M/S SREE ANNAPURNESHWARI GINNING & PRESSING INDUSTRIES,DAVANGERE vs. ITO, DAVANGERE

ITA 1141/BANG/2016Status: DisposedITAT Bangalore21 April 2017AY 2011-123 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal found no infirmity in the CIT(Appeals)'s order, which had rightly adjudicated the issue. The damaged stock should be valued at its net realizable value, which is significantly less than the purchase value.

What were the facts?

The assessee's premises suffered a fire accident, resulting in damaged merchandise. An insurance surveyor assessed the salvage value at 20% of the damaged stock. The assessee valued the damaged stock higher than the salvage value, based on purchase price.

What were the issues?

Whether damaged stock should be valued at purchase price or net realizable value after a fire incident.

Which sections of the Income-tax Act were involved?

Not explicitly mentioned

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH : BANGALORE

Before: SHRI SUNIL KUMAR YADAV & SHRI S. JAYARAMAN

For Respondent: Shri M.K. Biju, Jt.CIT(DR)(ITAT-3)

Hearing: 18.04.2017Pronounced: 21.04.2017

O R D E R Per Sunil Kumar Yadav, Judicial Member

This appeal is preferred by the assessee against the order of CIT(Appeals) inter alia on the following grounds:-

“1. The learned CIT (A) has noted the fact that there was a fire accident at the premises on 21/12/2010. With the assistance of the Fire Brigade, the fire was extinguished. There was loss of merchandise and since the goods were covered by Insurance company, the surveyor, approved by the Government and Chartered Engineer Shri. B.R. Manjunath, visited and inspected the entire premises and assessed the loss on account of fire and determined salvage amount payable to the assessee. The assessee has filed complete Report of the surveyor which contains full details of stock as per books as on the date of fire, physical stock taken by the surveyor, Fire Brigade Report and value thereof.

2. The average purchase price as worked by the learned CIT(A) is Rs.43.67 per kg for Kapas and Rs.78/- per kg for Cotton Lint.

3. The Stock had suffered extensive damage and as per the Insurance valuer, the salvage value was 20% only. However the appellant had valued the stock at Rs.38.22 per kg for Kapas and Rs.66.48 per kg for Cotton lint which is much higher than the salvage value determined by the insurance valuer.

4. After appreciating the fact of the damage to the stock due to fire, the learned (IT (A) failed to appreciate that such damaged stock cannot be valued on the basis of the purchase value, but should be valued at net realizable value. Which is significantly less than the purchase value.

The appellant inclines to submit the additional facts that would be urged at the time of hearing, the appellant craves leave to amend, alter, delete such facts and add additional evidences as facts and circumstances of the appellant's case circumspectively demand. PRAYER Since the appellant has sustained heavy damage to the stock and property and the damaged stock are not worth the purchase value. The appellant taking in to account the fair realizable value had adopted the rate for valuation of stock. Hence, the Appellant prays to accept the valuation adopted by the appellant in the interest of natural justice.”

This appeal was listed for hearing on 18.04.2017, but none appeared on behalf of the assessee, despite service of the notice of hearing. AD card is placed on record. Since the assessee did not appear, we have no option, but to hear the appeal ex parte, qua the assessee. Accordingly, the revenue was heard.

We have carefully examined the order of the CIT(Appeals) on the impugned grounds and we find that he has rightly adjudicated the issues in detail and we find no infirmity therein. Accordingly, we confirm the order of CIT(Appeals).

In the result, the appeal of assessee is dismissed.

Pronounced in the open court on this 21st day of April, 2017.

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