2014 (7) TMI 210

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....ock by adding balance under CENVAT account amounting to Rs. 4,11,37,363/-. 3. Rival contentions have been heard and record perused. Facts in brief are that during the course of scrutiny assessment, the AO found that under the head loans and advances, assessee had shown a sum of Rs. 4,11,37,363/- as closing CENVAT credit balance. The AO further observed that as per enclosure-CD7, which refers to clause 22(a) of 3CD form of the tax audit report shows that the assessee has an opening credit balance under the CENVAT account amounting to Rs. 4,76,78,878/-, credit availed during the year of Rs. 9,70,87,166/- which has been deducted from purchases and credit utilized during the year of Rs. 10,36,28,681/- which has been deducted from the sales a....

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....ctually paid or incurred by the assessee to bring the goods to the place of its location and conditions as on the date of valuation as per provisions of Section 145A of the Act. In the instant case before us, the AO has made adjustment by including the Cenvat credit balance available at the end of the year in the closing stock thereby increasing the business profit of the assessee without making corresponding adjustment of the opening stock. Exactly similar issue has been considered by the Hon'ble Bombay High Court in the case of Mahalaxmi Glass Works (P) Ltd. (supra) and it was held that to give effect to Section 145A, if there is any change at the closing stock at the end of the year due to inclusion of CENVAT credit available then there ....

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.... that year. It has been held that this would not amount to give double benefit to the assessee and would be necessary to compute the true and correct profit for the purpose of assessment. The Hon'ble Court further observed as under :- "3. We may reproduce here, the relevant observation in the judgment of the Privy Council in the case of CIT Vs. Ahmedabad New Cotton Mills Co. Ltd. which was relied upon by the Delhi High Court and which is as under : "If the method of altering both valuation is not adopted it is perfectly plain that the profit which is brought forward is not the real one. It may be more or it may be less, but it has no relation to the true profit if the stock is valued on one basis when it goes out without considering the ....