The Principal Commissioner Of Income Tax v. M/S Hiravati Marine Products (P) Ltd

C/TAXAP/242/2020 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 242 of 2020 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX Versus M/S HIRAVATI MARINE PRODUCTS (P) LTD. ========================================================== Appearance:MRS MAUNA M BHATT(174) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALAand HONOURABLE MR. JUSTICE ILESH J. VORA Date : 19/01/2021 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1. This Tax Appeal under Section 260 of the Income Tax Act, 1961 (for short, 'the Act, 1961') is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal, Rajkot Bench, Rajkot dated 23.9.2019 in ITA No. 946/RJT/2010 for the A.Y. 2006-07.(for short, 'the Act, 1961') is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal, Rajkot Bench, Rajkot dated 23.9.2019 in ITA No. 946/RJT/2010 for the A.Y. 2006-07. 2. The revenue has proposed the following two questions of law for consideration of this Court.consideration of this Court. “[A]Whether on facts and in the circumstances of the case, the Appellate Tribunal was right in confirming the decision of CIT(A) deleting the disallowance of Rs.7,74,084/- out of total disallowance of Rs.17,75,489/- made on account of advances written off? [B]Whether on the facts and in the circumstances of case, the Tribunal was right in law in confirming the decision of CIT(A) deleting the disallowance of Rs.3,88,28,010/- on account of claim loss of stock by obsolescence without appreciating that no quantitative details in respect of obsolescent stock was available with the assessee?” 3. We have heard Mrs. Mauna Bhatt, the learned Senior Standing Counsel appearing for the revenue.Counsel appearing for the revenue. 4. With respect to the first question, as proposed by the revenue, the finding of fact recorded by the Tribunal reads as under : finding of fact recorded by the Tribunal reads as under : “para-6: We have heard the rival contentions and perused the material on record. During the course of appellate proceedings before us, the ld. Counsel has submitted details of information and copies of documents before the assessing officer and CIT(A) at the time of hearing of this case. After considering the decision of Hon'ble Supreme Court in the case of TRF Ltd. Vs. CIT Civil Appeal No. 5293 of 2003 dated 9[th ]Feb, 2010, it is not necessary for the assessee to establish that the debt in fact has become irrevocable. Therefore, considering the aforesaid judicial finding of the Hon'ble Supreme Court on identical issue and facts, we do not find any infirmity in the decision of ld. CIT(A) in deleting the addition of Rs.20,67,787/- pertaining to trade bad debt. Regarding addition of Rs.17,75,489/- on account of advances written off, it is noticed that it is undisputed fact that an amount of advance of Rs.7,74,084/- were given in the ordinary course of business to various fishermen, fisheries for procurement of raw material and labour work. After considering the decision of Hon'ble Supreme Court in the case of CIT Mysore Sugar Company Ltd 46 ITR 649(SC) wherein it is held that in case the company had advanced money to sugarcane grower for purchase of sugarcane and when they were unable to purchase sugarcane, the amount was written off and claimed as trading loss and the same was allowed. Therefore, after considering the aforesaid decision of Hon'ble Supreme Court on identical issue and facts, we do not find any error in the decision of ld. CIT(A) in allowing the claim of advances written off to the amount of Rs.7,74,084/- which were given in the ordinary course of business by the assessee. Accordingly, we do not find any merit in the appeal of the revenue and cross of the assessee, therefore, the cross objection of the assessee and appeal of the revenue both are dismissed.” Thus, there is a concurrent finding recorded by two Appellate Authorities that so far as the addition of Rs.17,75,489/- on account of advances written off is concerned, indisputably an amount of advance of Rs.7,74,084/- was given in the ordinary course of business to persons like fishermen etc. for the procurement of raw material and labour work. 5. So far as the second question, as proposed by the revenue, the finding of fact recorded by the Tribunal reads as under : finding of fact recorded by the Tribunal reads as under : “para-10:-We have heard rival contentions and perused the material on record. The assessing officer has disallowed the claim of loss on account of absolescene of stock of fish to the amount of Rs.3,88,28,010/- stating that valuation shown by the assessee on the basis of stock or net realizing value cannot be accepted on the basis of evidence available on local sale account. It is brought to our notice that assessee has been consistently followed accounting Standard-2 for valuation of closing of stock at cost or net realizable value whichever is lower in accordance with the accounting standard referred in section 211(3E) of the Company Act, 1956. The detail of absolescene of stock along with detailed working were submitted before the assessing officer and CIT(A) at the time of hearing. The company has valued the stock at net realizable value on the basis of evidence available on the date of signing of the accounts and the actual price was taken for computing the net realizable sale value......” 6. In view of the aforesaid findings of fact recorded by the Tribunal, we see no good reason to entertain this appeal.we see no good reason to entertain this appeal. 7. In the result, this appeal fails and is hereby dismissed. (J. B. PARDIWALA, J) P.S. JOSHI (ILESH J. VORA,J)