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TMI Blog2023 (9) TMI 1521X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, we do not find any reason for deviating from the same. The assessee has never included freight charges while valuing its closing stock. Therefore, we do not find any reason for doing the same during the year under consideration. The findings of the ld. CIT(A) are set aside and the AO is directed to delete the addition. Thus, ground is allowed. Addition on account of subsidy - Revenue or capital receipt - HELD THAT:- This policy was introduced for promoting growth of industry in the State and since the assessee satisfied all the conditions for being eligible, it received subsidy of Rs.50 lakhs during the financial year 1998-99. The said incentive was taken to the capital reserve account and was claimed as non-taxable in the return of income for AY 1999-00, treating the same as capital receipt. The same was accepted by the AO. As during the year, the AO has taken a position that since it has been given a part of capital investment, cost of assets needs to be reduced as per Explanation 10 to section 43(1). We are of the considered view that the said section is not applicable on the facts of the case in hand in as much as the subsidy has not been granted for meeting cost of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has been consistently following the system of valuing the stock of traded goods at cost or market price, whichever is lower by following FIFO method. 6. It is the say of the ld. counsel that the method of valuation of closing stock is regularly and consistently followed by the assessee and accepted by the department. Therefore, there is no reason for making the impugned addition. 7. The ld. DR strongly supported the findings of the Assessing Officer /CITA. 8. We have carefully perused the orders of the authorities below. At the very outset, we have to state that any adjustment in the closing stock requires simultaneous adjustment in the subsequent opening stock. Thus, the entire exercise becomes tax neutral. Having said that, we find that the assessee has been consistently following the same method of valuation of closing stock, which has been accepted by the revenue in the earlier assessment years. 9. Therefore, We do not find any reason for deviating from the same. The assessee has never included freight charges while valuing its closing stock. Therefore, we do not find any reason for doing the same during the year under consideration. The findings of the ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khs during the financial year 1998-99. The said incentive was taken to the capital reserve account and was claimed as non-taxable in the return of income for assessment year 1999-00, treating the same as capital receipt. The same was accepted by the Assessing Officer. 16. However, during the year, the Assessing Officer has taken a position that since it has been given a part of capital investment, cost of assets needs to be reduced as per Explanation 10 to section 43(1) of the Act. We are of the considered view that the said section is not applicable on the facts of the case in hand in as much as the subsidy has not been granted for meeting cost of any asset but for larger public interest of industrial development of the State of Punjab. 17. An identical issue was considered by the Hon'ble Supreme Court in the case of P.J. Chemicals Ltd. 210 ITR 830. In that case, the assessee had received a capital subsidy, which was claimed as capital receipt, not exigible to Income-tax. The Assessing Officer held that such subsidy is liable to be reduced form the cost of assets, in terms of the provisions of section 43(1) of the Act. The matter travelled up to the Hon'ble Supreme Court a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received sales- tax incentives for establishing windmill, which is an alternative source of energy. Such subsidy was an incentive for encouraging development of non-traditional source of energy and not for simply meeting the cost of acquisition of windmills. While holding as above, the CIT(A) relied upon the decision of the apex Court in the case of P.J. Chemicals Ltd. (supra). The Tribunal dismissed the appeal filed by the Revenue and observed that the assessee's case was not hit by the insertion of explanation 10 to sec.43(1) and the same is covered by the decision of Supreme Court in P.J. Chemicals reported in 210 ITR 830. On further appeal preferred by the Revenue, the High Court affirmed the decision of the Tribunal and dismissed the appeal filed by the Revenue. 19. It would not be out of place to mention that even if the action of the Assessing Officer has to be accepted, then the same should have been taken in A.Y 1999-2000. However, we find that no action has been taken from A.Y 1999-2000 to A.Y 2006-07. Therefore, there being no change in the facts, it would be incorrect to take a different stand after a gap of 10 years. Considering the facts of the case in totality, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Act. 1961. VII Because the Ld. CIT(A) has erred in law and facts for deleting the addition of Rs. 57.85.000/- made on account of disallowance of Royalty paid on brand Gagan despite that as per provisions of Explanation of Section 43(1) of the Income tax Act. 1961. the actual cost of acquisition of the Edible Oil Brand is NIL as such no depreciation is available to the assessee company on the same. VIII Because of the Ld. CIT(A) has erred in law and facts for deleting the addition of Rs. 25.00.000/- made on account of Gross profit rate without appreciating the facts that the assessee company has failed to furnish quantitative details as well as physical stock register during the assessment proceedings. 22. Grievances raised vide Ground Nos. 1 to 5 are identical to the issues raised in ITA No. 4589/DEL/2018 for A.Y 2007-08. For our detailed discussion therein, Ground Nos. 1 to 5 are allowed. 23. Issue raised vide Ground No. 6 and 7 are identical to the issues raised in ITA No. 4589/DEL/2018 for A.Y 2007-08. For our detailed discussion therein, Ground Nos. 6 7 are dismissed. 24. Issue raised vide Ground No. 8 are identical to the issue raised in ITA No. 4589/DEL/2018 for A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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