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TMI Blog2014 (12) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ing by the AO that the profits cannot be correctly deduced on the basis of the method of valuation followed by the assessee - The provisions of section 145 have not been specifically invoked - CIT(A) has rightly held that in the case of cotton yarn average weighted cost of closing stock may be taken and the valuation of closing stock should be worked out on the basis of weighted monthly cost - the method of valuation of closing stock of raw material has been accepted by the assessee – the order of the Tribunal is upheld – Decided against revenue. Admissibility of deduction u/s 80I on duty drawback – Receipts attributable to conduct of any manufacturing activities of assessee or not – Held that:- Following the decision in M/s Liberty Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent company is deriving income from manufacture, purchase and export of cotton hosiery goods. For the accounting year ending 31.3.1989 relevant to the assessment year 1989-90, a return declaring an income of ₹ 69,870/- was filed on 1.1.1990. It was noticed by the Assessing officer during the assessment proceedings that the assessee had valued the yarn as well as own manufactured finished products at average cost and not on cost basis. Similarly, finished goods purchased from the market which were lying in the closing stock were also found to be valued at average manufacturing cost though such products were purchased from the market at a much higher price. Accordingly, the Assessing officer held that the respondent had undervalued i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Incentives Less Shipment Cost. The finished goods lying in the factory were directed to be valued at cost inclusive of Overheads and Interest or Net Realisable Value, whichever was lower. With regard to deduction under section 80I of the Act, the CIT(A) allowed part relief and directed that duty draw back should be bifurcated between manufacturing and trading activities for computing the deduction. Not satisfied with the order, both the revenue and the respondent filed appeals before the Tribunal. Vide order dated 4.3.1999, Annexure A.3, the Tribunal dismissed the appeal of the revenue on the issue of value of closing stock of yarn and finished product. The Tribunal partly allowed the respondent's appeal. With reference to stock of fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 and of this Court in CIT vs. Fazilka Cooperative Sugar Mills Limited, (2002) 255 ITR 411, the issue has been rightly decided in favour of the assessee. However, as regards question No.(2), it was fairly accepted that the issue stands concluded by the judgment of the Apex Court in Liberty India's case (supra). 6. After hearing learned counsel for the parties, we find that with regard to question No.(1), the Tribunal while accepting the plea of the assessee came to the conclusion as under:- 5. We have carefully considered the submissions made by both the parties on this issue and have perused the orders of the tax authorities. We have also perused the various documents placed in the paper book to which our attention was invited d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.3 of the order that in the case of cotton yarn average weighted cost of closing stock may be taken and the valuation of closing stock should be worked out on the basis of weighted monthly cost. It is also observed that the said method of valuation of closing stock of raw material has been accepted by the assessee and it has been stated before us that the assessee is not aggrieved on this part of the valuation. 7. In view of the aforesaid finding which has not been shown to be erroneous or perverse in any manner by the learned counsel for revenue, no fault could be found in the approach adopted by the Tribunal. Accordingly, question No.1 is decided against the revenue and in favour of the assessee. 8. In view of the fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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