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TMI Blog2012 (2) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the agent has discontinued the business the chances of anybody approaching the agent to get those product is remote and once the assessee closed his account discontinuing the business, the products which were in stock naturally would not have any value. Also, technological obsolence and cannibalization of equipment to spare parts due to non supply appears plausible in the realm of business and such occurrence is not rare. Therefore, the loss claimed by the assessee is allowable as deduction. Decision in favour of the Assesses. Payment of Gratuity and PF - Covered u/s 36(1)(va) 2(24) or not? - Deduction u/s 43B - Payment of provident fund and gratuity was not considered as allowable deduction u/s 43B by Tribunal - HELD THAT:- Relying on the judgement of COMMISSIONER OF INCOME-TAX VERSUS SABARI ENTERPRISES [ 2007 (7) TMI 169 - KARNATAKA HIGH COURT] , they are liable for deduction u/s 36(1)(va) read with section 2(24) (x), the same can be claimed deduction by the assessee only if the contribution is paid within the due date for claiming exemption. Decision in favour of Assessee. - ITA. NO. 3202 OF 2005 - - - Dated:- 28-2-2012 - MR. N. KUMAR AND MR RAVI MALIM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue as well as the assessee preferred independent appeals before the Tribunal. The appeal preferred by the Revenue was dismissed and the appeal preferred by the assessee was allowed. Aggrieved by the said order, the Revenue has preferred two appeals against the order dismissing their appeal as well as the order partly allowing the assessee s appeal. 3. The 1st substantial question of law which arises for consideration reads as under:- 1) Whether Tribunal was correct in holding that income from sale of scrap newspaper, stationery and battery etc., should be treated as profits and gains from exports and deduction under Section 10A of the Act should be allowed? This question also arose for consideration in the assessee s appeal in ITA No.507/2002 disposed off on 25th August, 2010, where it was held that the assessee was entitled to deductions as income derived therefrom from the aforesaid business. For the reasons set out therein, this substantial question of law is answered in favour of the assessee and against the Revenue. 4. The second substantial question of law is as under:- Whether the Tribunal was correct in holding that income received by the assessee fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction. So far as Component No.2 is concerned, it is the loss on account of stock which had no resaleable value and stock worth ₹ 2,04,95,641/- has been valued at ₹ 25,00,000/- and the loss of ₹ 1,75,95,641/- was claimed. The second component is a basic question of valuation of stock. The valuation done is less than 1/9th of the original cost/worth. The valuation principle stipulate that the stock has to be valued either at cost or at market value. However, the assessee has valued at only ₹ 25,00,000/-. When he was asked to furnish the particulars he failed to furnish the same and contended it is valued at a lump sum of ₹ 25,00,000/- and that the printed figures are not available. The assessing authority held as the items are all imported they are presumably of high value if one were to go by the name of M/s. Apple Products. The business was discontinued only in February, 1998. Therefore the assessee s valuation was not accepted and the said loss was disallowed. The third component is with reference to debts due on sale of M/s. Apple Products provided for resulting in a write off of ₹ 1,94,43,448/-. The assessing officer held that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e once the principal himself in carrying on the business and that the agent has discontinued the business the chances of anybody approaching the agent to get those product is remote and once the assessee closed his account discontinuing the business, the products which were in stock naturally would not have any value. That is the reason why the Tribunal accepted the case of the assessee that due to discontinuance of product business and technological obsolescence and cannibalization of equipment the spare parts due to non-supply of Apple products is a plausible reason. Such occurrence is not rare in business and therefore was justified in allowing the loss claimed by the assessee as deduction. We do not see any substantial question of law involved in this case as it is purely a question of fact. Accordingly, the third question is answered in favour of the assessee and against the Revenue. In so far as component No.3 is concerned, that was an amount due to the assessee from the customers and it was not forthcoming. Therefore in their accounts they have written off the said dues in accordance with law and therefore they were entitled to deduction. Accordingly the 4th substantial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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