9911796707
TMI Blog2024 (9) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Whether the cost of silt would be capital expenditure or revenue expenditure? - HELD THAT:- As per the business model of the assessee, whenever stone is extracted from the mines, the pits will be formed and pits will be filled with the silt. This is recurring action, therefore, the expenditure involved in this work comes under revenue expenditure and does not give any benefit to the assessee in the capital field and hence it becomes purely revenue in nature because once the stone is extracted and resultantly, it is filled with the existing silt, there cannot be any further action required. CIT(A) admits that assessee had not bought any new material to fill up the pits but had only utilized the existing silt which were already available w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) dated 21.09.2022 by the Assessing Officer, NFAC. 2. The only issue to be decided in this appeal is as to whether the ld National Faceless Appeal Centre (NFAC) was justified in confirming the addition of Rs. 1,24,14,552/- on account of difference of valuation of stock in the facts and circumstances of the instant case. 3. We have heard the rival submissions and perused the material available on record. The assessee is a manufacturing industry engaged in the industry of stone crushing. The assessee filed its return of income at Rs. Nil with current year business loss of Rs. 6,64,28,881/-. The assessee furnished the quantitative details of principle items of goods t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it may also be done by purchased silt or fertile soil. However, assessee has not purchased silt for the filling. Although assessee had volunteered an indicative cost of silt in the market, assessee clearly indicated that silt should not be considered as 'stock' since it is used for filling the pits. It is obvious that the only cost of filling the pit is the cost of moving the silt, because the silt, unless sold in the market, has no value in itself. 4. The ld AO did not accede to the aforesaid contentions of the assessee on the valuation of stocks and proceeded to value the silt arbitrarily at market rate by determining it to be capital expenditure and disallowed the same in the sum of Rs. 1,24,14,552/-. The case of the revenue is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as only utilized for filling up the dug pits. Hence, the same would constitute the revenue expenditure. It is also pertinent to note that the returned loss of Rs. 6,64,28,881/- ultimately stood assessed at a loss of Rs. 5,40,14,329/- even after making the addition on account of valuation in respect of cost of silt of Rs. 1,24,14,552/-. It could be seen that there is absolutely no malafide intention for the assessee to claim a capital expenditure to be a revenue expenditure. Effectively assessee is only trying to value the stock with raw materials left over having saleable value and raw materials not having saleable value, which is in accordance with the accepted trade practice of valuation of stock. The same is also in accordance with Accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of inventories having no realisable value. The change in the method of valuing the closing stock decreased the value of DBM dust by Rs. 70,50,677 thereby reducing the assessable income by the same amount. The Assessing Officer(AO) rejecting the assessee's contention valued the closing stock at Rs. 77,50,677 and added it to the assessee's income on the ground that upto the asst, yr.1983 -84 the assessee was showing the value of DBM dust at cost only and in order to determine the true profit in any particular year it is necessary that the system of valuation adopted for opening stock as well as the closing stock should be on identical lines. On appeal the CIT after going through the scheme of the assessee and various case laws in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
