9911796707
TMI Blog2011 (12) TMI 710X X X X Extracts X X X X X X X X Extracts X X X X ..... er on account of provision for impairment of stock. 4. The assessee company is engaged in the business of marketing of very small aperture terminals (VSATs) and provision of satellite communications services through its HUB earth station at Gurgaon. The assessee is also providing broadband, internet and other telecommunications services under various licenses obtained from the Department of Telecommunications, Government of India. The assessee company also provides high-end education programmes imparted by premier institutes in India and overseas. It filed its return of income declaring profit at ₹ 12,59,65,323/- on 1.11.2004. The return was selected for scrutiny and notice under sec. 143(2) was duly issued and served upon the assessee. 5. During the course of assessment proceedings it was noticed by the AO that the assessee had shown value of inventories after adjustment of ₹ 90,35,298/- on account of stock impaired during the year. The assessee was asked to submit the valuation of stock. From the details filed by the assessee, it was noticed by the AO that the stock was claimed to have been valued at the realizable value. The assessee was then asked to give the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us items adopted by the assessee. He further pointed out that the assessee has applied ad hoc percentage of deduction to the cost price, which cannot be said to be a system recognized under the principles of law and accountancy for the purpose of valuing the inventories at net realizable value. He further submitted that merely because the assessee s claim has been allowed in the Assessment Year 2003-04, that by itself cannot be a basis to allow the same in the years under consideration unless the net realizable value adopted by the assessee is supported by any evidences and material. He further pointed out that in some of the items, even the value has been taken at `Nil , which is not at all justifiable inasmuch as there must be some value of stock even if it is sold in the market as a scrap. 9. The learned counsel for the assessee on the other hand, submitted that the assessee as per the consistent method of valuation of stock, has valued the closing stock at cost or net realizable value, whichever is lower and in some items of inventories, the net realizable value has been taken at `Nil because of the reason that these stocks could not be sold in the market and as such, the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,976 Rs.2,343 Against used Inventory Rs.112,558,530 Rs.56,348,170 Rs.56,210,360 Against Defective Inventory Rs.34,415,761 Rs.21,339,758 Rs.13,076,003 Against No Value Rs.248,336 - Rs.248,336 Against Scrap Rs.5,590,655 - Rs.5,590,655 Against Consumable ₹ 4,270,022 - Rs.4,270,022 Total devaluation as on 31-03-2004 Rs.104,630,091 Rs.79,397,719 Less:- Devaluation already booked till 31-03-2003 (-) Rs.66,092,399 Rs.13,305,320 Less:- Transferred tow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... `Nil . In this regard, following some more decisions have been relied upon by the assessee:- (i) K. Mohammad Adam Sahib vs. CIT, 56 ITR 360 (Mad.). (ii) India Motor Parts and Accessories (P) Ltd. Vs. CIT, 60 ITR 531 (Mad.). (iii) CIT vs. Dalmia Cement (Bharat) Ltd., 215 ITR 441 (Del). (iv) IAC vs. Consolidated Pneumatic Tool Co. (India) Ltd., 14 ITD 564 (Bom.). 13. In the present case, as discussed and pointed out above, the assessee has been following a consistent method of valuing the closing stock at cost or market price, whichever is lower, which is an accepted and recognized method of valuation of stock. The assessee has furnished the details of inventory with their respective net realizable value as at the end of the year. Same method was adopted in earlier years. The A.O. has not been able to point out any defect or irregularity in the details filed by the assessee. The A.O. has failed to make any enquiry to determine the net realizable value of various items with a view to rebut the rate of net realizable value adopted by the assessee. The assessee has followed the same method in earlier years, where the assessee s claim was allowed by the A.O. The learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee has submitted vide its letter dated 29.11.2006 that the papers seized pertain to only the installation / de-installation of equipment and no sale was made by the assessee during the year under consideration. The assessee has further submitted that it has filed an file against the aforesaid order and therefore the above amount be not added as undisclosed income in the hands of the assessee. 12. The submission of the assessee has been considered. The assessee has only made general submissions and no evidence / confirmation is submitted by it. It is observed in the sales tax assessment order that the loose sheets impounded show the installation and supply of various goods, however, the assessee has intentionally not provided any explanation regarding the goods mentioned in the impounded loose sheets and the assessee is trying to conceal its sale made to the BSE. No entry for supply of these goods is made in the books of account maintained by the assessee nor any details in this regard are available with the assessee. In view of the above, the sales shown by the assessee were rejected and sales were determined by making an addition of ₹ 5 crores. The findings gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment made by the Sales-tax Officer in the light of certain survey conducted by the Sales-tax Department. However, on an appeal, against the Sales-tax assessment, the Joint Commissioner of Sales-tax (appeals) vide his order dated 22-12-2006 has deleted the addition of sales by holding and observing that the impounded documents/loose sheets were not pertaining to sale of V-SATs but only related to certification of installation/ deinstallation of V-SATs for and on behalf of BSE (Bombay Stock Exchange) at various locations/offices of BSE. A copy of appellate order passed by the Joint Commissioner of Sales-tax (U.P.) dated 22-12-2006 was filed before the CIT(A) which was rightly admitted as Additional Evidence after giving an opportunity to the A.O. as the same was not available by the time the A.O. made the assessment under sec. 143(3) of the Act. A copy of said appellate order is also placed before us in the assessee s Paper Book. It is not the AO s case that service charges for installation and/or de-installation of V-SATs has not been shown by the assessee in its books. We, therefore, do not find any reason to interfere with the learned CIT(A) s order in deleting the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
