Appeal Details
Counselvise Citation
[2016] 132 COUNSELVISE.COM (IT) 0496 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 year(s) 5 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
20-09-2016
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
05-09-2016
Assessment Year
2008-2009
Appeal Filed On
19-04-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI AMARJIT SINGH , ACCOUNTANT MEMBER. ITA. NOS.1622/AHD/2013 & 2892/AHD/2014 (ASSESSMENT YEARS: 2009-10 & 2008-09) DCIT, CIRCLE-1, AHMEDABAD APPELLANT VS. M/S. ASTRAL POLY TECHNIK LTD. 207/1, ASTRAL HOUSE, B/H. RAJPATH CLUB, S G HIGHWAY, AHMEDABAD - 380 059 RESPONDENT & ITA. NO.1106/AHD/2013 (ASSESSMENT YEAR: 2008-09) & C.O. NO.189/AHD/2013 (IN ITA NO.1622/AHD/2013) (ASSESSMENT YEAR: 2009-10) M/S. ASTRAL POLY TECHNIK LTD. 207/1, ASTRAL HOUSE, B/H. RAJPATH CLUB, S G HIGHWAY, AHMEDABAD - 380 059 APPELLANT VS. ACIT/DCIT, CIRCLE-1, AHMEDABAD RESPONDENT ITA NO.1622 & 1106/AHD/13, 2892/AHD/14 & C.O. NO.18 9/AHD/13 A.Y. 08-09 & 2009-10 [ASTRAL POLY TECHNIK LTD.] PAGE 2 PAN: AABCA2951N / BY REVENUE : SHRI JAGDISH, CIT D.R. / BY ASSESSEE : SHRI VARTIK CHOKSI & SHRI VIJAY RANJAN, A.R. /DATE OF HEARING : 05.09.2016 /DATE OF PRONOUNCEMENT : 20.09.2016 ORDER PER BENCH: ALL THESE FOUR APPEALS OF WHICH TWO FILED BY REVENU E AND ONE APPEAL AND ONE CROSS OBJECTION BY ASSESSEE ARE AGAINST THE ORDERS OF CIT(A)-VI, AHMEDABAD, FOR A.YS. 2008- 09 & 2009-10. 2. IN ITA NO.1622/AHD/2013 FOR A.Y.2009-10, REVENUE HAS FILED THE APPEAL ON FOLLOWING GROUNDS: 1. THAT THE CIT(A) HAS ERRED IN NOT APPRECIATING T HE FACT THAT FOR THE PURPOSE OF 80IC DEDUCTION, THE BADDI UNIT WAS DEEMED SEPARATE UNIT WHICH IS ELIGIBLE UNIT. BECAUSE OF THIS SPECIFIC DEEMING ACT, ALL OT HER UNITS AND ALSO THE COMPANY AS SUCH BECOME NON- ELIGIBLE BUSINESS. 2. THAT THE CIT(A) HAS ERRED IN NOT APPRECIATING TH E FACT THAT THERE WAS A TRANSFER OF GOODS FROM BADDI UNIT (ELIGIBLE BUSINESS UNIT) TO COMPANY AS SUCH (WHICH IS NON-ELIGIBLE BUSINESS) AND THE PROVISIONS OF SECTIO N 80IC(7) R.W.S. 80IA(8) ARE TO BE APPLIED TO DETERMI NE THE MARKET VALUE AND REASONAL PROFIT OF ELIGIBLE BUSINESS UNIT. ITA NO.1622 & 1106/AHD/13, 2892/AHD/14 & C.O. NO.18 9/AHD/13 A.Y. 08-09 & 2009-10 [ASTRAL POLY TECHNIK LTD.] PAGE 3 3. THAT THE CIT(A) HAS ERRED IN NOT APPRECIATING TH E FACT THAT BY REDUCING THE PROFIT DUE TO MARKETING ACTIVITIES AND BRAND VALUE, THE A.O. HAS FOUND OUT REASONABLE PROFIT OF THE ELIGIBLE BUSINESS UNIT (AT BADDI) AS PER 80IA(8) R.W.S. 80IC(7). 4. THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF EXCESS INTEREST EXPENSES O F RS.172.42 LACS DEBITED BY THE ASSESSEE IN THE ACCOUNTS OF GUJARAT UNIT AND THEREBY CLAIMING MORE DEDUCTION U/S 80IC FOR THE BADDI UNIT. THE ASSESSEE HAD CLAIMED HE ENTIRE INTEREST EXPENSES OF RS.440.52 LACS IN GUJARAT UNIT THOUGH 30.01% OF CAPITAL WAS EMPLOYED AT BADDI UNIT. 5. THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.6,45,45,525/- MADE U/S 145A HOLDING THAT THE SAME IS REVENUE NEUTRAL WHEN THE ACT SPECIFICALLY REQUIRES THE ASSESSEE TO INCLUDE THE TAXES ETC., U/S.145A. 3. FIRST ISSUE IS WITH REGARD TO DEDUCTION U/S.80IC ON BADDI UNIT. ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION U/S.80IC OF THE ACT. IN APPEAL, CIT(A) A LLOWED THE SAME. IN FACT, CIT(A) FOLLOWING THE PRECEDING ORDE R ALLOWED THE ISSUE IN FAVOUR OF ASSESSEE. WE FIND THAT ITAT HAS UPHELD THE ORDER OF CIT(A) ON SIMILAR ISSUE IN ITA NOS. 3216/AHD/2011 & 559/AHD/2012 FOR A.YS. 2007-08 & 2008-09, WHEREIN VIDE PARA 6, ITAT HELD AS UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE O RDERS OF THE AUTHORITIES BELOW. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DENYING THE CLAIM OF DEDUCTION U/S. 80IC OF THE ACT. WE FIND THAT LD.CIT(A) WHILE DECIDING THE ISSUE IN FAVOUR OF ASSESSEE HAS GIVEN A FINDING THAT THERE W AS NO ITA NO.1622 & 1106/AHD/13, 2892/AHD/14 & C.O. NO.18 9/AHD/13 A.Y. 08-09 & 2009-10 [ASTRAL POLY TECHNIK LTD.] PAGE 4 MARKETING DIVISION AND, THEREFORE, THERE WAS NO TRA NSFER OF GOODS FROM ELIGIBLE TO NON-ELIGIBLE UNDERTAKING AND IN THE ABSENCE OF MARKETING DIVISION BEING A SEPARATE UNDERTAKING, NO PROFIT COULD BE ATTRIBUTED TO THE MARKETING ACTIVITY. WITH RESPECT TO BRAND VALUE, TH E LD.CIT(A) HAS GIVEN FINDING THAT THE SAME IS OWNED BY THE FOREIGN COLLABORATOR AND THERE CANNOT BE ANY PROFIT ATTRIBUTABLE TO BRAND. HE HAS FURTHER GIVEN A FINDI NG THAT AO HAD QUANTIFIED THE GROSS PROFIT ATTRIBUTABLE TO MARKETING AND BRAND VALUE AND DISALLOWANCE AND THAT SINCE DEDUCTION U/S.80IC IS CLAIMED IN RESPECT OF N ET PROFIT AND, THEREFORE, DISALLOWING GROSS PROFIT ATT RIBUTABLE TO MARKETING AND BRAND VALUE IS NOT CORRECT AND THA T FURTHER, SINCE THE MARKETING EXPENSES DEBITED TO TH E PROFIT & LOSS ACCOUNT ARE MORE THAN GROSS PROFIT COMPUTED BY THE AO, THAT THERE CANNOT BE ANY DISALLOWANCE OF DEDUCTION U/S.80IC OF THE ACT. BEFORE US, REVENUE H AS NOT PLACED ANY MATERIAL TO CONTROVERT THE FINDINGS OF LD.CIT(A). WE FURTHER FIND THAT THE ASSESSEE HAD CL AIMED DEDUCTION U/S.80IC IN AY 2006-07 ALSO AND THE CLAIM HAS BEEN ALLOWED IN THE ASSESSMENT FRAMED U/S.143(3) OF THE ACT, AND THAT NO REOPENING OF ASSESSMENT U/S.147/14 8 OR U/S.263 HAS BEEN INITIATED FOR WITHDRAWING THE CLAI M MEANING THEREBY THAT THE CLAIM OF ASSESSEE HAS BEEN ACCEPTED BY REVENUE AND HAS ATTAINED FINALITY. IN V IEW OF THE AFORESAID REASONS, WE FIND NO REASON TO INTERFE RE WITH THE ORDER OF THE LD.CIT(A) AND THUS GROUND RAISED B Y THE REVENUE IS DISMISSED. AS A RESULT, REVENUE'S APPEAL FOR AY 2007-08 IS DISMISSED. 