INCOME TAX ACT, 1961

Section 143(3)

Assessment - Valuation closing stock - Sampling cost included in value of closing stock by treating same as excessive -

Assessee, fashion house, claimed expenses of Rs. 1.45 crores for Overseas Sampling in addition to samples expenses of Rs. 13 lakhs under the head 'Other expenses'. AO held that huge amount of Samples cost and Overseas Sampling cost to the extent of Rs. 1.58 crores was to be treated as part of closing stock, not being perishable and retained by assessee but not disclosed/offered within the closing stock of the year. Held: Assessee was engaged in highly competitive designer in clothes market wherein market samples may not always fetch any income in a segment having ever involving fashion trends. AO had not disputed assessee's sampling cost per se by doubting genuineness thereof and there was also no material even as per AO that impugned samples had been in anyway sold outside books or same had been included in closing stock. Impugned sampling cost had been incurred qua prominent export markets only and AO failed to dispute that assessee had been adopting very criteria of claiming sampling cost/samples, then not including it in closing stock since no more relevant in the export market.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14

INCOME TAX ACT, 1961

Section 37(1)

SUBSCRIBE FOR FULL CONTENT