ACIT, Bangalore V. M/s Golden Profiles, Bangalore

ITA 1078/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60771 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 14-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUSAN THOMAS JOSE
• Section: 143(3)

Judgement Text

PAGE 1 OF 5 ITA NO.1078/BANG/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI N BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.1078/BANG/2011 (ASSESSMENT YEAR 2006-07) THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE- 6(1), BANGALORE-1. VS M/S GOLDEN PROFILES, B-158, IV MAIN ROAD, PEENYA II STAGE, PEENYA INDUSTRIAL ESTATE, BANGALORE-58. PA NO.AAAFG9976D (APPELLANT) (RESPONDENT) DATE OF HEARING : 27.06.2012 DATE OF PRONOUNCEMENT : 04.07.2012 APPELLANT BY : NONE RESPONDENT BY : SMT. SUSAN THOMAS JOSE, JCI T ORD ER PER GEORGE GEORGE K : THIS APPEAL INSTITUTED BY THE DEPARTMENT IS DIRECT ED AGAINST THE ORDER OF THE CIT(A)-III, BANGALORE, DATED 11.8. 2011. THE RELEVANT ASSESSMENT YEAR IS 2006-07. 2. THE ONLY EFFECTIVE GROUND RAISED READS AS FOLLOW S:- THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.16,27,808/- MADE IN TERMS OF SECTION 145A BY THE ASSESSING OFFICER ON ACCOUNT OF INCLUSION OF EXCISE DUTY IN THE CLOSING STOCK. PAGE 2 OF 5 ITA NO.1078/BANG/2011 2 3. BRIEFLY STATED THE FACTS ARE AS FOLLOWS:- THE ASSESSEE IS A PARTNERSHIP FIRM. IT IS ENGAGE D IN THE BUSINESS OF MANUFACTURE AND SALE OF HYDRAULICS EQUIP MENTS AND PIPE HOSES. RETURN OF INCOME WAS FILED FOR THE CONCERNED ASSESS MENT YEAR ON 26.10.2006 DECLARING AN INCOME OF RS.2,32.50,212/-. THE SCRUT INY ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDE R DATED 21/11/2008 BY MAKING AN ADDITION OF RS.16,27,808/-, BEING THE AMO UNT OF EXCISE DUTY AT 16% ON VALUATION OF FINISHED GOODS. THE CONTENTION O F THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT SINCE THE GOODS HAVE NOT BEEN MOVED OUT OF THE FACTORY PREMISES, EXCISE DUTY COULD NOT BE ADDED TO THE VALUE OF THE GOODS. IT WAS ALSO BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THAT SIMILAR ADDITION OF EXCISE DUTY MADE IN THE EARLIER ASSESSME NT YEAR NAMELY, 2004-05, WAS DELETED BY THE CIT(A) AND THE SAME WAS CONFIRMED BY THE INCOME TAX APPELLATE TRIBUNAL. THE ASSESSING OFFICER, HOWEVER , MADE THE ADDITION BY OBSERVING THAT THE DEPARTMENT HAS NOT ACCEPTED THE ORDER OF THE TRIBUNAL AND AN APPEAL HAS BEEN PREFERRED BEFORE THE HONBLE HIGH COURT. 4. AGGRIEVED BY THE ADDITION OF RS.16,27,808/- BEIN G 16% OF THE VALUE OF THE FINISHED GOODS BY INVOKING THE PROVISIO NS OF SECTION 145A OF THE ACT, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFO RE THE FIRST APPELLATE AUTHORITY. 5. BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS CON TENDED THAT THE ASSESSEE WAS CONSISTENTLY FOLLOWING A METHOD OF ACCO UNTING NAMELY, THE COST OF PURCHASE AND THE VALUE OF CLOSING STOCK WITHOUT CONSIDERING THE CENTRAL EXCISE COMPONENT AND THE EXCISE COMPONENTS WERE NOT LIABLE TO BE INCREASED PAGE 3 OF 5 ITA NO.1078/BANG/2011 3 IN VIEW OF THE PROVISIONS OF SECTION 145A OF THE AC T. IT WAS SUBMITTED THAT IF THE VALUE OF THE CLOSING STOCK HAS TO BE ENHANCE D BY THE EXCISE DUTY COMPONENT, CORRESPONDING DEBIT TO THE TRADING ACCOU NT TOWARDS THE COST OF PURCHASE ALSO SHOULD BE ALLOWED, ULTIMATELY NULLIFYIN G THE ADDITION MADE. IT WAS SUBMITTED THAT THE ASSESSING OFFICER OUGHT TO H AVE APPRECIATED THAT EXCISE DUTY WAS LEVIABLE ONLY WHEN THE STOCK MOVES OU T FROM THE FACTORY PREMISES OF THE ASSESSEE. SINCE THE GOODS HAVE NOT BEEN MOVED OUT OF THE FACTORY PREMISES OF THE ASSESSEE, THE SAME CANNOT BE INCLUDED AS CLOSING STOCK FOR THE PURPOSE OF VALUATION. FURTHER IT WAS ALSO SUBMITTED THAT A SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-05 IN ITA NO.1090/BANG/07 (ORDER DATED 9/5/2008). 6. THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE B Y FOLLOWING THE JUDGEMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT V INDO NIPPAN CHEMICALS LTD. (261 ITR 275). 7. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. 8. THE LEARNED DR SUPPORTED THE ORDER OF THE ASSES SING OFFICER. SHE SUBMITTED THAT THE ORDER OF THE TRIBUNAL IN ITA NO.1090/BANG/2007 IN ASSESSEES OWN CASE CONCERNING ASSESSMENT YEAR 2004- 05 HAS NOT ATTAINED FINALITY AND THE SAME IS PENDING IN APPEAL BEFORE TH E HONBLE JURISDICTIONAL HIGH COURT. 9. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. 10. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE TRIBUNAL IN ASSESSEES OWN CASE CONCERNING PAGE 4 OF 5 ITA NO.1078/BANG/2011 4 ASSESSMENT YEAR 2004-05 HAS DECIDED AN IDENTICAL MAT TER IN ITS FAVOUR. THE RELEVANT FINDING OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO.1090/BANG/07 DATED 9/5/2008 READ AS FOLLOWS:- WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. ON OUR CAREFUL CONSIDERATION OF THE FACTS, WE ARE INCLINED TO AGRE E WITH THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSES SEE. THE LAW IS VERY CLEAR THAT FOR INVOKING THE PROVISIO NS OF SECTION 145A IN SO FAR AS THAT IT MUST INCLUDE THE TAX DUTY, CESS OR FEES ACTUALLY PAID OR INCURRED BY THE ASSESSEE TO BRING ITS LOCATION AND CONDITION AS ON THE DATE OF VALUATION WHICH WAS CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER YEARS. THE ASSESSEE HAS BEEN FOLLOWING SYSTEM OF VALUATION ON THIS CONSISTEN T BASIS. NO CONTROVERTING MATERIAL HAS BEEN BROUGHT O N RECORD BY THE ASSESSING OFFICER OR THE REVENUE BEFOR E US ON THIS VALUATION. THE ASSESSEES COST INCLUDES THE EXCISE DUTY COMPONENT WHICH HAS BEEN PAID ON THE PURCHASE OF RAW MATERIAL AND IN THE MANUFACTURE OF FINISHED GOODS WHICH ARE LYING BEFORE BEING REMOVED FROM THE FACTORY PREMISES FOR LEVY OF THE EXCISE DUTY COMPONENT ESTIMATED BY THE ASSESSING OFFICER AS 16% OF THE INVENTORY. THIS EXCISE DUTY COMPONENT, WHICH THE BUYER WILL BEAR ONLY WHEN THE ASSESSEE RAISES THE BIL L, IN ACCORDANCE WITH THE EXCISE DUTY REGULATIONS. THE ASSESSING OFFICER THEREFORE APPEARS TO HAVE MISINTERPRETED THE PROVISION OF LAW WITH RESPECT TO VALUATION OF THE CLOSING STOCK IN SO FAR AS IT IS I N ACCORDANCE WITH THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE I.E. MERCANTILE AND ALSO THE FACT THAT A FUTURE LIABILITY COULD NOT BE FORCED UPO N ON THE ASSESSEE FOR VALUING ITS STOCK TO INFRINGE THE RATIO OF DECISION AS PER THE DECISION OF THE HONBLE APEX CO URT IN THE CASE OF BERGER PAINTS (SUPRA). THE CASE LAWS A S RELIED UPON BY THE ASSESSING OFFICER DID NOT RELATE TO PAGE 5 OF 5 ITA NO.1078/BANG/2011 5 THE ISSUE ON HAND AS NOW BEEN AGITATED BY THE REVENU E BEFORE US. THE LEARNED CIT(A), THEREFORE, WAS WITH IN HIS JURISDICTION TO HOLD THAT THE ISSUE IS IDENTICAL TO THE ONE DECIDED IN ASSESSEES OWN CASE BY THE TRIBUNAL IN A COMMON ORDER (SUPRA) FOR THE FIVE PREVIOUS YEARS WHI CH WE ARE INCLINED TO UPHOLD. THEREFORE, WE DO NOT FI ND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) AND SAM E IS THEREFORE CONFIRMED. 10.1 SINCE THE FACTS FOR THE CONCERNED ASSESSMENT YEAR IS IDENTICAL TO THE FACTS FOR THE ASSESSMENT YEAR 2004-05 CONSIDE RED BY THE TRIBUNAL IN ITA NO.1090/07, WE FOLLOW THE COORDINATE BENCH ORDE R OF THE TRIBUNAL AND HOLD THAT THE CIT(A) IS JUSTIFIED IN LAW IN DELETIN G THE ADDITION MADE AMOUNTING TO RS.16,27,808/-. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED ON THE 4 TH DAY OF JULY, 2012 AT BANGALORE. SD/- SD/- (N BARATHVAJA SANKAR) (GEORGE GEORGE K) VICE PRESIDENT JUDICIAL MEMBER COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCERNE D. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/ BY ORDER SENIOR PRIVATE SECRETARY, ITAT, BA NGALORE.