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TMI Blog2017 (3) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... y levy sugar. - Income Tax Appeal No. 35 of 2016 - - - Dated:- 3-3-2017 - Hon'ble Bharati Sapru And Hon'ble Saumitra Dayal Singh, JJ. For the Appellant : Ashish Agarwal For the Respondent : Shakeel Ahmad ORDER ( Delivered by Hon'ble Saumitra Dayal Singh, J. ) This Income Tax Appeal filed by the Revenue under Section 260-A of the Income Tax Act for the Assessment year 2006-07 arises from the order of the Income Tax Appellate Tribunal, Lucknow Bench A , Lucknow dated 6.10.2015 whereby the tribunal has allowed the assessee's appeal and deleted the addition of ₹ 1,84,00,096/- on account of valuation of closing stock of sugar. The tribunal accepted the case of the assessee that there was no need to make any addition on account of valuation closing stock of sugar as it has correctly valued the closing stock of sugar at a lower rate, the stock being of levy sugar and not of free sale sugar which rate had been applied by the Assessing Authority while making the original assessment. The appeal was admitted on the following questions of law:- (A) Whether on the facts and in the circumstances of the case, the learned ITAT is justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal by the assessee Income Tax Tribunal vide its impugned order deleted the addition for said valuation after recording the below noted findings. We have considered the rival submission. We find force in the submission of Ld. AR of the assessee. As per certificate regarding sanction of sale of sugar at the rate of 100% as free sale quota available at page 25 of the paper book, it is seen that for a period of seven years from the year 1985-86 to 1991-92 , the assessee was authorized to sale 100% production as free sale sugar. Hence, in the A.Y. 1990-91, the Tribunal has rightly held that the entire closing stock has to be valued at the selling price of free sale sugar. Now, in the A.Y. 2006-07, the assessee has valued the closing stock of levy sugar for three years lying in stock i.e. the year 2001-03, 2003-04 and 2004-05 at selling price of levy sugar. Under these facts, we are of the considered opinion that no addition is called for because closing stock of levy sugar cannot be valued at sale price of free sale sugar. Hence, the addition made by the AO and confirmed by the CIT(A) by valuing the levy sugar also at the sale price of free sale sugar is deleted. Accordingly, grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT further noted the written submission made by the assessee as below:- The AR for the appellant vide his written submissions stated as under:- The Learned AO has made addition of ₹ 1,84,00,096.00 towards alleged under valuation of closing stock of sugar valuing the same @ ₹ 1760.95 per Qtl. disregarding the valuation made by assessee bifurcating its year wise sugar stock valuation and valuation of Levy Sugar made by it. The assessee is consistently following while making valuation of closing stock of sugar as under (as certified by Tax Auditor in annexure attached to Tax auditor Report, copy enclosed). Free Sugar At Cost or Market Value which ever is lower Levy Sugar At Levy Rate fixed by Govt. (i) The valuation of closing stock of sugar held as on 31st March, 2006 showing season wise bifurcation of sugar held as given in schedule L attached to Balance Sheet (copy enclosed) The summarized position of valuation is given below:- Free Sugar Bags Rate Amount Season 2003-04 37893 1660/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t three years namely financial year 2002-03, 2003-04 and 2004-05 was correctly valued at a lower price being that of levy sugar. It was further submitted that levy sugar could never be valued by applying the prices applicable to free sale sugar as that would give un-realistic and wrong results. It is in this background that the tribunal has observed that the closing stock of levy sugar cannot be valued at sale price of free sale sugar and hence it has deleted the addition on that account. While Sri Ashish Agarwal has heavily relied on the observations made in the assessment order as to non production of the stock register, he does not dispute the fact that the production of sugar and actual availability of the sugar stock including the closing stock has been correctly disclosed by the assessee and that there is no dispute on that issue. On the other hand we find from a perusal of the order passed by the CIT (Appeals) that he had specifically held that the A.O. has not pinpointed any defect in books of account and records maintained by assessee. Thus the total stock of sugar stands accepted to the revenue. Further the assessee had claimed to have consistently followed the me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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