Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: TAX RATES - GOODS TAXABLE @ 4% :: VAT RATES :: due date for vat payment :: ACCOUNTING STANDARD :: VAT Audit :: ARTICLES ON INPUT TAX CREDIT IN VAT :: form 3cd :: ACCOUNTING STANDARDS :: articles on VAT and GST in India :: list of goods taxed at 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: cpt :: Central Excise rule to resale the machines to a new company :: empanelment :: TDS
 
 
From the Courts »
 Reliance Communications Ltd vs. DDIT (ITAT Mumbai)
  Sushila Devi vs. CIT (Delhi High Court)
 Ashok Prapann Sharma vs. CIT (Supreme Court)a
  Vatsala Shenoy vs. JCIT (Supreme Court)
  Vatsala Shenoy vs. JCIT (Supreme Court)
 M.K.Overseas Pvt. Ltd. Vs. Pr.Commissioner Of Income Tax-06
 Arshia Ahmed Qureshi Vs. Pr. Commissioner Of Income Tax-21
 CHAUDHARY SKIN TRADING COMPANY Vs. PR. COMMISSIONER OF INCOME TAX-21
  Sushila Devi vs. CIT (Delhi High Court)
  Vatsala Shenoy vs. JCIT (Supreme Court)
 Deputy Director Of Income Tax Vs. Virage Logic International

Deputy Commissioner of Income Tax, Income Tax, Circle- Circle-7(1), New Delhi. New Delhi. Vs. M/s Sylvania & Laxman Pvt.Ltd.,B-57, Swami Nagar, 57, Swami Nagar, 57, Swami Nagar, New Delhi.
November, 19th 2015
                 IN THE INCOME TAX APPELLATE TRIBUNAL
                                  `G' : NEW DELHI
                      DELHI BENCH `G'

          BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND
                           VARKEY, JUDICIAL MEMBER
               SHRI ABY T. VARKEY,

                              No.5034/Del/2010
                          ITA No.
                                          2005-06
                        Assessment Year : 2005-


Deputy Commissioner of            Vs.    M/s Sylvania & Laxman Pvt.Ltd.,
Income Tax,                              B-57, Swami Nagar,
Circle-
Circle-7(1),                             New Delhi.
      Delhi.
New Delhi.                               PAN : AAACS6862P.
     (Appellant)                             (Respondent)

             Appellant by         :     Shri   B.R.R. Kumar, Senior DR.
             Respondent by        :     Shri   Manpreet Singh Bagga,
                                        Shri   Amit Arora &
                                        Shri   Suraj Nangia, CAs.

      Date of hearing             :     05.11.2015
      Date of pronouncement       :     17.11.2015

                                  ORDER

PER G.D. AGRAWAL, VP :-
      This appeal by the Revenue for the assessment year 2005-06 is
directed against the order of learned CIT(A)-X, New Delhi dated 11th
August, 2010.


2.    The only ground raised in this appeal by the Revenue reads as
under:-


      "On the facts and circumstances of the case the ld.CIT(A)
      erred in law as well as on merits in deleting the addition of
      Rs.1,07,83,935/-    made     by    AO    on     account    of
      pilferage/obsolete inventories."

3.    At the time of hearing before us, the learned DR pointed out that
the   assessee    has   claimed   the    deduction     for   pilferage/obsolete
inventories on the ground that its business premises were temporarily
                                    2                        ITA-5034/Del/2010



suspended in April, 1996 and the office block of the assessee, cost
section and store room in the premises of the company were sealed on
26th August, 1996.     The premises were de-sealed consequent to the
order of Hon'ble High court dated 5th November, 2002. He, therefore,
submitted that even if any loss was incurred due to pilferage/obsolence
of stock, it would arise in the assessment year 2003-04 and not in the
year under appeal i.e. 2005-06. He further submitted that in support
of the pilferage, the assessee claimed to have filed the copy of FIR. In
the FIR, the assessee has mentioned the theft of certain items like
office equipment, computers, air conditioners, typewriters etc. but,
there is no mention of the theft of stock of finished goods or raw
material or other things in respect of which the assessee is claiming
loss. Learned DR further submitted that the assessee did not furnish
any details in respect of either the pilferage or obsolence.            The
assessee did not even specify which item has been stolen and which
part of loss is for obsolence. He, therefore, submitted that the order of
learned CIT(A) should be reversed and that of the Assessing Officer
may be restored.





