Sanjeev Woolen Mills v. CIT

ACIT 29 (3), Mumbai vs. Zeemag Industries, Mumbai

In the result, the appeal by the Revenue is dismissed

Bench: Shri Prashant Maharishi & Shri Sandeep Singh Karhail

…subsequent assessment proceeding, valuation of closing stock was different to arrive at a disclosure of income. However, the recognized method of valuation is cost or market rate whichever is lower. The Supreme Court in the case Sanjeev Woolen Mills v. C.I.T. 279 ITR 434 (SC) held that: “On no principle can one justify the valuation of Closing Stock at a Market rate higher than cost. Permissibility of valuation of the Stock at Market Value would be only if the market value of the Stock is lower than the cost of the Stock.” “Choice of the method of accounting lies with the assessee but the ass Assessee would be re…

Dy. CIT CC -7(40), Mumbai vs. Shree Ambica Gems, Mumbai

In the result, both the appeals of the revenue are dismissed and Cross Objection filed by the assessee are dismissed

Bench: Shri Amarjit Singh & Shri Sandeep Singh Karhail

…C) it was held that only profit embodied on sale proceeds can be taxed In CIT vs Balachand Ajit Kumar(2003) 263 ITR 610(MP)(HC)(612-613) it was held that suppressed sale cannot be the income only net profit can be assessed In Sanjeev Woolen Mills vs CIT(2005) 279 ITR 434(SC) it was observed that it is a settled principle of income- tax law that it is the real income which is taxable under the Act Hon'ble Gujarat High Court in the case of CIT vs. Simit Sheth (2013) 38 Taxmann.com 385 (Guj), has sustained addition to the extent of 12 5% of the bogus purchase. Whereas in Shri Madhukan B Gandhi vs ITO, ITA No 1950/M/…

DCIT 2(2), Mumbai vs. State Bank of India, Mumbai

Bench: Shri M. Balaganesh & Shri Kuldip Singhassessment Year: 2005-06 M/S. State Bank Of India, Dcit, Financial Reporting & Circle -2(2), Taxation Dept., Mumbai 3Rd Floor, Vs. Corporate Centre, Madam Cama Road, Nariman Point, Mumbai – 400 021 Pan: Aaacs8577K (Appellant) (Respondent) Assessment Year: 2005-06 Office Of The Dcit-2(2), M/S. State Bank Of India, R.No.545, Central Office, Aayakar Bhavan, Accounts & Compliance M.K. Road, Dept., Vs. 14Th Floor, Mumbai- 400 020 Madam Cama Rd., Nariman Point, Mumbai – 400 021 Pan: Aaacs8577K (Appellant) (Respondent)

…curities should be followed. This resulted in a situation of taxing appreciation of stock, which goes against the general and settled principle of non-taxation of notional income, as laid by the Supreme Court in the case of Sanjeev Wollen Mills vs. CIT [2005] 279 ITR 434 (SC) and others discussed supra. Hence, we are of the view that this disallowance of depreciation/ reducing of 36 ITA No.3685/M/2013 & ITA No.4951/M/2013 M/s. State Bank of India depreciation on appreciation in the value of securities held as available for sale and held for trading category are allowable. We direct the AO accordingly.” 33.2. Res…

State Bank of India, Mumbai vs. DCIT Cir 2(2), Mumbai

Bench: Shri M. Balaganesh & Shri Kuldip Singhassessment Year: 2005-06 M/S. State Bank Of India, Dcit, Financial Reporting & Circle -2(2), Taxation Dept., Mumbai 3Rd Floor, Vs. Corporate Centre, Madam Cama Road, Nariman Point, Mumbai – 400 021 Pan: Aaacs8577K (Appellant) (Respondent) Assessment Year: 2005-06 Office Of The Dcit-2(2), M/S. State Bank Of India, R.No.545, Central Office, Aayakar Bhavan, Accounts & Compliance M.K. Road, Dept., Vs. 14Th Floor, Mumbai- 400 020 Madam Cama Rd., Nariman Point, Mumbai – 400 021 Pan: Aaacs8577K (Appellant) (Respondent)

…curities should be followed. This resulted in a situation of taxing appreciation of stock, which goes against the general and settled principle of non-taxation of notional income, as laid by the Supreme Court in the case of Sanjeev Wollen Mills vs. CIT [2005] 279 ITR 434 (SC) and others discussed supra. Hence, we are of the view that this disallowance of depreciation/ reducing of 36 ITA No.3685/M/2013 & ITA No.4951/M/2013 M/s. State Bank of India depreciation on appreciation in the value of securities held as available for sale and held for trading category are allowable. We direct the AO accordingly.” 33.2. Res…

