2014 (1) TMI 812

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....ollowing substantial questions of law : "(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law approving exclusion of excise duty from valuation of closing stock of finished goods? (2) Whether the Appellate Tribunal was right in holding that interest of Rs.2,19,216/- derived from Bank Guarantee Deposits, Letter of Credit and on delayed payments, is eligible for deduction u/s.80IA? 2.00. That the assessee filed return of income for the AY 1997-98 declaring total income at Rs.25,40,810/-. That while passing the assessment order, the AO disallowed and consequently directed to make addition of Rs.11,09,733/- on the ground of undervaluation of closing stock due to noninclusion of excise ....

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....ing substantial questions of law : "(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law approving exclusion of excise duty from valuation of closing stock of finished goods? (2) Whether the Appellate Tribunal was right in holding that interest of Rs.2,19,216/- derived from Bank Guarantee Deposits, Letter of Credit and on delayed payments, is eligible for deduction u/s.80IA? 3.00. Heard Mr.Manish Bhatt, learned counsel appearing on behalf of the revenue and Mr.Agarwala, learned advocate appearing on behalf of the respondent. 3.01. Now, so far as question No.(1), Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law approving exclusio....

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....sub-section (3) of section 145 of the Act. The assessee was following the mercantile system of accounting but it was not the case of the Assessing Officer that the Assessing Officer was not in a position to deduce true profits of the year under consideration. Such duty of Central excise if added to enhance the value of closing stock would result in enhanced opening stock on the first day of the next accounting period, namely, April 1, 1997. So the next year's profits would get depressed accordingly. Over a period of time the whole excise would even out, in other words, be revenue neutral. At the same time while disturbing the value of the closing stock the assessing authority could not change the method of accounting regularly employed. ....