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TMI Blog2016 (1) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... AO. Hence in these facts and circumstances , we deem it fit and appropriate, in the interest of justice and fair play, to set aside this issue to the file of the Learned AO to decide this issue afresh in accordance with law. The assessee is at liberty to file additional evidences and documents to explain the cash found during the course of survey with reference to its cash book of various divisions before the Learned AO. - Decided in favour of assessee for statistical purposes. Applicability of provisions of sec.40(ia) - whether applicable only to amounts of expenditure which are payable as on 31st March of every year and it cannot be invoked to disallow expenditure which has been actually paid during previous year without deduction of TDS as held by CIT(A) - Held that:- We find that the provisions of section 40(a)(ia) of the Act have been held to be applicable even for amounts paid before the end of the previous year by the decision of the Jurisdictional High Court in the case of CIT vs Crescent Export Syndicate (2013 (5) TMI 510 - CALCUTTA HIGH COURT ). Accordingly the ground raised by the revenue stands allowed. However, the alternative argument of the Learned AR that the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of closing stock and accordingly made an addition of ₹ 2,27,246/-. On first appeal, the Learned CITA held that all direct expenses are to be included for determining the final cost price for the purpose of valuation of closing stock. The Learned CITA also held that the assessee had agreed for the said disallowance in the assessment. Aggrieved, the assessee is in appeal before us on the following ground:- 8. The CIT(A) is wrong to confirm the addition of ₹ 2,27,246/- to raise the value of the closing stock without corresponding direction that the opening stock for the next year would have arise with that addition. He also failed to hold valuation of closing stock made at cost or market price need not be disturbed . 4.2. The Learned AR argued that the valuation of closing stock has been made at the lower of cost or market price in accordance with the generally accepted business practices and the said method is regularly employed by the assessee over the years. He argued that there is no change in the method of valuation of closing stock adopted by the assessee during the assessment year under appeal. He further argued that the Learned AO had stated erroneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer to make adjustment of unutilized Modvat credit to the opening stock and thus ignoring the ratio laid down in Melmould Corporation v. CIT [1993] 202 ITR 789 (Bom) wherein it was held that changing the value of opening stock will lead to chain reaction and hence the same should not be done ? 2. This question has been dealt with and answered by the Delhi High Court in the case of CIT v. Mahavir Alluminium Ltd. [2008] 297 ITR 77 (Delhi). This question concerns the method of valuation of inventory as contemplated by section 145A of the Income-tax Act. In the case before the Delhi High Court, the Assessing Officer contended that section 145A did not permit the assessee to make a change in the valuation of the opening stock as on April 1, 1998, though it permitted a change in the closing stock as on March 31, 1999. The question before the Delhi High Court was that the adjustment of excise duty could be made in the opening stock also. In this connection, relying upon the decision of the Privy Council in the case of CIT v. Ahmedabad New Cotton Mills Co. Ltd. AIR 1930 PC 56, the Delhi High Court took a view that to give effect to section 145A, if there is any chan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closing stock of goods. Accordingly, the ground no. 8 raised by the assessee is allowed for statistical purposes. 5. The next issue to be decided in this appeal is as to whether an addition could be made in the sum of ₹ 7,82,442/- towards cash found during the course of survey. 5.1. The brief facts of this issue is that during the course of survey, cash of ₹ 5,48,923/- in Automobiles Division and ₹ 2,33,519/- in Telecom Division was found and inventorised by the survey team. The Learned AO asked the assessee firm to reconcile the above cash found at the time of survey with its regular books of accounts and the assessee could not do so during assessment proceedings. Accordingly, an addition u/s 68 of the Act was made towards unexplained cash credit. On first appeal, the Learned CITA upheld the addition made by the Learned AO. Aggrieved, the assessee is in appeal before us on the following ground:- 9. The CIT(A) is wrong to confirm the addition of ₹ 7,82,442/- being the cash found at the close of the survey work at the respective counters on the date of survey despite the fact that the cash were the business cash (survey did not stop normal busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances , we deem it fit and appropriate, in the interest of justice and fair play, to set aside this issue to the file of the Learned AO to decide this issue afresh in accordance with law. The assessee is at liberty to file additional evidences and documents to explain the cash found during the course of survey with reference to its cash book of various divisions before the Learned AO. Accordingly, the ground no. 9 raised by the assessee is allowed for statistical purposes. This appeal of the assessee is allowed for statistical purpose. ITA No. 211 / 2013 Revenue appeal 6. The revenue has raised the following ground before us :- The Ld. CIT(A) has erred in Law and circumstances of this case in holding the provisions of sec.40A(ia) are applicable only to amounts of expenditure which are payable as on 31st March of every year and it cannot be invoked to disallow expenditure which has been actually paid during previous year without deduction of TDS. 6.1. We find that the provisions of section 40(a)(ia) of the Act have been held to be applicable even for amounts paid before the end of the previous year by the decision of the Jurisdictional High Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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