DY. CIT, CIRCLE-1, , ALLAHABAD vs. M/S LALLOOJI & SONS, ALLAHABAD

ITA 102/ALLD/2020Status: DisposedITAT Allahabad05 June 2026AY 2017-188 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the ad-hoc addition made by the AO on account of construction material was not justified. The nature of the business and the consumables used meant that materials, once used, had no commercial value or market, and the assessee's accounting method was consistent.

What were the facts?

The assessee, engaged in constructing temporary structures for events, claimed expenses for construction materials. The Assessing Officer (AO) made an ad-hoc addition, estimating a 5% salvage value for consumed materials, which the assessee disputed. The matter reached the ITAT due to a difference of opinion between members.

What were the issues?

Whether an ad-hoc addition on account of estimated salvage value of consumed construction materials is justified when the materials are largely non-reusable consumables. Whether the AO correctly inferred potential reuse or sale of scrap from repair and renewal expenses.

Which sections of the Income-tax Act were involved?

Section 145(3)

AI-generated summary — verify with the full judgment below

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI NIKHIL CHOUDHARY, ACCOUNTANT MEMBER Assessment Year: 2017-18 The Dy. CIT v. M/s Lallooji & Sons Circle – 1 1, Rambagh Allahabad (U.P) Allahabad (U.P) TAN/PAN:AAAFL8391H (Appellant) (Respondent) Appellant by: Shri A. K. Singh, D.R. Respondent by: None ORDER UNDER SECTION 255(4) OF THE INCOME TAX ACT, 1961

PER SUDHANSHU SRIVASTAVA, J.M.:

This appeal has been preferred by the Revenue against the order dated 06.07.2020, passed by the Learned Commissioner of Income Tax (Appeals) [Ld. CIT(A)] for Assessment Year 2017-18. 2.0 On account of difference of opinion between the Members, who originally heard the appeal, a Third Member was nominated to adjudicate the following question:-

“1.Whether in the facts and circumstances of the case, the addition made by the Assessing Officer on account of scrap value of the construction material claimed by assessee as consumable item is justified and sustainable or not?”

ITA No.102/ALLD/2020 4.0 The Hon'ble Third Member, vide order dated 01.01.2025, while disposing of the issues before him, observed in paragraphs N

The order continues below.

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