TaxTMI 
TaxTMI 
2025 (4) TMI 199
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....ncome Tax Act, 1961 ('the Act') wherein an adjustment of Rs.2,42,59,980 was made to the income of the assessee and the loss was assessed at Rs.25,89,05,126. 4. Thereafter, scrutiny assessment proceedings in the case of the assessee was completed vide order dated 24.09.2021 passed under section 143(3) r.w.s 144B, assessing the total loss at Rs.20,23,45,760, after considering the loss determined in the intimation issued under section 143(1) of the Act as the starting point of computation and making addition on account of alleged under-valuation of closing work-in- progress ('WIP'). It is the factual position that during the year under consideration closing stock of work in progress was Rs. 44,79,95,000/- which was required to be loaded with Excise Duty applicable @ 12.625% amounting to Rs. 5,65,59,368/ -. Which was added by Ld. AO order dt. 24/03/2021 [Section 145 (a) (ii)] 5. Challenging the aforesaid addition(s) made in the assessment order, the assessee filed an appeal before the CIT(A), which was decided in favour of the assessee vide order dated 28.06.2022 as and by way of "impugned order". 6. Aggrieved, the department is in appeal before the Hon'ble....
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....cer is completely erroneous inasmuch as in terms of section 145 A of the Act, the amount of duty actually paid or incurred only is includable for the purpose of valuation of inventory and purchase and sale of goods 10. In the facts of the present case, no duty was leviable on closing WIP in the first instance inasmuch as excise Duty is payable only on 'manufactured goods' and that too only when such goods are moved out of the factory/excise border of the manufacturer [refer Mc. Dowell & Company Ltd. vs. CTO: 154 ITR 148 (SC); C1T vs. Groz Beckert Asia Ltd: 296 ITR 401 (P&H). 11. Issue squarely covered 11. It is further respectfully submitted that the aforesaid issue of ad-hoc inclusion of excise duty in the value of closing WIP now stands covered in favour of the assessee vide order dated 14.05.2018 passed in assessee's own case for assessment year(s) 2005-06 to 2007-08,2010-11 to 2012-13 wherein similar addition made was deleted by this Hon'ble Tribunal holding as under (refer pgs. 135-142 of PB): "30. We have considered the rival contentions. In the case in hand, the assessee has not paid any excise duty on the closing work in progress and ....
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....lete disregard of the explanation furnished by the assessee, the adjustment proposed in the draft intimation was confirmed in the final intimation dated 02.10.2019, issued under section 143(1) of the Act (refer pg. 98-110 of PB). 19. In this regard, it is respectfully submitted that the payment for bonus / ex- gratia made by the assessee was not reported in the TAR since the same was made after the date of signing of the TAR but before the date of furnishing the return of income for the year under consideration. The TAR, it is submitted, has been signed on 18.08.2018 whereas the payment of bonus / ex-gratia have been made on the following dates: S.No. Voucher Number Date of Payment Amount Bonus Payments 1. 100263437 30.10.2018 21,06,181 2. 100263439 30.10.2018 69,536 3. 100263440 30.10.2018 15,386 4. 2200002511 3,37,726 Total Bonus Paid before 30.11.2018 (A) 25,28,829 S.No. Voucher Number Date of Payment Amount Ex-gratia Payment 5. 2200002374 31.10.2018 6,643,794 6. 2200002413 31.10.2018 7,238,378 7. 100263422 18.10.2018 7,488,494 ....
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....s bonus or commission; .. ........... " (emphasis supplied) 14. Thus, on a combined reading of the aforesaid provisions of section 36 and section 43B, it will be appreciated that any payment of bonus made by an assessee before the due date of filing the return of income for that year shall be allowed as deduction in that year. In the facts of the present case as well, the payment for bonus / ex-gratia payment has, admittedly been made after the end of the year but before the due date of filing the income tax return under section 139(1) of the Act. 15. Kind attention in this regard is invited to the certificate dated 30.11.2018 issued by an independent Chartered Accountant duly certifying that the assessee company had made the payment of bonus / ex-gratia aggregating to Rs.2,42,59,981 before the due date of filing the return of income under section 139(1) of the Act (refer pg. 122 of PB). 16. In view of the aforesaid, the payment for bonus / ex-gratia made after the end of the year and after the date of singing the tax audit report, but before the due date of filing the return of income was rightly claimed by the assessee and the action of the assessing officer in ....
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....completely erroneous in as much as in terms of section 145A of the Act, the amount of duty actually paid or incurred only is includible for purpose of valuation of inventory and purchase and sales of goods. (iv) In the facts of the present case, no duty was leviable on closing work in progress as excise duty is payable only on "manufactured goods" and that too only when such goods are moved out of factory / excise border of manufacture. (v) It was then contended that the aforesaid issue of adhoc inclusion of excise duty in the value of closing work in progress stands covered in favour of assessee vide order dt. 14/05/2018 passed in assessee's own case for AY's 2005-06, 2007-08. 2010-11, 2012-13 wherein similar addition made was deleted by this Hon'ble Tribunal in para no. 30 in ITA No. 79/Chd/2009 / ITA No. 112/Chd/2009 by observing as under: " 30. We have considered the rival contentions. In the case in hand, the assessee has not paid any excise duty on the closing work in progress and hence there was no question of loading any excise duty on estimation basis. Even otherwise, if the value of the excise duty has to be included in the closing s....
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..../11/2018 the date of return of income hence same should be allowed on combined and cumulative reading of section 43B/36 of Act. Amount is admittedly paid before end of year i.e; 31/03/2018 i.e on 30/11/2018 i.e date of filing of return of income and payment is same. That their claim is right and legitimate and action of Ld. AO in confirming the adjustment of this amount has rightly been deleted by CIT(A) in impugned order. Reliance on certificate of independent CA dt. 30/11/2018 was too made and emphasized. Findings and Conclusion 22. After examining rival contentions and in the premises as set out hereinabove respectfully following above order of our Coordinate Bench in (supra) in the Assessee own cases we dismiss the present appeal of Revenue as the issue is squarely covered. The Ld. CIT(A) has rightly deleted the addition of Rs. 5,65,59,368/ -. We also hold that Section 145A contemplates valuation of inventory to be made at lower of actual cost or net realisable value and tax, duty, cess or fee (by whatsoever called) shall not be includible in value of closing work in progress as no such amount of excise duty is paid as the stage of levy in law has not arisen. What is cont....