4.    Learned counsel for the assessee, on the other hand, stated that
the issue is squarely covered in favour of the assessee by the decision
of ITAT Delhi `G' Bench in the case of M/s Super Oil Seals India Ltd. vide
ITA No.1766/Del/2011. He also relied upon the decision of CIT(A) and
pointed out that the physical verification of the inventories was
completed in the accounting year relevant to the assessment year
under consideration and when the inventories were prepared, it was
found that certain items have become obsolete and unserviceable. In
view of the aforesaid, the inventories have been written off in the year
in question. He, therefore, submitted that the order of learned CIT(A)
should be sustained.
                                   3                          ITA-5034/Del/2010



5.    We have considered the rival submissions and have perused the
relevant material placed before us. Learned counsel for the assessee
has relied upon the decision of ITAT in the case of M/s Super Oil Seals
India Ltd. (supra) wherein the issue before the ITAT was with regard to
addition made by the Assessing Officer on account of obsolence of
stock. Learned CIT(A) had deleted the addition and when the matter
reached to the ITAT, it sustained the order of learned CIT(A) with the
following finding:-


      "5. After hearing the revenue, we find that there is no
      merit in the appeal of the revenue. The assessee is free to
      value the stock as per the market value of the stock or cost
      of the stock, whichever is less. The assessee has option to
      value the stocks as per the market rate and assessee has
      done so. Therefore, we find no merit in the ground of
      appeal taken by the revenue and the same stands
      dismissed."

6.    After considering the facts of the case and arguments of both the
sides, we find that the only issue before the ITAT was allowability of
loss on account of obsolence. There is no dispute with regard to the
legal proposition laid down by the ITAT that the assessee is free to
value the stock as per the market value of the stock or cost of the
stock, whichever is low. However, in the year under consideration, the
issue under consideration is first with regard to the year of loss and
secondly, whether the loss was actually incurred. Both these issues
were not before the ITAT in the case of M/s Super Oil Seals India Ltd.
(supra) and, therefore, the above decision of ITAT would have no
application to the case under appeal before us.


7.    Reverting to the facts of the assessee's case, we find that the
assessee has claimed the loss on account of pilferage/obsolete
inventories.     It   was   explained   by   the   assessee      that     the
pilferage/obsolence of stock took place on account of sealing of the
assessee's premises.    However, we find that the premises of the
                                     4                       ITA-5034/Del/2010






assessee were de-sealed during the accounting year relevant to
assessment year 2003-04.         Therefore, if any loss was incurred on
account of pilferage/obsolete inventories due to sealing of the
assessee's premises, it came to the knowledge of the assessee on the
de-sealing of the premises which was admittedly during the accounting
year relevant to assessment year 2003-04. If the assessee chose not
to prepare the inventory for a period of two years, the incurring of the
loss cannot be postponed. Therefore, in our opinion, the loss, if any,
on account of obsolence/pilferage of the goods claimed to have been
incurred by the assessee due to sealing of its premises, could have
been claimed in the assessment year 2003-04 and not in the year
under consideration.     Learned DR has also pointed out that the
assessee has not produced any evidence with regard to pilferage of
the stock. The only evidence produced in support of the claim is the
FIR which mentions the theft of certain items like office equipment,
computers, air conditioners, typewriters etc. but there is no mention of
the pilferage of the inventory. No other evidence for pilferage of the
stock is produced. The assessee did not even produce the list of the
items which have been stolen. The claim of the assessee is of general
nature without specifying which item is pilfered and which item has
become obsolete. In view of the above, in our opinion, learned CIT(A)
was not justified in allowing the loss claimed to have been incurred by
the assessee on account of pilferage/obsolence of the inventory. The
order of learned CIT(A) on this point is reversed and that of the
Assessing Officer is restored.
8.    In the result, the appeal of the Revenue is allowed.
      Decision pronounced in the open Court on 17.11.2015.


                  Sd/-                                Sd/-
                 VARKEY)
         (ABY T. VARKEY)                                AGRAWAL)
                                                  (G.D. AGRAWAL)
        JUDICIAL MEMBER                           VICE PRESIDENT

VK.
                                5                      ITA-5034/Del/2010



Copy forwarded to: -

1.   Appellant  : Deputy Commissioner of Income Tax,
                  Circle-
                  Circle-7(1), New Delhi.
2.   Respondent : M/s Sylvania & Laxman Pvt.Ltd.,
                  B-57, Swami Nagar, New Delhi.

3.   CIT
4.   CIT(A)
5.   DR, ITAT

                           Assistant Registrar

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - About Us

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions