| The Tax Publishers2020 TaxPub(DT) 4978 (Kol-Trib) INCOME TAX ACT, 1961
Section 143(3)
Where assessee valued its purchases at high sea prices and purchases was from Kerala Port @ Rs. 70 per kg. and disclosed in Government sales tax and VAT law the difference with normal price was also disclosed in IT Act and on the same the closing stock was valued at enhanced value [as per purchases valued by assessee, i.e., Rs. 70 per kg.] hence, there was no revenue effect as such, addition made by AO was, therefore, rightly deleted by CIT(A).
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Assessment - Addition to income - High Sea purchases - Effect of neutralizing valuation of closing stock
Assessee made high-sea purchases of raw cashews from Kerala Port and as per the Departmental of Commercial Taxes, Kerala under the Kerala VAT Rules the price was of such import was fixed at Rs. 70 per kg. The irrespective of the prices of actual purchases as per the high seas agreement valued the raw cashews at 70 per kg. Under the State Rules, VAT and the IT Rules and laws. It was in this manner that the appellant reflected the value of purchase of raw cashews in the audited account which resulted in excess value to the extent of 1,75,07,965. This was admitted by the assessee in the reply furnished by him during the course of assessment proceedings. Assessee contended that excess purchase price without considering the fact that the effect of such excess pricing had already been neutralized in the Profit and Loss Acount by way of enhancing the closing stock value of almost same value as observed in the assessment order also. AO disallowed excess price, CIT(A) deleted the addition. Held: The fact which should not be lost sight of was that the quantity of purchases was tallying with the parties accounts vis-Ã -vis the assessees books in this regard. The assessee made high sea purchases of raw cashews from Kerala Port and as per the Departmental of Commercial Taxes, Kerala under the Kerala VAT Rules the price was of such import was fixed at Rs. 70 per kg. This was also mentioned in Circular No.28/11, dated 3-12-2011 issued by the Departmental of Commercial taxes, Kerala. The assessee, irrespective of the prices of actual purchases as per the high seas agreement, valued the raw cashews at 70 per kg. under the State Rules, VAT and the Income Tax Rules and laws. It was in this manner that the assessee reflected the value of purchases of raw cashews in the audited accounts which resulted in excess value to the extent of Rs. 1,75,07,965 and the said fact had been properly appreciated by CIT(A). That being so, the Tribunal declined to interfere with the order of CIT(A) in deleting the aforesaid additions.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2013-14
INCOME TAX ACT, 1961
Section 41(1)
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