The Ahmedabad bench of Income Tax Appellate Tribunal allows the deduction and held that the loss of consumable stock can be held as accidental to the business of allowability.
In instant case, Assessee Rasna Pvt Ltd. is a soft drink concentrate brand owned by Pioma Industries which is based in Ahmedabad, India. The Assessee company also buys soft concentrate in bulk quantity from supplier M/s. Pioma Industries and sells through various clearing and forwarding agents as well as through own Depot to the stockiest.
Here the allegation starts with deletion of disallowance on account of destroyed stock is concerned. CIT (A) allowed the loss of consumable stock and had given relief to the Assessee.
Being aggrieved with the action of appellate authority Revenue came to Ahmedabad Tribunal by observing that similar addition was seen in the case of Waves Foods Pvt. Ltd on the ground that claim of Assessee that stock becomes perishable on account of expiry date has not been accepted by the department and they made the addition.
The bench while hearing the recital of Assessee observed that life of products dealt by Rasna Pvt Ltd is 18 to 24 months depending on their nature. After the shelf life period consumption of such products are also subject to Government Health Department inspection.
Accordingly, the bench noted that “Such item has to be destroyed and the loss of consumable stock can be held as accidental to the business of allowability”.
By following the above observation bench found the decision of first appellate authority is best and do not want to interfere with it.
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