M/S-ORISSA MINING CORPORATION LTD,BHUBANESWAR vs. PR.CIT-1, BHUBANESWAR

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ITA 186/CTK/2019Status: DisposedITAT Cuttack21 June 2022AY 2014-154 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the undervaluation of closing stock had no revenue effect as it was adjusted in the subsequent year's opening stock. It also found that CSR expenditure was allowable for the assessment year 2014-2015. Therefore, the assessment order was neither erroneous nor prejudicial to the interest of revenue.

What were the facts?

The assessee's original assessment was completed under Section 143(3). The Pr.CIT invoked Section 263, citing lack of proper verification of closing stock and allowing CSR expenditure. The assessee argued that the undervaluation of closing stock had no revenue effect as it was adjusted in the subsequent year's opening stock, and CSR expenditure was allowable for the assessment year in question.

What were the issues?

Whether the Pr.CIT's revisionary order under Section 263 was justified when the alleged errors in the assessment order had no revenue impact and the expenditure was allowable for the relevant assessment year.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 37(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK

Before: SHRI GEORGE MATHAN & SHRI ARUN KHODPIA

Hearing: 21/06/2022Pronounced: 21/06/2022

Shri Siddharth Ranjan & Dinakar Mohanty, CAs for the assessee Shri M.K.Gautam, CIT-DR for the Revenue Date of Hearing : 21/06/2022 Date of Pronouncement : 21/06/2022 आदेश / O R D E R Per Bench : This is an appeal filed by the assessee against the order of the ld. Pr.CIT-1, Bhubaneswar, dated 28.03.2019 passed u/s.263 of the Act in F.No.Pr.CIT-1/BBSR/263-DP/AAACO3324L/2018-19 for the assessment year 2014-2015.

2.

It was submitted by the ld. AR that the original assessment came to be completed u/s.143(3) of the Act on 22.12.2016. It was the submission that the ld. Pr.CIT invoked his powers u/s.263 of the Act for the purpose of setting aside the order passed u/s.143(3) of the Act on the ground that AO in respect of closing stock as mentioned in its accounts. It was the submission that the ld. Pr.CIT was of the view that the C&AG of India vide his comments on accounts in the annual report had observed that there was change in inventories and overstatement in its value due to under valuation of closing stock of Daitari Mines. It was the submission that this did not result in any loss of revenue making the assessment order passed u/s.143(3) of the Act erroneous and prejudicial to the interest of revenue insofar as undervaluation of the so-called closing stock has resulted in the same value be adjusted in the opening stock of the next year. This was not affecting the revenue. For this purpose, ld. AR relied on the decision of the coordinate bench of the Tribunal in the case of Caparo Maruti Ltd. Vs. DCIT in order dated 09.08.2017, wherein in para 12 it has been held that if the AO finds that the corresponding adjustment has been done in subsequent year then necessary relief should be granted during the relevant assessment year. It was the submission that the assessee has made adjustment in the opening stock of the subsequent assessment year and there is no C&AG comments on that issue.

3.

In regard to the second issue, it was submitted that the issue was against the action of the ld.AO in allowing the CSR Expenditure incurred by the assessee. It was submitted that the CSR Expenditure was held to be not an allowable expenditure u/s.37(1) of the Act for and from the assessment year 2015-2016. It was the submission that the impugned

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