery of Rs. 1,08,00,000/- being the double of advance amount paid as earnest money to the tune of Rs. 54 lacs. In view of above discussion, I am of the opinion that assessee has rightly valued the closing stock of aforesaid land less by Rs. 75 lacs. Now coming to the issue of method of valuation of closing stock which Assessing Officer says was cost price in earlier years, assessee has stated that there is no change in the method of valuing of closing stock. It has consistently been following method of valuing closing stock as Cost or Market price whichever is less. Infact tax audit report for the assessment year 2006- 07 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the findings of the AO, and the CIT(Appeals), in the matter, we are of the considered opinion that the order passed by the CIT(Appeals) does not suffer from any infirmity and hence the same is upheld and the appeal of the revenue is dismissed. 8. In the present case, it was not disputed that civil suit was filed by M/s Amritsar Royon and Silk Mill Pvt. Limited in which the assessee was impleaded as respondent No.4. There was an interim order passed by the trial court which was affirmed by this Court as well. In such a situation, the assessee was justified in reducing the valuation of the closing stock. The assessee had reduced the closing stock and the same was taken as opening stock for the assessment year 2007-08 which was accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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