3.1 NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE O N BEHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLOWI NG SAME REASONING, WE UPHELD THE ORDER OF CIT(A) WHEREBY HE HAS RIGHTLY ALLOWED THE CLAIM OF DEDUCTION U/S.80IC OF THE ACT AS CLAIMED. THIS VIEW IS FORTIFIED BY THE DECISION OF ITAT FOR A.Y. 2008-09 AS DISCUSSED ABOVE. ITA NO.1622 & 1106/AHD/13, 2892/AHD/14 & C.O. NO.18 9/AHD/13 A.Y. 08-09 & 2009-10 [ASTRAL POLY TECHNIK LTD.] PAGE 5 4. NEXT ISSUE IS WITH REGARD TO ADDITION OF EXCESS INTEREST EXPENSES OF RS.172.42 LACS DEBITED BY ASSESSEE IN A CCOUNTS OF GUJARAT UNIT. AT THE OUTSET OF HEARING, LEARNED AUTHORIZED REPRESENTATIVE POINT OUT THAT THIS ISSUE IS COVERED IN FAVOR OF ASSESSEE BY THE ORDER OF ITAT IN ITA NO.1591/AHD/20 13 & C.O. NO.188/AHD/2013 FOR A.Y. 2008-09, WHEREIN VIDE PARA 8 & 9 TRIBUNAL HAS DISCUSSED AND DECIDED THIS ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER: 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS IN ISSUE. THE UNDISPUTE D FACTS IS THAT THE H.P. UNIT HAD SUFFICIENT RESERVES AND SURPLUS TO MEET ITS LIABILITY. IN FACT, THE FIRST APPELLATE AUTHORITY HAS NOT ONLY CONFIRMED THIS BUT HAS ALSO OBSERVED THAT THE H.P. UNIT HAD ADVANCED SURPLUS MONEY TO THE GUJARAT UNIT. A PERUSAL OF TH E FINDINGS OF THE FIRST APPELLATE AUTHORITY WOULD SHO W THAT HE HAS CONSIDERED THE ENTIRE FACTUAL MATRIX QU A THE ISSUE. 9. CONSIDERING THE FACTS IN TOTALITY, WE DO NOT FIN D ANY REASONS TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSED. 4.1 NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE O N BEHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLOWI NG SAME REASONING, DISCUSSED THEREIN THAT H.P. UNIT HAD SUF FICIENT RESERVES AND SURPLUS TO MEET ITS LIABILITY. IN FAC T, FIRST APPELLATE AUTHORITY HAS NOT ONLY CONFIRMED THIS BUT HAS ALSO OBSERVED THAT THE H.P. UNIT HAD ADVANCED SURPLUS MO NEY TO THE GUJARAT UNIT IN A.Y. 2008-09. FACTS BEING SIMI LAR, SO FOLLOWING SAME REASONING, WE ARE NOT INCLINED TO IN TERFERE IN ITA NO.1622 & 1106/AHD/13, 2892/AHD/14 & C.O. NO.18 9/AHD/13 A.Y. 08-09 & 2009-10 [ASTRAL POLY TECHNIK LTD.] PAGE 6 THE FINDING OF CIT(A) WHO HAS RIGHTLY DELETED THE A DDITION MADE ON ACCOUNT OF EXCESS INTEREST EXPENSES OF RS.1 72.42 LACS DEBITED BY ASSESSEE IN THE ACCOUNTS OF GUJARAT UNIT. WE UPHOLD THE SAME. 5. NEXT ISSUE IS WITH REGARD TO ADDITION OF RS. 6,45,45,525/- MADE U/S.145A OF THE ACT. ASSESSING