Case Law Details
Racold Thermo Private Limited Vs ACIT (ITAT Pune)
In the present case, though the appellant made a provision for obsolescence of stock of finished goods following a methodology but it was not demonstrated before us that there was under-valuation of the finished goods or spares and the excess provision, if any, was written back in the succeeding year or in the year of sale of obsolete stock, etc. nor was it demonstrated that obsolete stock was valued at lower of cost or net realizable value. In the circumstances, in principle, we hold that the provision for obsolete stock is allowable but it requires to be satisfied that the value of obsolete items of finished goods is valued on the cost or market price whichever is less. In the circumstances, we remand the matter back to the file of Assessing Officer with a direction that the provision for obsolete stock be allowed as deduction subject to satisfying himself that the valuation is done based on the principle that at cost or market price or net realizable value, whichever is less. Thus, this ground of appeal is allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT PUNE
This is an appeal filed by the Assessee directed against the order of ld.Commissioner of Income Tax(Appeals)-6, Pune,(in short, the CIT(A) in Appeal No.PN/CIT(A)-V/ACIT Cir-10/103/2016-17dated 30/08/2017 for the Assessment Year 2012-13.The Assessee has raised following grounds of appeal:
“1:0 Re: Disallowance of provision for obsolescence of inventory:
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