Appeal partially allowed, issues 1 & 2 remanded, issues 3 & 4 decided for assessee. Order pronounced 08-06-2012.

The appeal was allowed in part, with issues 1 and 2 restored to the CIT for fresh examination, and issues 3 and 4 decided in favor of the assessee. The order was pronounced on 08-06-2012.

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Issues Involved:
1. Disallowance of additional depreciation.
2. Addition of differential amount of service charges.
3. Recomputing deduction under section 80HHC after excluding ocean freight.
4. Addition of excise duty payable on finished goods to the closing stock.

Detailed Analysis:

1. Disallowance of Additional Depreciation:
The CIT disallowed the claim of additional depreciation amounting to Rs.2,83,94,760/- on the grounds that the assessee did not furnish the mandatory Form 3AA as required under section 32(1)(iia) of the IT Act. The assessee contended that Form 3AA was submitted on 27-11-2006 during the assessment proceedings. The Tribunal found a dispute regarding the submission of Form 3AA and restored the matter to the CIT for verification. If the form was indeed filed on 27-11-2006, the additional depreciation cannot be disallowed. This issue was allowed for statistical purposes.

2. Addition of Differential Amount of Service Charges:
The CIT directed the addition of Rs.3,84,188/- as the difference between the service charges received as per TDS certificates and the amount admitted by the assessee. The assessee explained that the difference was due to service tax included in the TDS certificate but not in the credited amount. The Tribunal noted that the CIT passed the order ex parte and restored the issue to the CIT for fresh examination after affording the assessee an opportunity to be heard. This issue was allowed for statistical purposes.

3. Recomputing Deduction under Section 80HHC:
The CIT directed the AO to recompute the deduction under section 80HHC by excluding ocean freight of Rs.6,18,29,151/- from the export turnover. The assessee argued that the issue was already subject to appeal before the CIT(A), who directed the AO to verify the claim. The Tribunal held that the CIT cannot exercise jurisdiction under section 263 for an issue already decided in appeal, making the CIT's direction legally unsustainable. This issue was allowed in favor of the assessee.

4. Addition of Excise Duty Payable on Finished Goods:
The CIT directed the addition of Rs.30,02,950/- as excise duty payable on finished goods to the closing stock. The assessee contended that the finished goods were valued at cost as they were still at the manufacturing point and not removed to the godown, thus not attracting excise duty. The Tribunal supported the assessee's view, referencing similar decisions by the ITAT and the Madhya Pradesh High Court. Additionally, the assessee had paid the excise duty before filing the return. The Tribunal held that no addition could be made on this account. This issue was allowed in favor of the assessee.

Conclusion:
The appeal was allowed in part, with issues 1 and 2 restored to the CIT for fresh examination, and issues 3 and 4 decided in favor of the assessee. The order was pronounced on 08-06-2012.

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