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TMI Blog2019 (3) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... en duly proved with physical stock available with the assessee, CIT(A) has rightly decided the issue in favour of the assessee that the same cannot be added as unexplained income - decided against revenue. Addition on account of sale tax on sales return - allowable business loss - HELD THAT:- It is the case of the assessee that at the time of making the sale the assessee has debited the account of party with value of sales and sale tax, thus, the assessee has made payment of sales tax to the Government. However, when the goods were recovered by the assessee, the sales tax paid by the assessee was never recovered and the assessee has written of the amount of sales tax as bad debt. When the factum of sales return has been proved in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005-06 on the grounds inter alia that : 1. Whether in the fact and circumstances of the case in law, the Ld. CIT(A) erred in deleting the disallowance of ₹ 6,11,59,512/- made by the AO on account of bogus Sales Return after grossly ignoring the fact that assessee has failed to prove the genuineness of its claim? 2. Whether in the fact and circumstances of the case in law, the Ld. CIT(A) erred in deleting the addition of sales tax paid on Sales Return by the AO by ignoring the fact that the same could be allowed for the year in which sale has been actually made/booked by the assessee? 3. Whether in the fact and circumstances of the case in law, the Ld. CIT(A) erred in deleting the foreign exchange loss of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of foreign exchange loss by the treating the sum as notional loss. 4. Assessee carried the matter before the Ld. CIT(A) by way of filing the appeal who has deleted addition by partly allowing the appeal. Feeling aggrieved the revenue has come up before the Tribunal. 5. Ground no. 1 It is the case of the assessee that sales executives in order to earn the incentives have shown fictitious sales which came to the notice of the company when receivables has piled up and the assessee has not received any payment. Alleged fictitious sales were noticed for the period of April, 2004 to July 2004. Then the assessee has recovered goods worth ₹ 6,11,59,512/- lying with the transporters. 6. Undisputedly auditors have not made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Ld. CIT(A). Assessee has duly proved before the CIT(A) that out of total quantity of the sale return during the year under assessment approximately 40.3% quantity of such stock was resold and approximately 22.4% of quantity was included in the closing stock being sellable goods in the subsequent years and remaining quantity of approximately 37.3% was claimed as expired / damaged stock which was not included while computing the value of the closing stock as on 31st March, 2005. 9. So when sale returns has been duly proved with physical stock available with the assessee, the Ld. CIT(A) has rightly decided the issue in favour of the assessee that the same cannot be added as unexplained income. So we find no illegality or perversity on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard Governor India Pvt. Ltd. (2009) 312 ITR 254 (SC) . It is case of the assessee that it had taken a foreign currency loan of EUR 1,500,000 during FY 2002-03 and other loan of EUR 700,000 during FY 2003-04 from its parent Berlin Chemie AG, Germany for working capital requirement and the foreign exchange loss is on account of reinstatement of revenue items at the balance sheet date. When the factum of availing of the aforesaid loan is not disputed by the revenue then why the loss on account of exchange differences on revenue items arising on foreign currency transactions has to be treated as income / expenses during the year under consideration. So, Ld. CIT(A) has rightly deleted the addition on account of foreign exchange loss by follow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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