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TMI Blog2019 (2) TMI 1391X X X X Extracts X X X X X X X X Extracts X X X X ..... tual status of the land for the purpose of determination of value. Moreover, in the subsequent assessment year viz assessment year 2007-08 in the case of assessee, the Tribunal [2011 (6) TMI 954 - ITAT JAIPUR], restored back the matter to the Assessing Officer for deciding the issue and even in subsequent years i.e. 2009-10, 2010-11, 2011-12, 2012-13, vide order dated 23.02.2018, the Tribunal set aside this issue to the record of the Assessing Officer for deciding the same afresh in terms of the directions as given by the Tribunal in the assessment year 2007- 2008 and no appeal has been filed against the aforesaid orders by the assessee before this Court or before the Supreme Court. - D.B. Income Tax Appeal No.252/2018 - - - Dated:- 23-1-2019 - Mr. Justice Mohammad Rafiq And Mr. Justice Goverdhan Bardhar For the Appellant(s) : Shri Siddharth Ranka For the Respondent(s) : None JUDGMENT This appeal filed by the M/s. Rajasthan State Industrial Development Investment Corporation Limited (hereinafter called as the RIICO ) is directed against the order dated 28.05.2018 passed by the Income Tax Appellate Tribunal, whereby the learned Tribunal has remitted back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notes for adopting the said valuation policy were duly disclosed in the Audit Report which was duly approved by the Board of Directors and thereafter by share holders in their Annual General Meeting. Learned counsel for the appellant submits that the Comptroller Auditor General (C AG) also raised the query with regard to valuation of such encroached/litigated land and after considering the reply of the assessee appellant it was satisfied and dropped the Audit Para for assessment year 2010-2011. The return filed by the assessee appellant for the assessment year 2006-2007 was selected for scrutiny assessment and relevant notices were issued by the Assistant Commissioner of Income Tax, Circle 6, Jaipur, i.e., the Assessing Officer from time to time. The assessee appellant appeared through its authorized representative and furnished reply from time to time on various queries raised by the Assessing Officer. The Assessing Officer passed an order dated 25.11.2008 under Section 143(3) of the Act wherein various disallowances/additions were made and total income was determined therein at ₹ 61,12,82,240/- as against ₹ 43,73,82,600/- declared by the assessee appellant. Wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell as under encroachment aggregating to 384.23 acres as on 31.03.2005 and have further observed that stock of land under litigation/encroachment is treated as not-saleable. It is contended that the ITAT failed to appreciate and even refer to the details of the land which was under encroachment and litigation, highlighted before the ITAT. There were instances of the lands which were being used as cremation ground/temple land/tribal hostel under control of forest department/court litigations etc., and which were not readily available to the assessee for industrial development activity and hence, the value of such land at NIL is proper and justified. However, the learned ITAT failed to even consider the same. Learned counsel submitted that the Board of Directors after considering all the facts and circumstances had approved the method of valuation, which was subsequently also approved in the Annual General Meeting of the assessee appellant. Learned counsel submitted that similar issue was also raised by the Comptroller Auditor General (C AG) who after considering the reply of the assessee appellant was satisfied and dropped the Audit Para for assessment year 2010-2011. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Land Development Trust Ltd.-(1986) 161 ITR 524 (SC) and CIT vs. Wolkem India Ltd.-(2009) 315 ITR 211 (Raj.). Perusal of the impugned order of the ITAT shows that the learned Tribunal has observed that though the land which was under encroachment and litigation cannot be valued at the cost or prevailing market price but the value of such land would definitely be very less due to defects and deficiency of not available to the assessee for immediate use. However, the land in litigation or encroachment which is still shown as part of the closing stock of the assessee cannot be value at nil. Further the valuation of the land has to be determined on the basis of the actual status of the land in each case and it cannot be valued applying a standard parameter for each and every case of encroachment or litigation. Even the Tribunal in assessee's own case for the assessment year 2007-08 in ITA No. 1267/JP/2010 1387/JP/2010 vide order dated 24.06.2011 has considered this issue and remitted the matter back to the file of the AO for proper verification and adjudication. Similarly for the assessment years 2009-10 to 2012- 13 the Coordinate Bench of this Tribunal vide order dated 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al sales and gives a true and actual profit or loss on his year's dealings. The only exception is that unsold stock can be valued at the cost price or market value whichever is less. The notional loss, if any, can be claimed in the year when unsold stock has a lesser value as compared to the stock price. However, notional profit cannot be added in case market value is more than the cost. Hence, valuation of the stock is to be based on the same method for both opening and closing stock. The AO has simply not allowed deduction of ₹ 145.33 lacs on the ground of not accepting the change in method of valuation. However, the AO has not considered the aspects as to whether events in respect of reduction in valuation of stock have occurred during previous year relevant to assessment year under consideration. We are not having full facts in respect of the stock which have been valued at nil to ascertain the nature of litigation or encroachment and the period when such lands were acquired and when the assessee became aware of encroachment or litigation. Hence, the issue of addition of ₹ 145.33 lacs is restored back on the file of the AO. We do feel that litigation and encroac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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