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TMI Blog2014 (11) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... udice to the award by the Arbitrator - The assessee has to offer the balance of sale consideration in the year of arbitration award - What is contemplated to be taxed under the Income-tax Act is the real income and unless income due to the assessee has been crystallized, it cannot be brought to tax on an estimate basis - the assessee has received only ₹ 700/- PMT from M/s.Kalyani Steels Ltd. – thus, the actual price received by the assessee only shall be treated as income of the assessee during the relevant AY as the assessee has to offer difference of price charged on the final price arrived at by the Arbitrator in the year of award – Decided in favour of assessee. Sales made to M/s.Shivashankar Minerals – Held that:- The agreements between the assessee and M/s.Kalyani Steels Ltd., and also M/s.Shivashankar Minerals, are similar and the fixation of price of ore was also governed by similar set of facts - the actual price received by the assessee only is to be brought to tax. Addition on valuation of closing stock – Held that:- There is no finding by any of the authorities on this contention and this contention needs verification by the AO – thus, the matter is remitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the transactions with M/s.Kalyani Steels Ltd., are as per the agreement dated 17-1-2002 according to which the prices shall be revised and re-fixed on first of April each year taking into consideration the prices of MMTC but that the company's claims on M/s.Kalyani Steels Ltd., regarding various clauses of the agreement including revision of rates are under arbitration. The AO observed that during the financial year 2007-08, the assessee-company had sold 5,94,928 MT of C-ore to M/s.Kalyani Steels Ltd., at the rate of ₹ 700/- per MT whereas the market rate of iron ore was ₹ 1250/- per MT as on 4-4-2007. Since the price charged to M/s.Kalyani Steels Ltd., was only ₹ 700/- Per MT, the assessee was asked to produce the details of debit notes raised and the claims made before the Arbitrator, if any, during the financial year 2007-08. The assessee was also asked to explain the circumstances for selling C-ore at low rate to M/s.Kalyani Steels Ltd., The assessee replied that the company had sold C-ore to M/s.Kalyani Steels Ltd., at the rate of ₹ 700/- per MT as an interim price based on the resolution passed by the company in one of the Board meetin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18.4 We have heard both parties and carefully perused and considered the material on record. We find from the record that the assessee has furnished all the details required by the Assessing Officer. From the details on record in respect of the additions made to the returned income on account of sales to M/s. Kalyani Steels Ltd below market price, we agree with the observations of the Assessing Officer that the price charged for C-ore is below the market price. We also observe that the Assessing Officer has recorded that Karnataka Lok Ayukta in its report on the Mining Scam alleged malpractices on the part of the officials of the assessee company. From the submissions made by the assessee, a Govt of Karnataka Undertaking, it can be inferred that the sales of C-ore to Kalyani Steels Ltd are supported by invoices raised, entries in the books of accounts audited by Chartered Accountants. The system of accounting followed by the assessee is the Mercantile System as per the provision of section 145 of the Act and we find that no fault has been found therein nor has it been rejected. Nowhere in the order of assessment or the material on record do we find anything to establish that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficials of the assessee-company which is a Government of Karnataka undertaking and inquiries were initiated against the relevant officials. The Tribunal has also held that no evidence whatsoever has been brought on record by the AO to establish that the assessee has realized from the sale of C-ore to M/s.Kalyani Steels Ltd., more than what is recorded in the assessee's books of account and therefore the Tribunal had confirmed the order of the CIT(A) in deleting the addition. During the course of hearing, we had noticed from the order of the CIT(A) that the assessee had initially raised Debit Notes at ₹ 1057/- PMT and had reduced the rate to ₹ 700/- PMT during the penultimate month of the financial year. The learned counsel for the assessee had stated that this has been done in view of the Board Resolution dated 18/3/2008. The learned counsel for the assessee was directed to file copy of the Board resolution which has been filed before us. On perusal of the said Board resolution, we find that MMTC price was ₹ 1058 PMT prevailing on 1st April 2007 for supplies to be made during the financial year 2007-08 which is in conformity with the marketing agreement and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition on account of valuation of closing stock, brief facts are that during the assessment proceedings, the assessee-company was asked to furnish the details of closing stock as on 31-3-2008 and from the perusal of the details of tenders finalized against the Iron Ore Fines during March 2008 and from the details filed, the AO found that the assessee had called for tenders against its stock of Iron Ore Fines and it gave delivery order in the month of March/April 2008. Thus he came to the conclusion that the assessee has closing stock of iron ore but the same was not recorded in the books of account. The AO held that the assessee company is supposed to take the value of the closing stock at the end of each financial year and such value should be adopted as the closing stock to arrive at the true and correct income. He observed that the assessee-company had stock of iron ore of 1,10,000 MTs at the end of financial year and he did not accept the contention of the assessee that its stock was already sold by tenders and only delivery was pending. He, therefore, valued the stock at ₹ 25/- PMT and arrived at the closing stock at ₹ 27,50,000/- and brought it to tax as th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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