Vaerli Weaves Pvt. Ltd. v. The Dy. Commissioner of Income-tax (Asstt.)
[Citation -2014-LL-1201-36]

Citation 2014-LL-1201-36
Appellant Name Vaerli Weaves Pvt. Ltd.
Respondent Name The Dy. Commissioner of Income-tax (Asstt.)
Court HIGH COURT OF GUJARAT AT AHMEDABAD
Relevant Act Income-tax
Date of Order 01/12/2014
Assessment Year 1987-88
Judgment View Judgment
Keyword Tags question of law • closing stock • opening stock • custom duty • cost price
Bot Summary: 951/AHD/1993 952/AHD/1993 for the Assessment Years 1987-88 1988-89 respectively, the revenue has preferred the present Tax Appeals. 1.1 The following substantial question of law was raised while admitting the appeals on 31.01.2005. Tax Appeal No. 209 of 2004 Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in disallowing Rs. 3,17,85,798/- from the cost actually paid by the assessee in respect of the stock acquired from three amalgamating companies on amalgamation Tax Appeal No. 210 of 2004 Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in disallowing Rs. 99,60,469/- from the cost actually paid by the assessee in respect of the stock acquired from three amalgamating Page 2 of 5 O/TAXAP/209/2004 JUDGMENT companies on amalgamation 2. On appeal, the CIT dismissed the appeal and confirmed the findings of A.O. 3. On appeal before the Tribunal by the assessee, by orders, Tribunal dismissed the appeal and upheld the findings of CIT(A). The issue involved in the present Tax Appeal is now not res integra in view of the decision of this Court in the case of same group of companies viz. Having heard learned advocates appearing on behalf of the parties and the question posed for consideration before us reproduced hereinabove and considering the decision of this Court in the case of same group of companies referred hereinabove, the question, which is raised in the present appeals is required to be answered in favour of the assessee.


O/TAXAP/209/2004 JUDGMENT IN HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 209 of 2004 With TAX APPEAL NO. 210 of 2004 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER 1 Whether Reporters of Local Papers may be allowed to see judgment ? 2 To be referred to Reporter or not ? 3 Whether their Lordships wish to see fair copy of judgment ? 4 Whether this case involves substantial question of law as to interpretation of Constitution of India, 1950 or any order made thereunder? 5 Whether it is to be circulated to civil judge? VAERLI WEAVES PVT.LTD. Appellant(s) Versus DY.COMMISSIONER OF INCOME TAX (ASSTT.) Opponent(s) Appearance: MR JP SHAH, ADVOCATE for Appellant(s) No. 1 MR SUDHIR M MEHTA, ADVOCATE for Opponent(s) No. 1 CORAM: HONOURABLE MR.JUSTICE KS JHAVERI Page 1 of 5 O/TAXAP/209/2004 JUDGMENT and HONOURABLE MR.JUSTICE K.J.THAKER Date : 01/12/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Being aggrieved and dissatisfied with impugned orders passed by Income Tax Appellate Tribunal, Ahmedabad Bench B (hereinafter referred to as Tribunal ) dated 20.11.2003 in ITA Nos. 951/AHD/1993 & 952/AHD/1993 for Assessment Years 1987-88 & 1988-89 respectively, revenue has preferred present Tax Appeals. 1.1 following substantial question of law was raised while admitting appeals on 31.01.2005. : Tax Appeal No. 209 of 2004 Whether, on facts and in circumstances of case, Tribunal was right in law in disallowing Rs. 3,17,85,798/- (being custom duty component in cost) from cost actually paid by assessee in respect of stock acquired from three amalgamating companies on amalgamation? Tax Appeal No. 210 of 2004 Whether, on facts and in circumstances of case, Tribunal was right in law in disallowing Rs. 99,60,469/- (being custom duty component in cost) from cost actually paid by assessee in respect of stock acquired from three amalgamating Page 2 of 5 O/TAXAP/209/2004 JUDGMENT companies on amalgamation? 2. Three companies were amalgamated with assessee companies. assessees took over stock of discontinued firms at cost price as recorded in books of discontinued firms which included amount paid by way of custom duty. Assessing Officer held that since under Section 43B deduction was allowed to discontinued firms in respect of this custom duty in their assessments, if full cost inclusive of custom duty component is allowed to asessesses while computing profit on sale of such stock or on sale of production from such stock there will be double deduction. On appeal, CIT (Appeals) dismissed appeal and confirmed findings of A.O. 3. On appeal before Tribunal by assessee, by orders, Tribunal dismissed appeal and upheld findings of CIT(A). Being aggrieved and dissatisfied with impugned orders passed by Tribunal, revenue has preferred present Tax Appeals for consideration of aforesaid substantial question of law. 4. issue involved in present Tax Appeal is now not res integra in view of decision of this Court in case of same group of companies viz. Deputy Commissioner of Income-Tax vs. Garden Silk Mills Ltd reported in (2009) 315 ITR 188. 4.1. In aforesaid decision this court held that Tribunal was justified in deleting additions made by Assessing Officer who proceeded on ground that deduction was Page 3 of 5 O/TAXAP/209/2004 JUDGMENT allowed in hands of amalgamating sister concern, closing stock after such deduction was taken over by assessee company and opening stock in hands of assessee company had to be enhanced. 5. Mr. Sudhir Mehta, learned advocate on behalf of revenue is not in position to dispute above and is not in position to show and/or point out any contrary decision. 6. Having heard learned advocates appearing on behalf of parties and question posed for consideration before us reproduced hereinabove and considering decision of this Court in case of same group of companies referred hereinabove, question, which is raised in present appeals is required to be answered in favour of assessee. We are not giving any elaborate reasons for same question raised has already been answered by this Court in case of Garden Silk Mills Ltd. Accordingly, question is answered against revenue and in favour of assessee. 7. In view of above, impugned order passed by Tribunal is quashed and set aside. Assessment be made afresh accordingly. present Tax Appeals are allowed accordingly. (K.S.JHAVERI, J.) Page 4 of 5 O/TAXAP/209/2004 JUDGMENT (K.J.THAKER, J) divya Page 5 of 5 Vaerli Weaves Pvt. Ltd. v. Dy. Commissioner of Income-tax (Asstt.)
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