2014 (6) TMI 743 - AT - Income Tax

Tribunal upholds deletion of unutilized CENVAT credit addition for A.Y. 2005-06

The ACIT, (OSD) -1, Circle-4, Ahmedabad Versus Jagdish Aluminium Pvt. Ltd.

The Appellate Tribunal ITAT Ahmedabad upheld the CIT(A)'s decision to delete the addition of Rs. 13,61,234 on account of unutilized CENVAT credit for A.Y. ... Valuation of closing stock - unutilized CENVAT credit – Provisions of section 145A of the Act not properly appreciated – Held that:- CIT(A) while deleting the addition has given a finding that Assessee was following exclusive method of excise duty and had already submitted the reconciliation statement along with the return of income - Assessee has correctly reconciled the position of valuation of stock as per the inclusive method and exclusive method as contemplated u/s 145A of the Act - perusal of reconciliation statement between the inclusive and exclusive method of accounting states that there was no impact on the net position of the profit of Assessee - the unutilized credit of CENVAT account was adjusted against the excise duty payable in respect of sales made – thus, the question of applicability of Section 43B becomes irrelevant - Revenue could not controvert the findings of CIT(A) by bringing any contrary material on record – thus, there was no reason to interfere with the order of CIT(A) – Decided against Revenue. Issues Involved:Appeal against CIT(A) order for A.Y. 2005-06 - Addition on account of unutilized CENVAT credit - Exclusive method of accounting for excise duty - Reconciliation statement submission - Applicability of Section 145A and 43B of the Income Tax Act.Analysis:The appeal before the Appellate Tribunal ITAT Ahmedabad was filed by the Revenue challenging the order of CIT(A)-VIII, Ahmedabad for the assessment year 2005-06. The issue revolved around the addition of Rs. 13,61,234 on account of unutilized CENVAT credit by the Assessing Officer (A.O). The A.O contended that the unutilized CENVAT balance should be credited to the Profit and Loss account due to the Assessee following an exclusive method of accounting for excise duty. The A.O further highlighted the absence of a reconciliation statement for the valuation of closing stock and added the unutilized CENVAT balance to the total income of the Assessee. Subsequently, the CIT(A) overturned the A.O's decision, emphasizing that the Assessee had already submitted the reconciliation statement along with the return of income, correctly reconciled the valuation of stock under different methods, and adjusted the unutilized CENVAT credit against excise duty payable for sales, rendering Section 43B inapplicable.The CIT(A) based the decision on the exclusive method of excise duty followed by the Assessee, the submission of the reconciliation statement, and the lack of impact on the net profit position due to the reconciliation between inclusive and exclusive accounting methods. The Revenue, dissatisfied with the CIT(A)'s order, appealed before the Appellate Tribunal. During the hearing, the Revenue failed to provide any contradictory evidence to challenge the findings of the CIT(A). Consequently, the Appellate Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal. The Tribunal concluded that there was no justification to interfere with the CIT(A)'s order, leading to the dismissal of the Revenue's appeal.In summary, the Appellate Tribunal ITAT Ahmedabad ruled in favor of the Assessee, upholding the CIT(A)'s decision to delete the addition of Rs. 13,61,234 on account of unutilized CENVAT credit. The Tribunal recognized the Assessee's adherence to the exclusive method of excise duty accounting, submission of reconciliation statements, and proper adjustment of CENVAT credit against excise duty payable, ultimately finding no grounds to overturn the CIT(A)'s order.