OFFICER MADE ADDITION OF RS.6,45,45,525/- U/S.145A OF THE A CT. IN APPEAL, CIT(A) DELETED THE ADDITION HOLDING THAT SA ME WAS OF REVENUE NEUTRAL. IN SIMILAR SITUATION, AHMEDABAD T RIBUNAL IN ITS DECISION DATED 07.06.2011 IN CASE OF ASIAN T UBES LTD. FOR A.Y. 2003-04 IN ITA NO.1358/AHD/2009 HELD AS UN DER: 3. AT THE TIME OF HEARING, BOTH THE PARTIES AGREED THAT THE ISSUE IS NOW SQUARELY COVERED BY THE DECISION O F HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF AC IT VS. NARMADA CHEMATUR PETROCHEMICALS LTD. 327 ITR 369 (GUN.), WHEREIN FOLLOWING WAS HELD: HELD, DISMISSING THE APPEAL, THAT THE TRIBUNAL WAS JUSTIFIED IN EXCLUDING THE EXCISE DUTY AT THE TIME OF VALUATION OF THE CLOSING STOCK OF FINISHED GOODS AT THE END OF THE ACCOUNTING PERIOD BECAUSE : (A) NO DEDUCT ION FOR THE LIABILITY HAD BEEN CLAIME D BY THE ASSESSEE. THE EXCISE DUTY PAYABLE ON THE FIN ISHED GOODS LYING IN THE CLOSING STOCK AT THE END OF THE RELEVANT ACCOUNTING PERIOD HAD BEEN PAID IN THE SUBSEQUENT Y EAR BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCO ME AND THAT WAS HOW THE AMOUNT WAS AVAILABLE CONSIDERING T HE FACT THAT THE ASSESSMENT HAD BEEN FRAMED AND THE SH OW- CAUSE NOTICE WAS ISSUED MUCH AFTER THE CLOSE OF THE ACCOUNTING YEAR; (B) THE ASSESSING OFFICER HAD NOT HAD RECOURSE TO SUB-SECTION (3) OF SECTION 145 OF THE ACT. THE ASSE SSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING BUT I T WAS NOT THE CASE OF THE ASSESSING OFFICER THAT THE ASSE SSING ITA NO.1622 & 1106/AHD/13, 2892/AHD/14 & C.O. NO.18 9/AHD/13 A.Y. 08-09 & 2009-10 [ASTRAL POLY TECHNIK LTD.] PAGE 7 OFFICER WAS NOT IN A POSITION TO DEDUCE TRUE PROFIT S OF THE YEAR UNDER CONSIDERATION. SUCH DUTY OF CENTRAL EXCI SE IF ADDED TO ENHANCE THE VALUE OF CLOSING STOCK WOULD R ESULT IN ENHANCED OPENING STOCK ON THE FIRST DAY OF THE N EXT ACCOUNTING PERIOD, NAMELY, APRIL 1, 1997. SO THE NE XT YEAR'S PROFITS WOULD GET DEPRESSED ACCORDINGLY. OVE R A PERIOD OF TIME THE WHOLE EXERCISE WOULD EVEN OUT, I N OTHER WORDS, BE REVENUE NEUTRAL. AT THE SAME TIME WHILE DISTURBING THE VALUE OF THE CLOSING STOCK THE ASSES SING AUTHORITY COULD NOT CHANGE THE METHOD OF ACCOUNTING REGULARLY EMPLOYED. (C) THE ASSESSMENT YEAR BEING 1997-98 THE PROVISIONS OF SECTION 145A OF THE ACT INSERTED BY T HE FINANCE (NO.2) ACT, 1998 WITH EFFECT FROM APRIL, 1 1999 COULD NOT BE INVOKED. ' 4. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF HON 'BLE JURISDICTIONAL HIGH COURT, THE ADDITION MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) IS HEREBY DELETED.' 5.1 SIMILAR VIEW WAS TAKEN BY AHMEDABAD TRIBUNAL IN ITS DECISION DATED 06.01.2012 IN CASE OF JALARAM CERAMI CS LTD. VS. DCIT, CIRCLE-4 IN ITA NO.2187/AHD/2009 FOR A.Y. 2005- 06 BY HOLDING AS UNDER: '5. