9911796707
TMI Blog2021 (2) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... ossibility of having the inventory loss in the business of the appellant cannot be ruled out. He further considered annual turnover of the assessee and stated that claim of inventory loss is not significant. It was further noted that the ld AO has not brought on record any adverse evidence still he reached at a conclusion to allow only 70% of such loss. Even otherwise, the assessee has claimed such loss on account of passing of the of the expiry date of the finished product of the assessee. The value of such goods is as such Nil as having became non-marketable. It is not the case of the revenue that the assessee has derived any revenue from sale of such goods. Even otherwise, it is not possible. It is also not the case of the ld AO that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is that ld CIT(A) has failed to appreciate that the expenditure incurred by the appellant due to pulling back of inventory from the market on account of expiry of product are normal business expenditure allowable as deduction in accordance with the provisions of the Act. 2. Brief facts of the case shows that the assessee is a company engaged in the business of trading of non-alcoholic beverages. It filed its return of income on 30.11.2006 declaring a loss of ₹ 25,80,27,830/-. The issue in this appeal is disallowance of write off excess shortage of the inventory by the assessee. The fact shows that during the year under consideration it was seen that as compared to the earlier year Assessee Company had claimed excess breakage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of trade. The assessee company did not produce any evidence to show that the risk of stock was its own. It never produced any agreement with its distributors to show that it was obliged to even bear losses on account of sales already made to the distributors for best before date stock. In these circumstances and further with no evidence produced to actually substantiate the claim that these stocks were really called back from the market and in absence of any claim being made on the manufacturing company which is normal in such type of business, the ld AO held that the claim of exceptional inventory loss worth ₹ 20898501/- is not acceptable and addition of ₹ 2089501/- is made to the income of the assessee. 3. This issue was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven the following findings: On careful consideration of the facts of the case, I find that keeping in view the nature of the products of the appellant company i.e. bottling and sale of various beverages of the Coca Cola brand, breakage of bottles in transit cannot be ruled out. Such breakage is also due to mishandling, and in terms of BDD policy of the company, certain products which have out-lived the prescribed expiry date, need to be destroyed. The appellant has furnished details of such losses incurred during the current year and informed that during the current year, the loss was 0.3% of the stock which is much lower than 0.5% of the stock as in the immediately preceding previous year. In respect of the breakage of the inventory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintaining the brand quality and market value of the product. Therefore, it would be reasonable and justified if the inventory loss claimed by the appellant is restricted at 70% of its claim as upheld by the Ld.CIT(A)-XV, New Delhi. The A.O. is directed to recompute the quantum of disallowance on this count. The appellant gets consequential relief. This ground of appeal is partly allowed. 4. Therefore, the assessee is in appeal before us. 5. We have heard Shri Sachit Jolly, ld AR on behalf of the assessee and Ms. Meenakshi Goswami, CIT DR, ld DR on behalf of the revenue. 6. We have carefully considered the facts of the case that the assessee stated that approximately 10000 cases were pulled back by the assessee from the market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nished goods only. The ld CIT (A) further accepted that possibility of having the inventory loss in the business of the appellant cannot be ruled out. He further considered annual turnover of the assessee and stated that claim of inventory loss is not significant. It was further noted that the ld AO has not brought on record any adverse evidence still he reached at a conclusion to allow only 70% of such loss. Even otherwise, the assessee has claimed such loss on account of passing of the of the expiry date of the finished product of the assessee. The value of such goods is as such Nil as having became non-marketable. It is not the case of the revenue that the assessee has derived any revenue from sale of such goods. Even otherwise, it is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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