TaxTMI 
TaxTMI 
2015 (8) TMI 1497
X X X X Extracts X X X X
X X X X Extracts X X X X
....appeal:- " GROUNDS OF APPEAL AND RELIEF PRAYED FOR: 1. The Assessment Order passed by learned Principal Commissioner of Income Tax - I, Ahmedabad u/s. 263 of the Income Tax Act, 1961 is bad in law, illegal and the said order deserves to be cancelled. 2. The Learned Principal Commissioner of the Income Tax-1, Ahmedabad has erred in law and on the facts and circumstances of the case in passing the impugned order directing the Deputy Commissioner of the Income Tax Range 1, Ahmedabad to make the fresh assessment with intention to enhance the assessed business Income to the extent of unutilised balance of the Modvat Credit by considering the same as taxable income by invoking provisions of section 145A of the Income Ta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h assessment. The assessee feeling aggrieved by this order is now in appeal before us. 3. All the grounds are inter-connected and, therefore, the same are disposed of together for the sake of convenience. The ld.counsel for the assessee vehemently argued at length that the order of the ld.Pr.CIT is unjustified and deserves to be quashed. He submitted that as per ld.Pr.CIT, the reasons for invoking the provisions of section 263 of the Act are that the assessee had included the unutilized balance of CENVAT credit in the balance-sheet under the head "Loans & Advances". As per inclusive method of accounting u/s.145A of the Act, this was to be shown as closing stock. The ld.Pr.CIT was of the view that the order passed u/s.143(3) of the Act by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Revenue. He submitted that in the case in hand, neither of the two conditions are satisfied. He submitted that the assessment order is neither erroneous nor prejudicial to the interests of the Revenue. Therefore, the order of the ld.Pr.CIT is ex-facie bad in law. He submitted that the reasoning given for invoking the provisions of section 263 of the Act is contrary to the settled principle of law. He submitted that there is no prohibition under law for following the inclusive or exclusive method of accounting since by both the methods same conclusion is reached. He submitted that there is no understatement in the value of closing stock because the appellant has not debited the value of excise duty to Profit & Loss Account at the time of acc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... fact that the AO during the assessment proceedings had raised a specific query in notice dated 26/11/2012 calling upon the assessee to state whether tax, duty, cess, etc. included in turnover and inventory in compliance to provisions of section 145A of the Act. If not, give details of taxes liable to be included in turnover and inventories. In response to this specific query, the assessee had vide reply dated 14/12/2012 submitted that the relevant annexure of tax audit gives the desired details. It is not disputed that the tax audit report was placed before the AO. The contention of the assessee is that the AO had applied his mind and found the compliance of provisions of section 145A in order. Therefore, it cannot be inferred conclusively....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is not liable to be taxed. Before the ld.Pr.CIT a reliance was placed on the judgement(s) of the Hon'ble Supreme Court in the case of CIT vs. Indo Nippon Chemicals Co.Ltd. reported at (2003) 261 ITR 275(SC) and of CIT vs. Shri Ram Honda Power Equipment Ltd. reported at (2013) 258 CTR 329(SC). The reliance was also placed on the judgment of Hon'ble Gujarat High Court in the case of CIT vs. Unique Industries reported at (2008) 307 ITR 350(Guj) and also the decision of the Coordinate Bench of this Tribunal in the case of Bemco Sleepers Ltd. Aurangabad vs. Department of Income Tax in ITA No.715/PN/2011 dated 20/06/2012 In support of the contention that it would not affect the taxable income if the assessee adopts inclusive or exclusive method o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Indo Nippon Chemicals Co.Ltd.(supra). The Hon'ble Apex Court has held as under:- "4. The High Court has taken the several illustrations in the charts placed before it by both sides and demonstrated that there are two possible methods of valuation of stock. The first would be the "gross method", in which the stock is valued at cost price inclusive of the excise duty element. If this method is adopted, then the unconsumed stock also must necessarily be valued in the same manner. The other method is the "net method", in which the raw material purchased is valued at the actual cost, that is the actual purchase price and, on this, Modvat credit would be available. If this method is to be adopted, then uniformly the same method must be ....