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, IT WAS FOUND THAT THE ASSESSEE HAD MAINTAINED A SEPARA TE ACCOUNT FOR THE EXCISE DUTY AND THAT THE ASSESSEE H AD PAID THE EXCISE DUTY LEVIABLE ON FINISHED GOOD STOC K BEFORE THE FILING OF THE RETURN. THE EXCISE DUTY WAS NOT D EBITED TO P & L ACCOUNT AND IT WAS NOT CLAIMED AS AN EXPENDIT URE. FOR THIS PROPOSITION CASE LAW CITED IS CIT VS. PARR Y CONFECTIONARY 299 ITR 321. THE NEXT ARGUMENT IS THA T THE EXCISE DUTY IS LEVIABLE AND INCLUDABLE IN THE CLOSI NG STOCK WHEREIN THE STOCK IS CLEARED FROM THE FACTORY. SINC E IT WAS NOT CLEARED FROM THE FACTORY, THEREFORE NOT INCLUDA BLE IN THE VALUE OF THE CLOSING STOCK. CASE LAW RELIED UPO N IS ASST. CIT VS. NARMADA CHEMATUR PETROCHEMICALS LTD. 327 ITR 369 (GUJ.). IT HAS ALSO BEEN ARGUED THAT IN THE PAST NO ITA NO.1622 & 1106/AHD/13, 2892/AHD/14 & C.O. NO.18 9/AHD/13 A.Y. 08-09 & 2009-10 [ASTRAL POLY TECHNIK LTD.] PAGE 8 SUCH ADJUSTMENT WAS EVER MADE, HENCE THE ADJUSTMENT FOR THE YEAR UNDER CONSIDERATION IT OTHERWISE REVEN UE NEUTRAL FOR THIS LEGAL PROPOSITION CASE LAW RELIED UPON IS CIT VS. REALEST BUILDERS AND SERVICES LTD. 307 ITR 202 (SC). ASSESSEE HAS ALSO PLACED RELIANCE ON ASHWIN A . SHAH 1 ITR 356 (TRIB) [AHD] FOR THE LEGAL PROPOSITION TH AT THE LIABILITY ARISES ONLY AT THE TIME OF REMOVAL OF GOO DS FORM THE FACTORY. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW DISCUSSED ABO VE WE HEREBY REVERSE THE FINDING OF THE LD. CIT(A) AND AL LOW THIS GROUND. ASSESSEE'S APPEAL IS ALLOWED.' 5.2 REGARDING THIS PROVISION IN RESPECT OF A.Y. 199 9-2000, BEING THE FIRST YEAR AFTER THE INSERTION OF SECTION 145 A OF THE ACT, THERE IS DIFFERENCE OF OPINION AS TO WHETHER O NLY CLOSING STOCK HAD TO BE ADJUSTED OR WHETHER ALL THE THREE E LEMENTS NAMELY, PURCHASES, SALE AND INVENTORY ARE TO BE ADJ USTED TO INCLUDE THE ELEMENT OF VAT. IN RESPECT OF ALL THE SUBSEQUENT ASSESSMENT YEARS THE RATIO LAID DOWN IS THAT ALL TH E THREE ITEMS NAMELY, PURCHASES, SALE AND THE INVENTORY (AS MENTIONED IN 145A OF THE ACT) ARE TO BE ADJUSTED TO INCLUDE ELEMENT OF VAT. EFFECTIVELY, SUCH AN EXERCISE IS R EVENUE NEUTRAL. SO, IN THIS BACKGROUND, CIT(A) RIGHTLY DE LETED THE ADDITION IN QUESTION. THIS REASONED FACTUAL FINDIN G OF CIT(A) IN ABOVE LEGAL BACKGROUND NEEDS NO INTERFERENCE FRO M OUR SIDE. WE UPHOLD THE SAME. 6. AS A RESULT, REVENUES APPEAL IS DISMISSED. 