The DCIT, Circle-8, Ahmedabad V. Yash Organics Ltd., Ahmedabad

ITA 1020/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8885 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2000-2001
• Appeal Filed On: 12-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3); 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER !# I.T.A. NO.1020/AHD/2013 ( / ASSESSMENT YEAR: 2000-01) DY. COMMISSIONER OF INCOME TAX, CIRCLE-8, AHMEDABAD. # VS. M/S. YASH ORGANICS LTD., A-27, SHRIRAM NAGAR SOCIETY, VEJALPUR, AHMEDABAD. $ # % & # PAN/GIR NO. : AAACY 0532 A ( !$' / APPELLANT ) .. ( ($' # RESPONDENT ) !$') # APPELLANT BY : SHRI ASHISH POPHARE, SR. DR ($'*) / RESPONDENT BY : -NONE- + ,*-. / DATE OF HEARING 01/03/2017 /012*-. / DATE OF PRONOUNCEMENT 20/03/2017 3# O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XIV, AHMEDABAD, DATED 13/02/2013 FOR THE ASSESSMENT YEAR (AY) 2000-01 AND FOLLOWING GROUNDS HAS BEEN TAKEN: THE LD.CIT(A)-XIV, AHMEDABAND HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF DISALLOWANCE RS. 1,97,24,4 52/- OUT OF TOTAL ADDITION OF DISALLOWANCE OF RS.1,97,56,008/- MADE O N ACCOUNT OF EXCISE DUTY. ITA NO.1020/AHD /2013 DY. CIT VS. M/S. YASH ORGANICS LTD. ASST.YEAR 2000-01 - 2 - 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, THE ASSESSMENT WAS COMPLETED U/S.143( 3) OF THE ACT ON 28/02/2003 DETERMINING A LOSS OF RS.9,13,203/- AS A GAINST THE RETURNED LOSS OF RS.9,53,946/-. THE ASSESSMENT WAS REOPENED U/S. 148 AND ORDER U/S. 143(3) R.W.S. 147 OF THE ACT WAS PASSED ON 31/ 03/2006 DETERMINING TOTAL INCOME AT RS.1,90,80,040/-. THEREAFTER, LD.CI T(A) DELETED THE ADDITION TO THE EXTENT OF RS.1,97,56,008/- OUT OF T OTAL ADDITION OF RS.1,97,87,564/- ON ACCOUNT OF DISALLOWANCE OF EXCI SE DUTY. 3. IN THE SECOND APPEAL BEFORE THE HONBLE ITAT, TH E HONBLE ITAT VIDE THEIR ORDER IN ITA NO.1397/AHD/2007 DATED 31/0 3/2010 HAS SET- ASIDE AND RESTORED THE ISSUE OF DISALLOWANCE OF EXC ISE DUTY BACK TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION AFRE SH KEEPING IN VIEW THE PROVISIONS CONTAINED IN SECTION 145(A) OF THE ACT. 4. LD. AO DECIDED THE MATTER ON THE BASIS OF FACTS AVAILABLE ON RECORD AND ASSESSED THE INCOME OF RS. 1,90,80,040/- 5. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A), WHO PARTLY ALLOWED THE APPEA L AND THE ADDITION OF RS.31,556/- WAS CONFIRMED OUT OF THE TOTAL ADDITION OF RS.1,97,56,008/-. AGAINST THE FINDINGS OF THE LD. CIT(A), DEPARTMENT HAS GIVEN IN APPEAL. ITA NO.1020/AHD /2013 DY. CIT VS. M/S. YASH ORGANICS LTD. ASST.YEAR 2000-01 - 3 - 6. WE HAVE GONE THROUGH THE IMPUGNED ORDER AND HEAR D THE RIVAL SUBMISSIONS, AFTER CONSIDERING THE FINDINGS AND THE SUBMISSIONS MADE BY THE PARTIES, IT IS NOTED THAT THE ASSESSEE HAS BEEN FOLLOWING EXCLUSIVE METHOD FOR VALUING THE INVENTORY OF GOODS AND THERE WAS A CREDIT BALANCE OF UNUTILIZED MODVAT/CENVAT. IT IS NOTED