TaxTMI 
TaxTMI 
2014 (9) TMI 1160
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....it. It claimed an amount of Rs. 1,20,62,472 in the P & L Account as write-off of the outstanding unutilized CENVAT Credit available in its books of accounts. Assessing Officer in the course of scrutiny of the assessment did not allow deduction by stating as under : "3. The assessee has written off an amount of Rs. 1,20,62,472/- towards Cenvat receivable written off and made it a charge on the profit and loss account. Since the amount involved is a statutory amount, vide show cause dt.13.12.2010, the assessee was asked to explain as to why the amount written off should not be disallowed. With regard to this, the assessee vide its letter dated 16.12.2010 submitted as under : It is true that we have written off a sum of Rs. 1....
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....med as deduction. It was further submitted that assessee company has two divisions viz., Distilleries and Property. The distilleries division was finally demerged and its assets and liabilities are transferred to another company w.e.f. 01.04.2008 in a scheme of arrangement approved by the Hon'ble High Court of Andhra Pradesh. Accordingly, the outstanding CENVAT Credit was written-off in the books of accounts as the assessee-company was divested of its distilleries business and it has no facility to claim any further credit as the business itself was stopped. 4. Ld. CIT(A), however, did not agree and after analyzing the CENVAT provisions came to the conclusion that there are only two ways which could be debited to the P & L account i.e., ....
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..../s.Mohan Spinning Mills (supra) has opined as under :- "7. We have heard the rival contentions and perused the record. The issue arising in the present appeal is in respect of the deduction claimed on account of CENVAT amounting to Rs. 35,94,577. The assessee was engaged in the business of manufacturing and trading of yarn and fibre. The yarn manufactured by the assessee was an excisable item. The assessee was paying excise duty on the raw material purchased i.e. acrylic yarn/fibre and polyester yarn/fibre. In turn, assessee was liable to pay duty on its manufactured items. The rate of excise duty payable on the raw material was higher and the assessee was depositing the excise duty in PLA account which in turn was adjustable again....
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....tems, cannot be utilized by the assessee and the said write off of CENVAT credit, is allowable as an expenditure in the year under consideration on the closure of the business. The write off of CENVAT credit by the assessee in its books of account is thus allowable as business expenditure under the provisions of section 37(1) of the Act relatable to the year, in which the manufacturing activities are closed down by the assessee. Accordingly, we direct the Assessing Officer to allow the claim of the assessee in respect of write off of CENVAT credit of Rs. 35,94,577/-. Ground No.1 raised by the assessee is thus allowed." 6.1. We have also noted that the Coordinate Bench "A" Ahmedabad in the case of Girdhar Fibres Pvt.Ltd. (supra) has also ....