Suprerior Financial Consultancy Services P.Ltd, Mumbai vs. Asst CIT 1(3), Mumbai

In the result, appeals filed by the assessee are allowed and appeal filed by the revenue is dismissed

Bench: Shri Laliet Kumar, Hon'Ble & Shri S. Rifaur Rahman, Hon'Ble&

…diate pecuniary gain the State cannot tax them, for under the IT Act the State has no power to tax a potential future advantage. All it can tax is income, profits and gains made in the relevant accounting year. (c) In Sanjeev Woollen Mills Ltd. vs. CIT [2005] 279 ITR 434 (SC), it was held as under: 6 ITA.No. 3113 & 3355/Mum/2015 (A.Y. 2006-07) Superior Financial Consultancy Services Pvt. Ltd., “……….. anotional imaginary profit cannot be taxed. It is well settled principle as held in Kikabhai Premchand vs. CIT (supra) Constitution Bench judgment that the firm cannot make profit out of itself, The transaction whic…

State Bank of India, Mumbai vs. Asst CIT Cir 2(2), Mumbai

In the result, appeal of the Revenue in ITA No

…at is lower. But on no principle can one justify the valuation of the closing stock at a market value higher than cost as that will result in the taxation of notional profits the assessee has not realised. [para 28]” 65. In Sanjeev Wollen Mills vs. CIT [2005] 279 ITR 434 (SC), the Supreme Court was concerned with a case where the assessee had valued its finished goods at market value. For assessment year 1992-93, the opening stock was valued at Rs. 90 per kg (market price as on 1.4.1991 was Rs. 98 per kg) and the closing stock at Rs. 130 per kg. For assessment year 1993-94, the opening stock was valued at Rs. 130…

Edelcap Securities Ltd, Mumbai vs. ACIT, Circle 3(1)(2), Mumbai

In the result, all the appeals of the Revenue as well as the assessee are partly allowed

…is no actual loss on account of dealing in derivative as the loss or gain arises only when something goes out or comes in the pocket of the assessee. (ii) Relying on the judgment of Hon'ble Supreme Court in the case of Sanjeev Woolen Mills vs CIT reported in 279 ITR 434 (SC). (iii) Relying on CBDT's instruction dated 23.03.2010. 3.2. The assessee submits that the bifurcation of loss on account of provision for mark to market is tabulated as under: M/s. Edelcap Securities Ltd., M/s. Ecap Equities & M/s. Edelweiss Investments Advisors Particulars Amount (Rs) Currency Future 79,90,0243 Currency Options 12,03,560…

Deputy Commissioner of Income Tax Central Circle-6(2), Mumbai vs. Samira Reality Projects Private Limited, Mumbai

In the result, assessee’s appeal is partly allowed and 19

Bench: Shri S. Rifaur Rahman & Shri Pavan Kumar Gadale

…ncome of the applicant. What can be taxed is only the net income after reducing the expenses. In the Income Tax assessment tax can be levied only on the real income of the assessee as held by the Hon'ble Supreme Court in case of Sanjeev Woolen Mills Vs. CIT ( 279 ITR 434). This proposition was also enunciated In IT vs. Bind Gwalior (P) Ltd. 89 ITR 265 (SC) and In CIT vs. Shoorfi Vallabhdas & Co. (1962) 46 ITR 144 (SC). Recently Hon‟ble Bombay High Court in case of CIT vs. Shri Hariram Bhambhani (ITA No. 313 of 2013) held that the entire sale cannot be subject to tax and only net income out of the sales 10 Samira…

