The Tax Publishers2020 TaxPub(DT) 4352 (Del-Trib)


Section 145 Section 145A

While making inventory of work-in-progress (WIP) the addition made by AO by reducing opening stock of WIP was covered by the Tribunal's order in preceeding year, hence, addition made by AO was, therefore, deleted.

Accounting method - Valuation of opening stock of WIP - Reduction of opening stock of WIP in Form of semi-finished and unpacked finished goods -

The assessee company was engaged in the business of manufacture and trade in Pan Masala, Guthka, Zarda and perfumery compounds, etc. Assessee was also engaged in trading in securities, commodities and units of mutual funds. The manufacturing units of the assessee were located at Noida, Brotiwala and Kullu in Himachal Pradesh, Aggartala, Gawahati and Delhi. In respect of units located at Barotiwala and Kullu at Himachal Pradesh were shown to be eligible for deduction under section(s) 80-IB/80-IC. Assessee company was also having marketing offices, depot and branch offices spread across the length and breadth of the country. To derive at the correct profit, AO reduced the opening stock for this year. The AO noted that order for assessment year 2011-12 the issue of under-valuation of stock of work-in-progress in the form of semi-finished goods and unpacked finished goods amounting to Rs. 44,49,536 was discussed and same was reduced from the computation of taxable income of the assessee company. Therefore, on the same corollary the value of opening stock for the year under consideration should have been less by the above sum and therefore, this addition was made. Held: As the DR could not point out any infirmity in the order of the coordinate Bench for immediately preceding year where the corresponding addition had been deleted, the Tribunal following the decision of the coordinate Bench in assessee's own case ground of the appeal of the assessee was allowed and the AO was directed to delete the addition of Rs. 44,49,536 on account of adjustment of reduction in the value of opening work in progress for this year.

Followed:Assessee's own case for assessment year 2010-11 and 2011-12 in ITA No. 3738/39/Del/2016 and 3882-83/Del/2016.


FAVOUR : In assessee's favour.

A.Y. : 2012-13


Section 36(1)(iii)


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