Value of goods lying at port can be at cost or market price. SC dismisses SLP of Revenue

Value of goods lying at port but not exported can be at cost or market price at the option and regular practice of the assessee. SC dismisses SLP of the Revenue

ABCAUS Case Law Citation:
ABCAUS 3047 (2019) (07) SC

The Revenue had challenged the order of the Tribunal against the respondent assessee. The High Court framed the following questions of law:

1. Whether the order of the Income Tax Appellate Tribunal (Tribunal) affirming the order of the Commissioner of Income Tax (Appeals) deleting the disallowance made by the Assessing Officer under Section 80-IA of the Income Tax Act is perverse as it is non reasoned?

2. Whether the Tribunal was right in holding that the assessee is entitled to set off interest paid on borrowed funds from interest income earned held to be taxable under the head “income from other sources” under Section 57(iii) of the Income Tax Act, 1961?

However, the Hon’ble High Court declined to frame substantial question of law on the third issue raised by the Revenue on method of accounting adopted by the assessee with regard to the goods which were lying at the port which had not been exported.

The Hon’ble High Court observed that as per the finding of the Tribunal title in the goods ready for shipment had not transferred to the foreign buyers.

Accordingly, the Hon’ble High Court opined that the goods lying at the port ready for shipment was stock in hand that could be valued at cost or market price, at the option and as per regular practice of the assessee.

According to the Hon’ble High Court the mere fact that for sales tax purposes the value of the goods lying at the port was taken at the invoice value would not make any difference. Sales tax computation and declaration would be made in accordance of the provision of the Sales Tax Act.

Aggrieved by the order of the Hon’ble High Court, the Department filed a Special Leave Petition (SLP) before the Hon’ble Supreme Court.

The Division Bench headed by the Hon’ble the Chief Justice, after hearing the counsel for the petitioner and on perusing the relevant material dismissed the SLP as without any merit.    

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