- (1.) THIS appeal under Section 260A of the IT Act, 1961 (for short 'the Act of 1961' hereinafter) is directed against order dt. 23rd Nov., 2006 passed by the Income -tax Appellate Tribunal, Jodhpur Bench, Jodhpur (for short 'the Tribunal' hereinafter) in ITA No. 566/Jd/2004 in respect of the asst. yr. 2000 -01, whereby the appeal of the Revenue as well as the cross -objection of the assessee have been dismissed and the order dt. 30th Sept., 2004 passed by the Commissioner of Income -tax (Appeals), Udaipur [in short 'the CIT(A)' hereinafter], about the deducibility of obsolete stores along with its valuation has been confirmed.
(2.) THE relevant facts in nutshell are that the assessee is engaged in mining, processing and grinding of minerals. During the relevant assessment year, it claimed deduction of Rs. 68,59,108 as obsolete store written off under the head 'Plant and machinery repairs' account. The deduction claimed was sought to be justified by the assessee on the basis of Accounting Standard issued by the ICAI with the approval/acceptance of CBDT. After due consideration, the AO arrived at the finding that the assessee has estimated the inventories in most arbitrary manner @ 5 per cent of the cost writing off 95 per cent, without considering the period of purchase or the degree of damage or deterioration, if any. The AO noticed that even the items purchased during the year under consideration have been valued @ 5 per cent. In this view of the matter, the amount of Rs. 68,59,108 written off as obsolete stocks claimed in P&L; a/c under the head 'Plant and machinery repairs' was disallowed by the AO and the same was added to the income of the assessee. On appeal by the assessee, the CIT(A) on the basis of the material on record arrived at the finding that most of stock inventories which were treated as obsolete were either sold or consumed by 31st March, 2004. From the details furnished by the assessee, the CIT(A) found that on the sale of written down value of store inventories of Rs. 2.05 lacs the assessee had made a profit of Rs. 1.41 lacs. The CIT(A) found that the value of some of the items sold in the subsequent year comes to 8.43 per cent of the cost. Therefore, considering the facts situation emerging from the record the CIT(A) held that the WDV taken by the assessee company is not justified and determined the value of stores inventory written down at 10 per cent of the cost. Accordingly, the addition made by the AO on account of obsolete stores written off was reduced from Rs. 68,59,108 to Rs. 3,61,005.
(3.) ON further appeal by the Revenue, the learned Tribunal relying upon a decision of the Hon'ble Bombay High Court in the case of Alfa Laval India Ltd. v. Dy. CIT : [2004]266ITR418(Bom) , held that the CIT(A) was justified in valuing the stores at 10 per cent of the costs. Consequently, the appeal preferred by the Revenue so also the cross -objection filed on behalf of the assessee have been dismissed by the learned Tribunal by order dt. 23rd Nov., 2006, which is impugned in the present appeal.;