7. IN C.O. NO.189/AHD/2013 (IN ITA NO.1622/AHD/2013 ) FOR A.Y. 2009-10, ASSESSEE HAS FILED THE CROSS OBJE CTION ON FOLLOWING GROUNDS: ITA NO.1622 & 1106/AHD/13, 2892/AHD/14 & C.O. NO.18 9/AHD/13 A.Y. 08-09 & 2009-10 [ASTRAL POLY TECHNIK LTD.] PAGE 9 1. IN LAW AND IN THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE LEARNED CIT(A) ERRED IN NOT HOLDING T HAT THE ASSESSMENT ORDER DATED 30-12-2011 PASSED UNDER SECTION 143[3] OF THE ACT BY THE D.C.I.T., CIRCLE-1, AHMEDABAD IS BAD IN LAW AND HENCE, DESERVES TO BE CANCELLED. 2. IN LAW AND IN THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE, THE LEARNED CIT(A) ERRED IN NOT GIVING AN Y FINDING ON THE ALTERNATIVE GROUND RAISED BEFORE HIM IN RESPECT OF THE ERROR COMMITTED BY THE A.O. IN INCORRECTLY COMPUTING THE NET CAPITAL EMPLOYED RATI O FOR ALLOCATION OF INTEREST EXPENDITURE AND FOREIGN EXCHANGE LOSS [IF AT ALL THE ADDITION FOR ALLOCATIO N OF INTEREST EXPENSES AND FOREX LOSS IS HELD TO BE JUSTIFIABLE]. 7.1 AT THE OUTSET OF HEARING, LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT HE IS NOT PRESSING TH E GROUNDS OF CROSS OBJECTION. SO, SAME IS DISMISSED AS NOT P RESSED. 8. AS A RESULT, CROSS OBJECTION OF ASSESSEE IS DISM ISSED AS INDICATED ABOVE. 9. IN ITA NO.2892/AHD/2014 (U/S.143(3) R.W.S 263 OF THE ACT) FOR A.Y. 2008-09, REVENUE HAS FILED THE APPEAL ON FOLLOWING GROUNDS: (1) THAT THE CIT(A) HAS ERRED IN DELETING THE ADDI TION OF RS.79,28,008/- MADE U/S 145A HOLDING THAT THE SAME IS REVENUE NEUTRAL WHEN THE ACT SPECIFICALLY REQUIRES THE ASSESSEE TO INCLUDE THE TAXES ETC. U/S.145A. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ADDITION MADE SINCE THE ASSESSEE HAD CONTRAVENED THE PROVISIONS OF SECTION 145A BY FOLLOWING EXCLUSIVE ITA NO.1622 & 1106/AHD/13, 2892/AHD/14 & C.O. NO.18 9/AHD/13 A.Y. 08-09 & 2009-10 [ASTRAL POLY TECHNIK LTD.] PAGE 10 METHOD OF ACCOUNTING INSTEAD OF INCLUSIVE METHOD MANDATED U/S 145A. 10. LEARNED AUTHORIZED REPRESENTATIVE POINTED OUT T HAT SIMILAR ISSUE AROSE IN A.Y. 2009-10 WHEREIN SIMILAR ISSUE HAS BEEN DISCUSSED AND DECIDED BY US VIDE PARA 5.2 IN F AVOUR OF ASSESSEE. FACTS BEING SIMILAR, SO FOLLOWING SAME R EASONING, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDING O F CIT(A). SAME IS UPHELD. 11. AS A RESULT, APPEAL FILED BY REVENUE IS DISMISS ED. 12. IN ITA NO.1106/AHD/2013 (U/S. 263 OF THE ACT) F OR A.Y. 2008-09, ASSESSEE HAS FILED THE APPEAL ON FOLLOWING GROUNDS: 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E APPELLANT'S CASE, THE CIT AHMEDABAD -1, AHMEDABAD VIDE ORDER DATED 22.03.2013 ERRED PASSING ORDER U/S. 263 AND THEREBY SETTING ASIDE THE ORDER OF THE AO U/S. 143(3) AND DIRECTING THE AO TO PASS A ORDER AFRESH MERELY ON THE GROUND THAT THE ASSESSMENT WAS COMPLETED BY THE AO WITHOUT HAVING REGARD TO THE CORRECT POSITION OF LAW. 2. THE LD. CIT HAS GROSSLY ERRED IN LAW AND ON FACT S IN CANCELLING THE ORDER OF THE AO PASSED U/S. 143(3) AND DIRECTING HIM TO PASS THE ORDER AFRESH MERELY BECAUSE THE VIEW TAKEN BY THE AO WAS DIFFERENT FROM THAT OF THE LD. CIT ON ISSUED OF SECTION 145A ONLY. THE LD. CIT HAS NOT POINTED OUT ANY OTHER DEFAULT I N THE ORDER OF THE AO PASSED U/S. 143(3). 