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TMI Blog2016 (10) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... bring any defect in the submission of the assessee. In the case of deviation of the Accounting standard the AO should have rejected the books of accounts but he chose not to do so. CIT(A) has correctly deleted the addition made by the AO by observing that the method of valuation adopted by the assessee is consistent. It cannot be rejected merely because it will hamper the revenue. AO has not found any actual defect in the valuation of closing stock. AO has not found any defect in the books of accounts. Even if the average cost method is applied then also the AO calculation is not done properly and closing stock, 5584 pieces of sarees @ 1624 per piece = 90,68,416/- on the average price of the opening stock and purchases during the year( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) vide his order dated 13.12.2011 for assessment year 2009-10. Grounds raised by Revenue per its appeal are as under:- 1. That on the fact and circumstances of the case and in law the Ld. C.I.T.(A)-VIII, Kolkata has erred in not appreciating the fact that the assessing officer has rightly computed the value of closing stock where the assessee did not furnish the qualitative analysis of closing stock and as such is coming under the ambit of section 145 of the IT Act, 1961 and deleted the addition of ₹ 30,37,993/- under the head Undisclosed Sales holding that the calculation of valuation of closing stock is not done properly by the Assessing Officer as well as arbitrarily held that the assessee has shown the value of closing st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Sales 18880 pcs Rs.3,27,51,391.91/- 4. Closing stock 5584 pcs Rs.1,10,95,279/- It was observed by the AO that the qualitative analysis of the stock has not furnished, therefore the cost of each item of the stock cannot be determined. Accordingly the AO applied the average pricing method and worked out cost of the goods sold on the basis of per saree which comes to ₹ 1516.45 (2,86,30,758/- 18880 =1516.45). The cost of goods sold was worked out at ₹ 2,86,30,758.00 ( 24,30,650+3,72,95,387-1,10,95,279.00). The AO further applied this average rate of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to them. Ld. AR submitted paper book which is running pages from 1 to 81. 6. We have heard the rival contentions and perused the materials available on record. From the aforesaid discussion we find that the AO raised the issue for the undisclosed sale due to non-availability of information with regard to the quantitative details of the opening stock, purchases and sales, closing stock along with their respective values in the tax audit report. During the proceedings the details were furnished by the assessee but the AO rejected the same and worked out the undisclosed sale as discussed above. At the outset, we find that AO has made the addition on surmise and conjecture without pointing out any defect in the audited financial statement. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ld. CIT(A) who has deleted the addition made by the AO by observing that AO has assumed one third of the cost as land cost but there is no any material to support his findings. When price of land and building is not identifiable then and payment is a composite payment entire payment will be allowed for depreciation. Being aggrieved by the order of ld. CIT(A) Revenue is in appeal before us. 10. Before us Ld. DR relied on the order of AO whereas Ld. AR relied on the order of Ld. CIT(A). 11. We have heard the rival contentions and perused the materials available on record. At the outset, we find that assessee claimed to have made the investment in the aforesaid properties by paying composite amount. However, this fact has not been bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing has been constructed. It was, therefore, wrong on the part of the authorities below to exclude the valve of the land upon which some construction was made. The true meaning of the word building' means the land upon which some construction has been made. The two must necessarily go together. From the above details it is clear that the facts are different with the instant case. Similar facts were there in the case of DCIT Vs Capital Car Private Limited reported. However we find that on similar facts where the rates of the building are composite with the land then the Hon,ble Tribunal of Bangalore has decided the issue in favour of the assessee in the case of CIT Vs. Rajesh Exports Ltd. (2006) 9 SOT 28. The relevant extract is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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