TaxTMI 
TaxTMI 
2016 (3) TMI 115
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....de order dated 01.09.2011 dismissed the appeal of the assessee. Aggrieved by the order of ld. CIT(A), Assessee is now in appeal before us and has raised the grounds which were later concised and the concised grounds read as under: "1. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in treating Ground No. 1 of the appellant's appeal challenging the validity of the assessment order impugned before him as being only general in nature and not requiring adjudication. 2. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in upholding the addition of Rs. 54,16,674 (which amount was erroneously taken by the learned Assessing Officer instead of the correct amount of Rs. 34,06,778 and for correcting which the learned CIT(A) has issued direction at the end of para 3 of the impugned Appellate Order)on account of unutilized balance of MODVAT credits as at the end of the year on 31.3.2008 made by the learned Assessing Officer on the ground that in terms of the provisions of Section 145A of the Income-tax Act, 1961, it was required to be added to the value of ....
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....d and the deviation if any has to be added in the computation of income. The assessee has admitted that it has never followed the provisions of section 145A. It is stated that the assessee has no option but to follow the provisions of section 145A because this provision is there on the statute book. The decisions of honourable Supreme Court in the case of Indo Nippon chemicals Ltd and the decision of honourable Gujarat High Court in the case of unique industries are distinguishable on facts. As per the provisions of section 145A, the appellant is required to include the excise duty In the closing stock. In view of the above, the addition on account of excise duty and other taxes paid on raw material and other inputs are to be added to the value of closing stock of raw material, semifinished and finished goods. The method of accounting is not relevant after section 145A came into existence with effect from assessment year 1999-2000. Prior to that, method of accounting regularly followed by the appellant is relevant. In view of this, the decision of honourable Gujarat High Court in the case of ACIT V/s Narmada Chemature petrochemicals Ltd, 327 ITR 369 is not applicable. In t....
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....sessee is consistently following the method of accounting under which the entire amount of excise duty incurred during year for which assessee is entitled to get MODVAT credit is debited to MODVAT credit receivable account. He submitted that if the assessee includes the excise amount to the value of closing stock then corresponding adjustment would have been to be made to the opening stock, purchases and other figures which would not affect the Profit and Loss account. He submitted and pointed out at page 105 that had the assessee valued the stock after considering the MODVAT as part of stock, the gross profit would remain the same. He also placed reliance on the decision of Co-ordinate Bench in case of the Co-ordinate Bench in case of ITO vs. Gujarat Parafins Pvt. Ltd. in ITA No.2335/Ahd/2011 and also placed on record a copy of the aforesaid decision. He, therefore, submitted that in the present case no addition was called for. Ld. D.R. on the other hand supported the order of Assessing Officer and ld. CIT(A). 7. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to inclusion of excise duty to the value of closi....
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....y paid but not included in the purchases was shown in the balance sheet as excise duty receivable and therefore, there cannot be a reason to make any addition in the income of the assessee because even if we include such excise duty receivable in the value of closing stock, the same is also required to be included in the value of purchases and it will have no impacts on the profits of the assessee. Therefore, we do not find any reason to interfere in the order of Ld. CIT(A). 9. We further find that in the case of Bloom Dekor Ltd. (supra) similar issue was decided by the Co-ordinate Bench of Tribunal in favour of the Assessee by holding as under:- 4. On perusing the financial statements Assessing Officer noticed that as per the notes to accounts, excise duty on finished goods not cleared as per factory was estimated at R. 47.38 lacs and custom duty on stock lying at port estimated at Rs. 46.5 lacs was not provided for in the books and was also not considered in the valuation of Inventories. Assessing Officer was of the view that as per provision of Section 145A inserted with effect from 1.04.1999 excise duty has to be added while valuing finished goods. He thus con....
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....venue natural. At the same time while disturbing the value of the closing stock the assessing authority could not change the method of accounting regularly employed. (c) The assessment year being 1997-98 the provisions of section 145A of the Act inserted by the Finance (No. 2) Act, 1998 with effect from April 1, 1999 could not be invoked". [4.4] I have perused the assessment order and the written submissions made in this regard. Since the issue is squarely covered by the Jurisdictional 1TAT, I am of the view that no addition should be made on account of excise and customs duty in the valuation of closing stock. The addition made by the AO is thus directed to be deleted. The grounds raised by the appellant are thus allowed. 5. Aggrieved by the order of the Assessing Officer Revenue is now in appeal before us. 6. Before us, learned D.R. relied on the order of the Assessing Officer. 7. We have heard the learned D.R. and perused the material on record. CIT(A) while deleting the addition has held that the issue is squarely covered by the decision of jurisdictional Tribunal and accordingly relying on the aforesaid decision deleted the addition....