Shri. Ravindra Bhaskar Deshmukh, Kalyan vs. Dy. CIT, Panvel

In the result, the appeals filed by the assessee are partly allowed

Bench: Shri Shamim Yahya, Am & Shri Amarjit Singh, Jm आयकर अपील सं/ I.T.A. Nos. 1951 & 1952/Mum/2019 (निर्धारण वर्ा / Assessment Years: 2010-11 & 2011-12) Shri Ravindra Baskar बिधम/ Dy. Commissioner Of Deshmukh L/H Neeta Ravindra Income Tax Panvel Circle, Vs. Deshmukh Panvel, Dist-Raigad. C/O Sh. Satyajit Zunjarrao 1003/2, Indraprastha Society, Adharwadi Chowk, Kalyan West-421301. स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Ahcpd2323Gs (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) Assessee By: None Revenue By: Shri Bharat Andhle (Sr. Ar) सुनवाई की तारीख / Date Of Hearing: 02/03/2021 घोषणा की तारीख /Date Of Pronouncement: 20/05/2021 आदेश / O R D E R Per Amarjit Singh, Jm: The Assessee Has Filed The Above Mentioned Appeals Against The Order Dated 04.02.2019 Passed By The Commissioner Of Income Tax (Appeals) -2, Thane [Hereinafter Referred To As The “Cit(A)”] Relevant To The A.Ys. 2010-11 & 2011-12. Ita. No.1951/M/2019 2. The Assessee Has Filed The Present Appeal Against The Order Dated 04.02.2019 Passed By The Commissioner Of Income Tax (Appeals) -2, Thane [Hereinafter Referred To As The “Cit(A)”] Relevant To The A.Y.2010-11. Ita Nos. 1951 & 1952/M/2019 A.Ys.2010-11 & 2011-12 3. The Assessee Has Raised The Following Grounds: -

…Cake Industries (2009) 316 ITR 274 (Guj) (iv) ITO Vs. Permanand (2007) 107 TTJ 395 (Jd) A.Ys.2010-11 & 2011-12 (v) Shri Madhukant B. Gandhi Vs. ITO ITA No. 1950/M/2009 Bench „B‟ dt. 23.02.2010 (AY 2005-06) (Mum)(Trib) (vi) Sanjeev Woolen Mills Vs. CIT (2005) 279 ITR 434) (SC) 6. Taking into account, all the facts and circumstances, we are of the view that the end of interest of justice will meet if the profit ratio be estimated @ 12.5% of the bogus purchase. Accordingly, we allowed the claim of the assessee. ITA. NO.1952/Mum/2019 7. The facts of the present case are quite similar to the fact of the case as narr…

DCIT 12(2)(1), Mumbai vs. D R Coats Ink and Resins P.Ltd, Mumbai

In the result, appeal filed by the revenue is hereby dismissed and cross-objection filed by the assessee is also hereby dismissed

Bench: Shri Rajesh Kumar, Am & Shri Amarjit Singh, Jm आयकर अपील सं/ I.T.A. No.4858/Mum/2017 (निर्धारण वर्ा / Assessment Year: 2011-12) बिधम/ M/S. D. R. Coats Ink & Dcit 12(2)(1) Room No. 223, 2Nd Floor, Resins Pvt. Ltd. Vs. 230 New Sonal Link Aayakar Bhavan, M. K. Industrial, Building No.2, Road, Mumbai-400020. Estate Link Road, Malad (W), Mumbai-400064. Co. No.240/Mum/2018 (Arising Out Of Ita. No. 4858/Mum/2017) (निर्धारण वर्ा / Assessment Year: 2011-12) M/S. D. R. Coats Ink & बिधम/ Dcit 12(2)(1) Resins Pvt. Ltd. Room No. 223, 2Nd Floor, Vs. 230 New Sonal Link Aayakar Bhavan, M. K. Industrial, Building No.2, Road, Mumbai-400020. Estate Link Road, Malad (W), Mumbai-400064 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aabcd8645A (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) Revenue By: Shri Bharat Andhale (Sr. Ar) Assessee By: Shri M. Subramaniam सुनवाई की तारीख / Date Of Hearing: 06/01/2021 घोषणा की तारीख /Date Of Pronouncement: 01/04/2021 आदेश / O R D E R Per Amarjit Singh, Jm: The Revenue As Well As Assessee Have Filed The Above Mentioned Appeal As Well As Cross Objection Against The Order Dated 28.04.2017 Passed

…iii) CIT Vs. Sanjay Oil Cake Industries (2009) 316 ITR 274 (Guj) (iv) ITO Vs. Permanand (2007) 107 TTJ 395 (Jd) (Trib) (v) Shri Madhukant B. Gandhi Vs. ITO ITA. No. 1950/M/2009 Bench „B‟ Dated 23.02.2010 (AY 2005-06) & (vi) Sanjeev Woolen Mills Vs. CIT (2005) 279 ITR 434 (SC). The CIT(A) has considered the Gross Profit (G.P) ratio of the bogus purchase items. Moreover, we also find that the issue has duly been covered with the decision of the ITAT in the assessee’s own case in ITA. No.2143/M/2017 & 2144/M/2017 dated 30.12.2019. Taking into account all the facts and circumstances of the case, we are of the view th…

