2009 (12) TMI 708 - AT - Income Tax

Tribunal rules in favor of assessee on excise duty valuation & household expenses claims

Ashwin A. Shah Versus Assistant Commissioner of Income-tax

Ashwin A. Shah Versus Assistant Commissioner of Income-tax - [2010] 1 ITR 356 Issues involved: Six appeals filed by the assessee against the orders of the Commissioner of Income-tax (Appeals)-IV, Ahmedabad, for the assessment years 2000-01, 2002-03 to 2006-07 u/s 153A(b) read with section 143(3) of the Income-tax Act, 1961.Excise Duty Issue:The assessee contested the addition on account of excise duty not included in the closing stock of finished goods. The Tribunal examined the provisions of section 145A of the Income-tax Act, emphasizing that adjustment to closing stock should be for tax, duty, or cess actually paid or incurred, not accrued. Referring to relevant court decisions, including CIT v. Parry Confectionary Ltd., it was concluded that excise duty on goods not cleared from the factory should not be included in valuing closing stock. The Tribunal held that excise duty is incurred only when goods are cleared from the factory premises for sale, not merely upon manufacturing completion. Consequently, the addition made by the authorities was deemed incorrect and was deleted.Household Expenses Issue:Regarding the addition in household expenses for the assessment years 2002-03 and 2004-05, the Tribunal noted a discrepancy in the assessment for 2004-05, where the addition should have been limited to Rs. 20,000 instead of Rs. 50,000. As a result, the assessee received a relief of Rs. 30,000 for 2004-05. However, the addition for the assessment year 2002-03 was considered reasonable and confirmed. The appeal of the assessee was partly allowed for all years.The judgment was pronounced on December 11, 2009.