TaxTMI 
TaxTMI 
2017 (2) TMI 730
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 28.10.2011 and duly served on the assessee. Necessary details as called for were duly supplied by the assessee along with audited financial statements, Tax Audit Report and enclosures. The assessment was completed assessing the income at Rs. 1,78,79,354/- after making additions of 46,04,094/- on account of following :- Preliminary Expenses (Para.3) 113068 Adjustment u/s 145A(Para.4) 3184930 Employees contribution to PF (Para 5) 9278 Sticky Creditors (Para.6) 148310 Outstanding Professional Tax (para.7) 44220 Outstanding Sales Tax (Para.8) 63060 Un-reconciled Credit differences (Para.9) 341228 46,04,094 3. Aggrieved, assessee went in appeal before ld. CIT(A) and partly succeeded. 4. Now Revenue has filed the appeal and the assessee has filed the Cross Objection before the Tribunal. 5. First we take up Revenue's appeal wherein following grounds have been raised:- i) The CIT(A) has erred in law and on facts in deleting the addition of Rs. 31,84,930/- made by the A.O. U/S.145A of the Income tax Act. ii) The CIT(A) has erred in law and on facts in deleting the addition of Rs. 9,278/- on account of late pay....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt of closing stock and, therefore, ld. Assessing Officer has rightly made the addition. 9. On the other hand, ld. Authorised Representative (AR) supporting the order of ld. CIT(A) submitted that the assessee company purchased goods both from within the State and outside the State and all the stocks of raw materials, packing materials, stores and consumables as on 31.3.2009 are not VAT credit stocks. Further categorical details of the VAT credit and non-VAT credits inputs consumption values in the stock of finished goods and semi finished goods is infeaible to determine. It was further submitted that the valuation has been done under the compliance of Accounting Standards prescribed by the Institute of Chartered Accounts of India which are to be followed for preparing financial statement as per the Companies Act. Stocks are valued excluding tax and duties. However, in any case it would not have any impact on the total income of the assessee company as all VAT credit purchases are debited to purchases exclusive of taxes and opening stocks have also been valued excluding taxes. 10. Ld. AR further submitted that assessee company was enjoying the benefit of excise notification an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is not disputed that as per the provisions of section 145A of the Act opening and closing stocks should be inclusive of taxes but due to the type of business and variety of stocks, assessee is unable to do so. However, it is a fact that there is no negative impact on the revenue as both the opening and closing stocks are valued exclusive of taxes and, therefore, closing stock for the year under appeal which is excluding of taxes will become opening stock for next year. 11.1 We further observe that Hon. Jurisdictional High Court in the case of Voltamp Transformers Ltd. vs. CIT (2008) 217 CTR 254 has held that Assessing Officer has got very limited powers to change valuation of closing stock which is part of accounting policy. He cannot change method of accounting regularly followed by the assessee without valid reasons. We further observe that Hon. Apex Court in the case of Chainrup Sampatram (1953) 24 ITR 481 (SC) has held that "profits does not arise out of valuation of closing stock and situs of its arising or accruing where the valuation is made and valuation of unsold stock is necessary part of the process of determining trading results but it can in no sense be regarded a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts which is brought forward is not real one. In such cases, the real profits of a particular year cannot be ascertained by merely raising value of closing stock, not taking into consideration the similar valuation of opening stock. As per the ratio of this case, enhancing the value of closing stock without giving corresponding effect to the valuation of opening stock is not proper. (d) The appellant during the assessment proceedings as well as \ appellate proceedings submitted that it was paying excise duty at a . concessional rate and accordingly it was not entitled to take benefit of CENVAT credit This is d plausible explanation given by the appellant which remain uncontroverted. In my considered view, since CENVAT benefit is not available to the appellant, accordingly the value of raw material, semi finished goods and finished goods on account of CENVAT in the closing stock is not warranted. (e) The appellant has also submitted during the appellate: proceedings as well as assessment proceedings that purchase of: primary raw material like China clay is directly procured from mines and the major stores and packing items are purchased from SSI units. These entities are exe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....facts, we do not see any reason to interfere with the order of the Id.CIT(A). Thus, the ground of Revenue is dismissed. 12. Respectfully following the decision of Co-ordinate Bench and in the totality of facts and circumstances of the case and our discussion in the preceding paragraph, we are of the view that no addition of Rs. 31,84,930/- was called for u/s 145A of the Act by ld. Assessing Officer and we, therefore, find no reason to interfere with the order of ld. CIT(A). We uphold the same. This ground of Revenue is dismissed. 