TaxTMI 
TaxTMI 
2017 (9) TMI 2049
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....-Tax (Appeals)-XIV, Ahmedabad is right in law and on facts in deleting the addition of Rs. 4,23,71,333/- u/s. 145A of the Act by AO on account of disallowance of CENVAT receivable. ii. Whether the Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad is right in law and on facts in deleting the addition of Rs. 51,52,843/- made by AO. On account of disallowance u/s. 14A r.w.r. 8D" iii. Whether the Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad is right in law and on facts in deleting the addition of Rs. 51,52,843/- being disallowance u/s. 14A r.w.r. 8D to the Book profit computed U/s. 115JB of the Act. 2. The relevant facts as culled out from the materials on record are as under:- In th....
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.... of Finished Goods. 1.1 The same is the case with service tax receivable. This represents that the assessee has paid excess service tax as against the Cenvat credit receivable. The service tax receivable has not relation with the valuation of closing stock and therefore the same should not be added under section 145A. 1.2 It may please further be noted that cenvat credit receivable and service tax receivable are not the income of the assessee and therefore it cannot be added [CIT Vs. Indo Nippon Chemicals Ltd 261 ITR 275 (Supreme Court)]. 1.3 The assessee furnished the Audit Report under section 44AB along with Annexure to the Assessing Officer. The copy of reconciliation statement to show that the exclusive metho....
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....ered as income. 1.6 The attention is drawn to the recent Gujarat High Court Judgement in the case of ACIT Vs. Narmada Chematur Petro Chemicals Ltd 372 ITR 369 (Guj). The High Court has observed as under: "According to the settled legal position and accepted principles of accounting, closing stock has to be valued, at the option of the assessee, at cost or market price, whichever is lower. Duty of central excise is levied on the goods manufactured i.e. excisable goods manufactured by an assessee. It is not a part of manufacturing cost. It can be termed a post manufacturing cost. Therefore, unless and until it is entered on one side, as an item of cost, it cannot be taken as a component of the value of the closing stock on t....
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....portion of excise/vat paid on input is debited to P&L Account, and hence such excise /vat is not considered for the purpose of valuation of closing stock" 2.3 Assessee's submission were considered carefully but not found acceptable by the learned AO and addition of Rs. 4,23,71,333/- was made u/s. 145A of the Act. 2.4 Ld. CIT (A) held that the "It may please be noted that the CIT (A) has deleted the above referred addition for A.Y. 2009-2010. The ITAT, Ahmedabad in Para No. 7.1 on Page No. 8 held as under: "In the result, on the same lines we deem it proper to restore this ground back to the stage of the AO to verify the facts as also the accounting policy adopted by the assessee in respect of modvat/cenvat ince....
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....ult, this ground of department is dismissed. 3. Interest expenses during the previous year which is not directly attributable to any particular income or receipt is NIL. The disallowance under Rule 8D(2)(iii) works out to be Rs. 51,52,843/-, being 0.5% of Average investment (being Rs. 103,05,68,638/-) and the disallowance u/s. 14A of the act as computed in accordance with the provisions of Rule 8D of the Income Tax Rules works out to Rs. 66,98,323/-. However, since Rs. 15,45,480/- has already been disallowed total disallowance comes to Rs. 51,52,843/-. Hence the said sum of Rs. 51,52,843/- is disallowed and added back to the total income. In this, ld. CIT decided ground in favour of the assessee. 3.2 We h....