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Judgment
This appeal is before us to adjudicate the following
substantial questions of law:-
"(1) Whether on the facts and in the circumstances of the case the Assessing Officer was justified in making additions of Rs.476.84 lacs by disallowing assessee''s claim for deduction from its profit on account of provision for loss in stores stock, raw material, finished goods provided in books of accounts?
(2) Whether in the light of provisions contained in section 37(3) and 37(5) of the I.T. Act, 1961 the tribunal was justified in law in deleting additions made by the Assessing Officer by disallowing the claim of the assessee to depreciation of assets used in guest house amounting to Rs.17,28,684/-?
(3) Whether in the facts and circumstances of the case the tribunal was justified in upholding contention of the assessee for reducing profits of the company by adjusting the alleged loss amounting to Rs.78,43,000/- by excluding the interest on Government loan and office expenses from the cost of closing stock?
(4) Whether the Assessing Officer was justified in making additions of Rs.8,38,30,000/- by increasing value of closing stock and discarding changed basis of valuing of closing stock by the assessee on the basis of Auditor''s report and tribunal has erred in deleting such additions? (5) Whether the Tribunal was justified in sustaining order of CIT appeals deleting additions made by the Assessing Officer on account of valuing stock and non moveable stores at less than 25% of its costs price amounting o Rs.5.46 lacs? (6) Whether the Tribunal was justified in disallowing adjustment made in the book profit of company by reducing the amount of depreciation made by it amounting to Rs.1,20,23000/- as beyond the scope of Explanation appended to Section 115J(JA) ?
(7) Whether the tribunal was justified in sustaining the order of CIT Appeals for deleting the additions made on account of amortization expenses because in earlier some time excessive amortization expenses were allowed as deduction and some times lesser amortization expenses were allowed as deduction?
(8) Whether the interest under Section 234 B, 234C could be levied when assessment is made on the basis of book profit under Section 115-J ?"
The first question is relating to deletion of addition
made on account of provisions for losses in stores stock, raw
material, finished goods. This issue was earlier considered by the
Income Tax Appellate Tribunal between the same parties in
Income Tax Appeal No.321(JP)/96 for the assessment year 1992-
93 under an order dated 17.10.2001. The order aforesaid came to
be affirmed by a Division Bench of this Court on 30.1.2009 and a
Special Leave Petition giving challenge to that also came to be
dismissed on 18.7.2011. In light of the judgment referred above,
we are satisfied that the question sought to be agitated is no more
res-integra. In light of that the order passed by the Income Tax
Appellate Tribunal deserves to be upheld to the extent it relates to
deletion of addition made on account of provisions for losses in
stores stock, raw material and finished goods.
So far as question No.2 is concerned, that pertains to
guest house expenses which is disallowed in light of the provisions
of Section 37(4) of the Income Tax Act, 1961 (hereinafter referred
to as ''the Act of 1961''). The same question between the same
parties was examined by the Income Tax Appellate Tribunal in
Income Tax Appeal No.1106(JP)/94 for the account year 1991-92
under an order dated 16.10.2001. An appeal giving challenge to
the order dated 16.10.2001 came to be rejected by a Division
Bench of this Court on 30.1.2009. Hon''ble Supreme Court in
Britannia India Private Limited v. CIT, reported in (2005) 278 ITR
(SC) 546, also arrived at the conclusion that the guest house
expenses are not allowable for claiming depreciation of assets in
light of the provisions of Section 37(4) of the Act of 1961. The
second question is also decided in the same terms.
The question No.3 related to disallowance on account of
change in valuation of closing stock. This issue too has already
been settled by the Apex Court in the judgment reported in 318
ITR (SC) 204 and 99 ITR (SC) 135, holding therein that closing
stock becomes the opening stock of the next year and as such the
Income Tax Appellate Tribunal was justified to adjust the alleged
loss of Rs.78,43,000/- by excluding the interest on government
loan and office expenses from the cost of closing stock.
The question No.4 pertains to valuation of closing stock
of more cake etc. This issue has also been settled by the Supreme
Court in the judgment reported in 318 ITR (SC) 204 and 99 ITR
(SC) 135, by holding that the closing stock becomes the opening
stock of the next year. As such, this issue is also decided in terms
of the finding given with regard to question No.3.
The question No.5 also deserves to be decided in the
same terms as that pertains to a deletion of addition on account of
valuation of closing stock of slow and non moveable stores and
spares less by 25%.
So far as questions No.6 and 7 are concerned, we are
not inclined to examine the same being purely of academic nature.
The question No.8 pertains to deletion of levy of
interest under Sections 234-B and 234-C when assessment is
made on basis of book profit under Section 115-J of the Act of
1961. Hon''ble Supreme Court in (2006) 284 ITR (SC) 434, has
already taken the view that in absence of specific provision in the
Act for payment of advance tax in cases where income is taxed
under Section 115-J or 115-JA, the tax payer is not liable to pay
any advance tax. In light of it, in our considered opinion, the
Income Tax Appellate Tribunal has not committed any error in this
regard.
In light of the findings given above, the appeal stands
disposed of.