13. Ground No.2 reads as under :- ii) The CIT(A) has erred in law and on facts in deleting the addition of Rs. 9,278/- on account of late payment of employees contribution to the Provident Fund. 14. At the outset ld. DR submitted that the issue raised in this ground is squarely covered in favour of Revenue by the judgment of Hon. Jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation (GSRTC) 366 ITR 170 (Guj) wherein held that the employees contribution to PF if paid beyond due date it should be disallowed as the assessee was not entitled to its deduction against the income referred in section 28 of the Act. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ase of M/s Goetze India Ltd. (supra) is misplaced because in the present case of assessee no new claim for deduction u/s 80IB has been made and ld. Assessing Officer should not have taken undue mistake on the part of assessee in taking legitimately entitled claim. Ld. AR further submitted that the Hon. Supreme Court in numerous decisions including Ramlal and Ors. Vs. Rewa Coalfields Ltd., AIR 1962 SC 361, The State of West Bengal vs. The Administrator, Howrah Municipality and Ors., AIR 1972 SC 749 and Babumal Raichand Oswal vs. Laxmibai R. Torte, AIR 1975 SC, 1297 stated that the State authorities should not raise technical pleas if the citizens have a lawful right and the lawful right is being denied to them merely on technical grounds. The State authorities cannot adopt the attitude which private litigants might adopt. 22. We have heard the rival contentions and perused the material placed before us. Through this ground Revenue has challenged the ld. CIT(A)'s order allowing addition deduction claimed u/s 80IB of the Act at Rs. 11,22,920/-. We observe that assessee is eligible to claim deduction u/s 80IB of the Act. In the return of income Rs. 54,36,002/- was claimed as deducti....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... (supra) will not be applicable. Secondly, the Hon'ble Supreme Court in Goetz India Ltd. (supra) had curtailed the powers of the Assessing Authority, however, powers of Appellate Authorities were no\ curtailed, in view of above, I am of the considered opinion that the ratio of Goetz India Ltd. (supra) is not applicable in this case. It is also an established proposition of law that the A.O. should assess the correct taxable income in the assessment order. In case, the appellant has not made a right claim of deduction u/s.80IB in the original return, the A.O. is duty bound to revise the same in the assessment proceedings. In this regard the appellant has rightly placed reliance on S.R. Koshti vs. CIT 276 ITR 165 (Guj.). In view of above, I am of the considered opinion that the ratio of Goetz India Ltd. (Supra) will fist be attracted in this case and accordingly, the A.O. is directed to accept the revised deduction claimed u/s.80IB of Rs. 65,58,922/-. This ground of appeal is allowed. 23. We are therefore, of the view that ld. CIT(A) has rightly allowed the revised claim of assessee u/s 80IB of the Act at Rs. 65,58,922/-. We therefore, find no reason to interfere with the ord....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee and in the case of 7 parties, the total difference was Rs. 3,41,228/- which was primarily due to the fact that the assessee has issued credit notes for outstanding which did not find place in the account of the other party and, therefore, Rs. 3,41,228/- was added to the income of assessee. 30. Appeal against this addition before ld. CIT(A) could not bring any relief as it was dismissed by ld. CIT(A) observing as follows :- 9.2 I have carefully considered the rival contention?,. It is seen that the appellant during the year under consideration had allegedly issued credit notes to 7 parties, details of which is recorded on page no.11 of the assessment order. The expenses pertaining to these credit notes has been claimed by the appellant in the P & L A/c. However, the independent enquiries conducted by the A.O. revealed that all the 7 parties had not accounted for these credit notes. During the appellate proceedings the appellant contended that credit notes have been issued and the same has been accounted for in the books of accounts. The books of accounts are duly audited and the auditors had not made any adverse observation. Taking entirety of facts in view, I am not i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lal & Co. Ghaziabad -640 Total -341228 We further observe that ld. counsel for the assessee has contended that these alleged differences were only due to credit notes issued by the assessee. He should not have accounted for in the alleged books of 7 parties. It is a fact that assessee is subjected to audit u/s 44AB of the Act declaring of total income of Rs. 1,32,75,260/- and book profit of Rs. 4,82,76,833/-. Books of accounts have not been rejected by the Assessing Officer and deduction u/s 80IB has also been accepted by him. Assessee is registered under the Excise as well as VAT and statutorily required to file monthly/quarterly statement and all these facts are not disputed. Issuing of credit notes is a normal business activity and arose on account of defective material, change of rates etc. and is a ongoing process. Even from going through the amount of difference which in the case of Panchratna Marbles is Rs. 1309/-, Granito Marketing Rs. 9999/-, Gayatri Trading Co.85965/- and others shows that the difference are only account of minor changes in the bills issued earlier. There is a fair possibility that in the case of some parties credit notes a....