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TMI Blog2016 (9) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... this reason stock of finished goods was for an amount of ₹ 7,19,336/- was destroyed. However the AO found that some sale out of the opening stock of finished goods was made during the relevant year. Therefore the claim of assessee was declined by AO. However, L’d CIT(A) deleted the addition made by AO as the amount involved of meager amount of ₹ 24,501/- only. We find that assessee has written off the closing stock of finished goods by debiting in its profit and loss a/c. We also find that business of assessee was of fruit and vegetable and raw materials used for the business was of green mango which was highly perishable. The business of assessee was severely affected for the reason discussed above. From the facts we also find that assessee had to sale its property under distress to repay the loan of the bank. As such, we find that the business of assessee as decreasing on yearto- year basis. Accordingly, we agree with the contention of L’d AR that the opening stock of finished goods became unfit for human consumption and same was duly debited in the profit and loss a/c of assessee. L’d DR has not brought anything contrary to the find of L’d CIT(A). Addition on acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pense such as flooring, construction of partition, painting etc. in different financial years, as detailed below:- Financial year 1998-99 Rs.2,74,071/- Financial year 1999-00 Rs.2,60,443/- Financial year 2000-01 ₹ 89,000/- Total Rs.6,23,514/- The assessee capitalized in its books of account the aforesaid expenses by making additions to the block of buildings, the assessee claimed depreciation allowance on the aforesaid amounts in its books of account. 4. In the instant case, Director of assessee-company was the owner of the land with godown but assessee was the owner of the expense incurred on flooring etc., as discussed above. The Director of assessee-company has sold land with godown along with the renovation work carried out by assessee for a consideration of ₹ 1,05,08,013/-. The sale consideration was written as a whole in the registered deed of conveyance without bifurcation the sale value attributable to the land and attributable to the building. During the course of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice of the building of Rs.64,97,321/- Less cost of acquisition of ₹ 2,89,849/- Balance STCG of ₹ 62,07,472/- Accordingly, AO worked out STCG of ₹ 62,07,472/- and added to the total income of assessee. 5. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who has deleted the addition by observing as under:- 2.4 The appellant has submitted a copy of the balance sheet and profit loss for the year ended 331.3.2007, conveyance deed for purchase of the said Ghusuri property by the appellant s Managing Director Mr. M.N.Mitra and the sale thereof by him, which have been duly scrutinized. The facts stated above are fully supported by these two deeds. In the sale deed between Shri M.N.Mitra and the purchaser M/s Rajendra Trading Co., the appellant s name does not appear at all. The sale deed clearly states that it is Mr. Mitra and not the appellant who was the owner of the said property. The sale consideration was agreed and paid at ₹ 40.00 Lacs. The memo of sale consideration clearly states that a sum of ₹ 27,60,00/- was paid by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceed received by Director of the assessee-company by adopting some basis and worked out sale consideration for ₹ 64,97,321/- for the building. The AO treated the sale proceed as towards the building of which the assessee was deemed owner and he worked out STCG for ₹ 62,07,472/- (649732 289849/-). However, same was deleted by L d CIT(A) on the ground that assessee was not the owner of the land and building. Now issue before us arise so as to whether the sale proceed received by Director of assessee-company was also forming part of the sale against the building occupied by assessee-company. From the facts of the case, we find that the assessee, after having incurred renovation expense on the land and building belonging to the Director of assessee-company, made the place as usable for the purpose of its manufacturing activities. The assessee was treated as deem owner for the limited purpose of claiming of depreciation. As such, assessee-company never became the owner of the land and building. Therefore in our considered view sale proceeds received by Director of the assessee-company is taxable in the hands of Director and not in the hands of assessee-company. In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration for the purpose of working out the capital gains should be the valuation as assessed by Stamp Valuation Authority in terms of Sec. 50C of the Act. The AO has worked out the capital gains by taking sale consideration of ₹ 57.86 lakh and added to the capital gains to the total income of assessee. 10. Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas assessee submitted that the provision of Sec.50C of the Act empowering to the AO to consider and substituting the Stamp Valuation for the sale consideration as stated in the conveyance deed came into force on 01.10.2009 and therefore same is not applicable for the year under consideration. Ld. CIT(A) after considering the contention of assessee has deleted the addition made by AO by observing as under:- 4.3 I have carefully considered the app s submission including the agreement for sale, Deduction of Conveyance, copies of which have been submitted along with the appeal. It is a fact that the appellant sold its Unit No.2 comprising of Land 7 Building in terms of agreement dated 26.12.2006 and handed over the possession thereof in the month of March, 2007 and received net consideration of ₹ 48 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of M/s Bagri Impex Private Ltd. (supra) is no longer applicable to the instant case. He relied on the order of Ld. CIT(A). 12. We have heard rival contentions and perused the materials available on record. At the outset it was observed that this issue is pending before Hon ble Supreme Court in the case of Bagri Impex Pvt. Ltd. in civil appeal no. 17138/2013 and subsequently Hon'ble Supreme Court has stayed this judgment of Hon'ble jurisdictional High Court vide order 10-05-2013 by following observations:- Interim order of stay granted on 10th May 2013, shall continue until further orders . In view of the above, Ld. counsel for the assessee fairly stated that let Hon'ble Supreme Court decide the issue and by that time the matter can be remitted back to the file of AO for fresh adjudication in term of the decision of Hon'ble Supreme Court. On this, Ld. CIT DR has not objected to the same. Accordingly, we set aside this issue to the file of the AO to await the decision of Hon'ble Supreme Court and decide the issue accordingly. This issue of assessee s appeals is remitted back to the file of AO and allowed for statistical purposes. 13. Nex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of old stock and working progress which was found fit for human consumption and it was for just an amount of ₹ 24,501/-. The assessee destroyed all the stock of finished goods became unfit for human consumption. Therefore, it was written off in its books of account. Accordingly, L d CIT(A) observed that the local sale claimed by assessee it was a meager amount and the claimed that it was made out of the opening finished goods appears reasonable. Accordingly, L d CIT(A) deleted the addition made by AO. Being aggrieved by this order of L d CIT(A) Revenue is in appeal before us. 16. Before us L d DR vehemently relied on the order of AO whereas L d AR relied on the order of L d CIT(A) 17. We have heard the rival submissions and perused the materials available on record. From the aforesaid discussion, we find that assessee has written off its stock of finished goods on the ground it became unfit for human consumption and for this reason stock of finished goods was for an amount of ₹ 7,19,336/- was destroyed. However the AO found that some sale out of the opening stock of finished goods was made during the relevant year. Therefore the claim of assessee was declined b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the name of packing materials. The exports of finished goods were not possible without using packaging materials. Therefore, claim of assessee for the loss of packing material is disallowed and added to the total income of assessee. 20. Aggrieved, assessee preferred an appeal before L d CIT(A) whereas assessee submitted that goods were exported and purchased by assessee for an amount of ₹ 13,72,500/- in duly packed condition and ready for export. The assessee in support of its claim has submitted purchase and sales account. The assessee also submitted that exported goods were purchased in complete packed condition and the same were supplied to the foreigner buyers even without opening the containers. Accordingly, L d CIT(A) deleted addition made by AO. Being aggrieved by this order of L d CIT(A) Revenue is in appeal before us. 21. Both the parties relied on the orders of authorities below as favorable to them. We have heard the rival contentions and perused the materials available on record. From the facts of the case, we find that assessee has written off packing materials by debiting its profit and loss a/c for ₹ 3,75,123/- on the ground that these materials ..... X X X X Extracts X X X X X X X X Extracts X X X X
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