M/S Tropical Clothing Co.pvt.ltd v. The Joint Commissioner Of Income-Tax

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL No. 254 OF 2006. IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL No. 254 OF 2006. M/s Tropical Clothing Co.Pvt.Ltd. ..Appellant. Vs The Joint Commissioner of Income-tax ..Respondent. Ms Vasanti B. Patel, Advocate for the Appellant. Mr Suresh Kumar, Advocate for the Respondent. CORAM: Dr.S. RADHAKRISHNAN CORAM: Dr.S. RADHAKRISHNAN AND V.C.DAGA, JJ. AND V.C.DAGA, JJ. DATED: 1st DECEMBER, 2008. DATED: 1st DECEMBER, 2008. P.C.: P.C.:---- ---- 1. Heard the learned counsel for the parties. 2. The learned counsel for the Appellant has tendered the draft of reframed substantial questions of law. The same is taken on record and marked "X" for identification. Leave granted. Amendment to be carried out within a period of two weeks from today. 3. Perused judgment of the Income-tax Appellate Tribunal. Main issue is : whether assessee is justified in changing method of accounting in respect of the accessories contending that they have not used at the end of the previous year. They appear on the closing stock. In that context, the Tribunal has considered the same and has observed in paragraphs 7, 10 and 11 as under: 7."Briefly stated, facts of the case in relation to this issue are that till assessment year 1997-98 the value of stock of assessee remaining unused was being shown in the closing stock. The assessee company has changed the method of accounting in this respect, and decided to write off the accessories even if it is unused on the last date of previous year and appear as closing stock. The Assessing Officer did not agree with this change of method of accounting, and added to the value of the closing stock an amount of Rs. 10,20,996/- on that count. 10. After considering the rival submissions and perusing other material on record, we find no infirmity in the finding of the CIT (A) in this regard. Undisputedly, unused stock was on account of buttons, elastic, labels, threads, etc. and these items cannot be held that they have become obsolete. It may be possible that these items may not have their full value, but it cannot be said that there is no value for these items. Therefore, we are of the considered opinion that change of method in this regard was not bona fide. Nothing was brought on record to show that ultimately what happened to the stock of these items. Therefore, in view of these facts and circumstances, and in view of the reasons given by CIT (A) we confirm the order of the CIT (A) on this issue. 11. Ground no.4 is against confirmation of the action of the A.O. in reducing 90% of the following miscellaneous income aggregating to Rs.3,40,000/- from the profits of business, for purposes of computation of relief under S. 80HHC." 4. In view of the aforesaid finding that change of method of accounting was not considered to be bona fide. Over and above, nothing has been brought on record, even to show as to what happened to the stock of more than Rs. 10,00,000/-. 5. We agree with the view taken by the Tribunal in favour of the Revenue and against the Assessee. In view of the aforesaid categorical findings of fact, there is absolutely no merit in the appeal. No substantial question of law is involved. 6. In the result, the appeal is dismissed. (V.C. DAGA,J) (V.C. DAGA,J)(DR S. RADHAKRISHNAN,J) (V.C. DAGA,J) (DR S. RADHAKRISHNAN,J)