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TMI Blog2022 (5) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... .CIT order in respect of claim of stores in the profit and loss account cannot be sustained and allow the grounds of appeal pertaining to the disputed issue on claim of stores. Set off of brought forward business loss against the short term capital gains - The contentions of the Ld.AR are that the Building and plant machinery were sold as block of assets and short term capital gains worked out over and above the WDV. The assessee has carried forward business loss of A.Y.2007-08 and claimed set off with the short term capital gains and relied on the judicial decision on merits. The Ld.DR submissions are that the PCIT has dealt on the facts which proves that the A.O. has not applied his mind and not made enquiries on the issues. We fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... General: On the facts and in the circumstances of the case and in law, the order passed by the Learned Pr, Commissioner of Income Tax (Central) - 2, Mumbai (here-in-after referred to as Pr. C IT ) u/s 263 is bad in law and liable to be quashed. 2. The Ld. Pr. CIT erred in law and on facts in invoking provisions of section 263 in respect of the issue of allowability of cost of stores of Rs 61,80,986 ignoring the fact that it was already verified by the Assessing Officer (here-in-after referred to as 'AO ) during the course of assessment proceedings and applied his mind on the submissions made. The Ld. AO during the course of scrutiny assessment made specific inquiries in the matter and applied his mind on the submissions made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee appeared from time to time and filed the submissions and documents. The assessing officer (A.O) considered the facts and material submitted supporting the information and accepted the returned income and passed the order u/s 143(3) of the Act dated 16.10.2017. 3. Subsequently the Pr.CIT on perusal of the records found that the A.O has passed the passed the assessment order without examining and making enquiry with respect to the claims (i) the set off of brought forward business loss of A.Y. 2007-08 against the short term capital gains of current year which in beyond a period of 8 years and (ii) the assessee has debited to profit and loss account cost of stores of Rs. 61,80,986/- as it pertains to earlier years. The Pr.CIT has is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s expenditure and supportive judicial decisions. Whereas, on first issue of set off of loss, the Pr. CIT is of the opinion that the assessee has business loss for the A.Y 2007-08 which could not be set off against the income from other heads in the current assessment year. The assessee has earned income from short term capital gains and claimed set off of brought forward loss. The Pr.CIT dealt on the provisions of Sec.72 of the Act in respect of the claim and issued directions to A.O. on two disputed issues as under: 1. To determine the extent of brought forward business losses of A.Y. 2007-2008 available for set off upto 8 assessment years (ii) to adjust such brought forward business loss against the prof it and gains from the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ward business loss against the short term capital gains and the cost of stores debited to profit and loss account pertains to the earlier years. The Ld.AR substantiated the arguments relying on the documentary evidence, provisions of the Act, judicial decisions and factual paper book and prayed for allowing the appeal. 7.Whereas the Ld. DR supported the order of the Pr. CIT and made submissions with respect to the importance and application of the provisions and explanation2 to section 263 of the Act. 8. We heard the rival submissions and perused the material available on record. Prima-facie the Pr.CIT has passed the revision order with a directions to the A.O. on two aspects (i) set off of brought forward business loss and (ii) the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld.AR has demonstrated the documents filed in the factual paper book discussed. Accordingly the assessee has diligently complied with the provisions of Act, and maintained the facts /details in the books of accounts and fallowed the Accounting standard -2 in valuation of inventories. Therefore we are of the opinion that the directions of the Pr.CIT order in respect of claim of stores in the profit and loss account cannot be sustained and allow the grounds of appeal pertaining to the disputed issue on claim of stores. 9. On the second disputed issue with respect to set off of brought forward business loss against the short term capital gains. The contentions of the Ld.AR are that the Building and plant machinery were sold as block ..... X X X X Extracts X X X X X X X X Extracts X X X X
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