State Bank of India (Successor to State Bank of Bikaner & Jaipur), Mumbai vs. ACIT -Circle 2(2)(1), Mumbai

Appeal stand allowed for statistical purposes

Bench: Hon’Ble Shri Mahavir Singh, Vp & Hon’Ble Shri Manoj Kumar Aggarwal, Am

…curities should be followed. This resulted in a situation of taxing appreciation of stock, which goes against the general and settled principle of non-taxation of notional income, as laid by the Supreme Court in the case of Sanjeev Wollen Mills vs. CIT [2005] 279 ITR 434 (SC) and others discussed supra. Hence, we are of the view that this disallowance of depreciation/ reducing of depreciation on appreciation in the value of securities held as available for sale and held for trading category are allowable. We direct the AO accordingly. The Ld. CIT(A) has also relied upon various favorable orders of earlier years…

Evas Machineries Pvt. Ltd., Mumbai vs. ACIT 12(2)-1, Mumbai

In the result, the appeal filed by the assessee is hereby partly allowed

…iii) CIT Vs. Sanjay Oil Cake Industries (2009) 316 ITR 274 (Guj) (iv) ITO Vs. Permanand (2007) 107 TTJ 395 (Jd) (v) Shri Madhukant B. Gandhi Vs. ITO ITA No. 1950/M/2009 Bench „B‟ dt. 23.02.2010 (AY 2005-06) (Mum)(Trib) (vi) Sanjeev Woolen Mills Vs. CIT (2005) 279 ITR 434) (SC) 5. Taking into account, all the facts and circumstances, we are of the view that to meet the interest of justice we restrict the addition to the extent of profit ratio @ 12.5% of the bogus purchase. Accordingly, we allowed the claim of the assessee. 6. In the result, the appeal filed by the assessee is hereby partly allowed. Order pronoun…

Siroya Developers, Mumbai vs. ITO 17(3)(3), Mumbai

The appeal of the assessee is partly allowed in terms of our aforesaid observations

Bench: Shri S. Rifaur Rahman & Shri Ravish Soodm/S Siroya Developers Ito-17(3)(3)[Previously Assessed 101, Kingston Towers, With Acit-31(3)], Gd Ambekar Marg, Parel Tank Mumbai Road, Parel – East, Vs. Mumbai – 400 033

…the correct profits could not be deduced from the accounts, he was obliged to have recourse to the proviso to Sec. 145 of the Act. At this stage, we draw support from the judgment of the Hon’ble Supreme Court in the case of Sanjeev Woolen Mills Vs. CIT (2005) 279 ITR 434 (SC). In the said case as the profits shown by the assessee were only notional and could not be said to be its correct income chargeable to tax, the Hon‟ble Apex Court had concluded that the A.O was justified in rejecting the accounts maintained by the assessee for valuation of closing stock. Accordingly, in the backdrop of our aforesaid observat…

State Bank of India, Mumbai vs. Addl CIT RG 2(2), Mumbai

In the result, the appeal of the assessee is partly allowed and the appeal of the Revenue is dismissed, as indicated above

Bench: Sri Mahavir Singh, Vp & Sri G Manjunatha, Am आयकर अपील सुं./ Ita No. 3644/Mum/2016 (ननर्ाारण वर्ा / Assessment Year 2008-09) State Bank Of India The Dy. Commissioner Of 3Rd Floor, Corporate Centre Income Tax, Circle -2(2)(1) बनाम/ Madam Cama Road Mumbai Vs. Nariman Point Mumbai-400021 (अपीलार्थी / Appellant) (प्रत्यर्थी/ Respondent) स्र्थायी लेखा सुं./Pan No. Aaacs8577K

…t is lower. But on no principle can one justify the valuation of the closing stock at a market value higher than cost as that will result in the taxation of notional profits the assessee has not realised. [para 28]” 65. In Sanjeev Wollen Mills vs. CIT [2005] 279 ITR 434 (SC), the Supreme Court was concerned with a case where the assessee had valued its finished goods at market value. For assessment year 1992-93, the opening stock was valued at Rs. 90 per kg (market price as on 1.4.1991 was Rs. 98 per kg) and the closing stock at Rs. 130 per kg. For assessment year 1993- 94, the opening stock was valued at Rs. 13…