THAT THE A SSESSEE WAS FOLLOWING SIMILAR POLICY IN THE PRECEDING YEARS AND THERE WERE NOTES IN THE AUDIT REPORT THAT IF THE ADJUSTMENT ON ACCOUNT OF 145(A) WAS MADE, THERE WOULD BE NO EFFECT ON THE INCOME. FURTHER, TH E AUDITORS HAVE NOT GIVEN ANY ADVERSE REMARKS IN THE CURRENT YEARS AUD IT REPORT. THE OBSERVATION OF THE DEPARTMENT THAT THE CREDIT OF MO DVAT/CENVAT IS AN INCENTIVE IS NOT JUSTIFIED. THE APPELLANT CANNOT CLAIM THE REFUND ON THIS ACCOUNT IF DUE TO SOME CIRCUMSTANCES INDUSTRY HAS T O BE CLOSED. THE VIEW HAS BEEN UPHELD BY HONBLE SUPREME COURT IN THE CAS E OF INDO NIPPON CHEMICALS LTD. [261 ITR 275]. IT HAS BEEN HELD BY T HE HONBLE SUPREME COURT THAT MODVAT CREDIT WAS AN IRREVERSIBLE CREDIT AVAILABLE TO MANUFACTURERS AND WOULD NOT AMOUNT TO INCOME, WHICH WAS LIABLE TO BE TAXED UNDER THE ACT. THEREFORE, THE MODVAT/CENVAT C REDIT BALANCE AVAILABLE WITH THE ASSESSEE IS NEITHER INCOME NOR A NY INCENTIVE OR SUBSIDY WHICH CAN BE CONSIDERED AS INCOME OF THE APPELLANT. 7. AS REGARDS, THE APPLICATION OF SECTION 145(A) WH ICH MANDATORILY PRESCRIBES THE VARIATION OF INVENTORY BY INCLUSIVE METHOD, THE APPELLANT HAS FULFILLED THE OBLIGATION BY WAY OF OBSERVATIONS IN THE AUDIT REPORT. THE SAME PRACTICE WAS FOLLOWED IN THE EARLIER YEARS . SO IT CANNOT BE SAID THAT APPELLANT IS NOT FOLLOWING THE PROVISIONS OF S ECTION 145(A). HONBLE ITA NO.1020/AHD /2013 DY. CIT VS. M/S. YASH ORGANICS LTD. ASST.YEAR 2000-01 - 4 - ITAT BENCH OF AHMEDABAD IN A DECISION IN THE CASE O F ALPANIL INDUSTRIES VS. ACIT IN ITA NO.169/AHD/2005 AND 170/ AHD/2005 FOR ASSESSMENT YEAR 1999-2000 & 2000-01 HAS DISCUSSED T HE PRINCIPLE RELATED TO VALUATION OF CLOSING STOCK U/S. 145(A) O F THE ACT. 8. IN VIEW OF THE FOREGOING OBSERVATIONS, WE REMIND THIS MATTER BACK TO THE FILE OF THE LD. AO, WHO WILL VERIFY THE CRED IT BALANCE OF UNUTILIZED MODVAT/CENVAT AND WILL ALSO VERIFY WHETHER SAME IS REVENUE NEUTRAL OR NOT AND THEREAFTER WILL DECIDE THE MATTE R AS PER LAW. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 20/03/2017 SD/- SD/- ( ) 4 5 (N. K. BILLAIYA) ( M AHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 20/03/2017 PRITI YADAV, SR. PS ITA NO.1020/AHD /2013 DY. CIT VS. M/S. YASH ORGANICS LTD. ASST.YEAR 2000-01 - 5 - !'#$ %$' # COPY OF THE ORDER FORWARDED TO : 1. !$' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 67- + 8- / CONCERNED CIT 4. + 8- 4!5 / THE CIT(A)-XIV, AHMEDABAD. 5. 9:;-67 !.!672 ! / DR, ITAT, AHMEDABAD 6. ;<=, # GUARD FILE. & ' / BY ORDER, (9-- //TRUE COPY// (/' )* ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION 01/03/2017 (DICTATION-PAD 3 P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 01/03/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 20/03/2017 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 20/03/2017 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DISPATCH OF THE ORDER