R.V.EASWAR, J. - (1.)THESE are appeals filed by the revenue under section 260A of the Income Tax Act, 1961 and they are directed against the order dated 26.12.2011 passed by the Income Tax Appellate Tribunal (,,Tribunal, for short) in respect of the assessment year 2004-05. The order of the Tribunal is a common order passed in cross-appeals.
(2.)THE following questions stated to be substantial questions of law have been proposed by the revenue: -
"2.1 Whether learned ITAT erred in deleting the addition of Rs.90,35,298.00 made by the Assessing officer on account of provisions for impairment of stock? 2.2. Wether learned ITAT/CIT (A) erred in deleting the addition of Rs.5,00,00,000.00 made by the Assessing officer on account of Sales of VSAT equipment?"

We may straightaway say that so far as the second question is concerned, the learned standing counsel for the revenue fairly stated that the addition was made on the basis of the sales tax assessment and that the Tribunal deleted the addition on the basis of the order passed by the Joint Commissioner of Sales Tax (U.P.) on 22.12.2006 in appeal by the assessee. The appellate authority by the aforesaid order had deleted the addition. The Tribunal, therefore, held that the addition made in the income tax assessment can no longer survive. It further noted that the assessing officer had no case that the service charges for installation and/ or de-installation of VSATs were not declared by the assessee in its books of accounts. In other words, it was the view of the Tribunal that the amount of Rs.5 crores cannot also be added as service charges. Having regard to the stand taken by the standing counsel for the revenue and also having regard to the fact that the findings of the Tribunal are factual we do not think that the second question can be admitted.

(3.)SO far as the first question is concerned, it relates to the valuation of the closing stock. The assessee carries on the business of installation of VSAT equipment. The stock consists of two categories; (i) old and used stock which is categorized as defective but repairable, (ii) demo stock. In its accounts the assessee reduced a sum of Rs.90,35,298.00 from the value of the stock on account of impairment and defects. The claim was made on the footing that the "net realizable value" of the stock had fallen below even the cost price. In support of the valuation, the assessee submitted the basis of the estimate which was prepared by its technical department. Certain details were also submitted regarding certain items of stock together with their realisable rate as on 31.03.2003 and 31.03.2004. The assessing officer rejected the assessees claim for reduction in the value of the closing stock made on the basis of the net realizable value being less than the cost and made an addition of Rs.90,35,298.00 to the business profits.