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2008 (2) TMI 316

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....st the order dated 12.8.2005 passed by the Income Tax Appellate Tribunal Chandigarh Bench, Chandigarh in ITA No.750/Chandi/2002 for the assessment year 1999-2000 raising the following substantial question of law: "Whether on the facts and the circumstances of the case, the Hon'ble ITAT was right in law in holding that no undue advantage has been taken by the assessee by adjusting the unutilized MODVAT credit in the revaluation of opening stock." 3. The respondent-assessee, which is a company, had filed its return of income for the assessment year 1999-2000 showing income of Rs.9,83,21,890/-. The assessee is a manufacturer and exporter of Cotton Yarn, Woollen Hosiery Garments and also trades in Cotton Yarn. The assessment was framed by the....

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....nning Mills Ltd in ITA No.750/Chandi/2002 is reproduced:- "We have given our careful consideration to the rival contentions. The issue before us is as to whether the method adopted by the assessee in valuation of the Closing Stock and adjustment of the opening stock gives a distorted picture of profits earned by the assessee in the year under appeal. Their Lordships of the Supreme Court in the case of CIT v. British Paints India Ltd., 188 ITR 44 held that the Assessing Officer is entitled to reject the method of accounting adopted by the assessee if the same is such from which true profits cannot be deducted therefrom. Therefore, the issue before us is as to whether the method adopted by the assessee is such from which the true profits can....

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....enhancing the value of the opening stock in the year under reference, the assessee has escaped taxation in the preceding year in so far as the value of the Closing Stock in that year was disclosed at lesser value. So however, it is not so. If the adjustment was made in the preceding year according to the method of accounting adopted in the year under appeal by virtue of Section 145A, there would be no effect on the profits of business computed in that year as in that year, the purchases would have been debited including the element of excise duty and the same element would be included in the value of the Closing Stock. As a result of this adjustment, the profits of the preceding year would not be effected at all in so far as the amount of e....