TaxTMI 
TaxTMI 
2013 (2) TMI 262
X X X X Extracts X X X X
X X X X Extracts X X X X
....stock on account of purchase tax not included therein. The Assessing Officer observed that the assessee-company purchased stock from unregistered dealer and paid purchase tax amounting to Rs. 53,71,399/-. In the tax audit report it was pointed out that purchase tax was not included in the value of closing stock on the goods purchased from unregistered dealer though this was debited to the profit and loss account. Since purchase tax had to be loaded to be purchases the Assessing Officer enhanced the value of purchase by Rs. 53,71,399/-. On an appeal filed by the assessee, learned CIT(A) observed that under identical circumstances in assessee's own case for A.Y. 2004-05 his predecessor added purchase tax to the cost of value of closing stock ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t prejudice to the above it was contended that learned CIT(A) erred in not directing the Assessing Officer to increase the opening stock and purchases for the year under consideration by applying section 145A in its entirety, in the light decision of Hon'ble Bombay High Court in the case of CIT v. Cabot India Ltd. [ITA No. 2123 of 2009 dated 16.10.2009]. 7. Facts necessary for the disposal of the issue are stated in brief. The Assessing Officer noticed that unutilized Modvat credit/Cenvat credit outstanding at the end of the year works out to Rs. 3,09,18,828/- which deserves to be added to the closing stock as per the provisions of section 145A. Case of the assessee-company was that the net impact in profit and loss account is nil if sui....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rovisions of section 145A were introduced long back, its effect was not given in computation of income. Therefore in the first year of giving effect to the provisions of section 145A, there is bound to be a positive impact upon the income of the assessee. In this regard learned CIT(A) relied upon the decision of ITAT, Mumbai Bench in the case of West Coast Paper Mills Ltd. v. Asstt. CIT [2006] 103 ITD 19. 9. Aggrieved, the assessee is in appeal before us. Learned counsel for the assessee adverted our attention to a Note on Cenvat credit (page 14 of the paper book) to submit that the assessee has been consistently following exclusive method of accounting i.e. purchases are reduced by the Modvat receivable at inception. The effect of this ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as well as closing stock in which event, there will not be any tax impact. 10. On the other hand learned Departmental Representative submitted that section 145A speaks of only adjustments to the closing stock and hence opening stock need not be revalued by applying inclusive method. However he fairly admitted that the issue is covered by the decisions cited by learned counsel, in the paper book. 11. We have carefully considered the rival submissions and perused the record. The assessee has been consistently followed exclusive method and by virtue of insertion of section 145A the assessee has to follow inclusive method in which event, similar adjustment has to be made to the opening stock, purchases, sale and closing stock also. Even ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The case of the assessee was that in respect of depreciable assets provisions of section 50 are applicable in which event method prescribed under 50C cannot be invoked. It was also contended that there is deemed short term capital gains, in the instant case, by virtue of the fact that block of assets were exhausted upon sale of Nanak Niwas but the fact remains that it is depreciable asset and hence valuation adopted by stamp valuation authority should not be taken into consideration. It was further submitted that on the date of sale, property was more than 50 years old and as per the stamp duty Ready Reckoner 50% depreciation has to be adopted and if such a method is adopted value as per the Stamp Act works out to Rs. 1.55 crores whereas ....