By Jagdish D. Shah, Jagdish T. Punjabi, Chartered Accountants
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Part B — Unreported Decisions
(Full texts of the following Tribunal decisions are available
at the Society’s office on written request. For members desiring that the
Society mails a copy to them, Rs.30 per decision will be charged for
photocopying and postage.)
32 National Leather Mfg. Co. v. JCIT
ITAT ‘E’ Bench, Mumbai
Before S. V. Mehrotra (AM) and
R. S. Padvekar (JM)
ITA No. 8294/Mum./2003
A.Y. : 2000-01. Decided on : 13-6-2008
Counsel for assessee/revenue : Mayur Shah/
Somogyan Pal
S. 2(24) of the Income-tax Act, 1961 — Income — Assessee
notionally computing the value of advance licences/DEPB and crediting the same
to Profit and Loss account — In its return of income filed, the said amount
excluded from its income — Whether the assessee justified in doing so — Held,
Yes.
Per R. S. Padvekar :
Facts :
The assessee, an exporter, was holding licences/ DEPB, which
were transferable. Hitherto, it was providing for the benefit under the said
licences/ DEPB only on the basis of its actual utilisation. However, during the
year under consideration, it changed its method of accounting, and made the
valuation of the benefit receivable in respect of the unutilised licences/DEPB,
and a sum of Rs.167.67 lacs was credited to Profit and Loss account. But while
filing return of income, the said amount was not considered as income of the
previous year and its loss was enhanced to that extent. However, the AO as well
as the CIT(A) did not agree with the said treatment, and the same was considered
as the income of the current year.
Held :
The Tribunal noted that the assessee had not transferred the
said licences, nor were the same utilised in paying import duty. The assessee
had merely calculated the notional value for the purpose of suppressing the huge
losses reflected in the books of account. According to it, merely because book
entries were passed and when there was no real income accrued to the assessee,
there was no justification to support the addition. Further, relying on the
Bombay Tribunal decision in the cases of Jamshi Ranjitsing Spg. & Wvg. Mills
Ltd. and of the Amritsar Tribunal in the case of Dera Singh Sham Singh, it
allowed the appeal of the assessee.
Cases referred to :
(1) Jamshi Ranjitsing Spg. & Wvg. Mills Ltd. v. IAC,
41 ITD 142 (Bom.);
(2) JCIT v. Dera Singh Sham Singh, 96 ITD 235 (Asr)