3. THE LD. CIT HAS ERRED IN LAW AND ON FACTS IN CANCELLING THE WHOLE ORDER OF THE AO PASSED U/S. 143(3) INSTEAD OF DIRECTING THE AO TO REVISE THE OR DER ON THE GROUND RAISED BY HIM IN THE U/S. 263 AS THE LD. CIT DOES NOT HAVE POWERS TO REOPEN THE ENTIRE ITA NO.1622 & 1106/AHD/13, 2892/AHD/14 & C.O. NO.18 9/AHD/13 A.Y. 08-09 & 2009-10 [ASTRAL POLY TECHNIK LTD.] PAGE 11 PROCEEDINGS AS IN REVISION PROCEEDINGS THE CIT CANNOT TRAVEL BEYOND THE REASONS GIVEN BY HIM FOR THE REVISIONS IN SHOW-CAUSE NOTICE. 4. WITHOUT PREJUDICE TO THE ABOVE THE LD. CIT HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE INCLUSIVE METHOD OF ACCOUNTING SHOULD BE FOLLOWED BY THE APPELLANT IGNORING THE FACT THAT THE APPELLANT HAD FURNISHED RE-CASTED PROFIT & LOSS ACCOUNT FOLLOWING THE INCLUSIVE METHOD AND THEREBY HAD PROVED THAT IT DID NOT AFFECT THE PROFITS OF THE APPELLANT COMPANY . 5. THE LD. CIT HAS ERRED IN LAW AND ON FACTS IN CANCELLING THE ORDER OF THE AO PASSED U/S. 143(3) F OR THE REASON OF NOT FOLLOWING THE INCLUSIVE METHOD OF ACCOUNTING AS PER SECTION 145A AND IGNORING THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE O F DYNAVISION LTD. APPROVED BY THE APEX COURT AND OF APEX COURT IN THE CASE OF SHREE RAM HONDA POWER EQUIPMENT LTD. AND TORRENT CABLES LTD. WHEREIN IT HAS BEEN HELD THAT CREDIT OF CENVAT WAS NOT INCURRED AS GOODS WERE NOT CLEARED FROM THE FACTORY AND THEREFORE INCLUSION OF THE SAME IN THE VALUE OF CLOSING STOCK WAS INCORRECT. 13. WE HAVE DISCUSSED THE ISSUE ON MERIT IN SET ASI DE PROCEEDINGS ORIGINATED FROM SUBSEQUENT TO SECTION 2 63 PROCEEDINGS AND DECIDED THE ISSUE ON MERIT IN FAVOU R OF ASSESSEE VIDE PARA 10 OF THIS ORDER, MEANING THEREB Y, IN SET ASIDE PROCEEDINGS, CIT(A) HAS GRANTED RELIEF TO ASS ESSEE WHICH HAS BEEN CONFIRMED BY US VIDE PARA 10 OF THIS ORDER. IN VIEW OF THIS, THE ISSUE RAISED IN SECTION 263 PR OCEEDINGS GOES ACADEMIC. SO, SAME NEEDS NOT TO BE DEDUCTED, HOWEVER, ASSESSEE IS AT LIBERTY TO RAISE THE SAME AS AND WHE N SITUATION ARISES FOR THE SAME. ITA NO.1622 & 1106/AHD/13, 2892/AHD/14 & C.O. NO.18 9/AHD/13 A.Y. 08-09 & 2009-10 [ASTRAL POLY TECHNIK LTD.] PAGE 12 14. AS A RESULT, APPEAL FILED BY ASSESSEE IS DISMIS SED BEING ACADEMIC AS INDICATED ABOVE. 15. IN THE RESULT, BOTH REVENUES APPEALS AS WELL A S ASSESSEES APPEAL AND CROSS OBJECTION ARE DISMISSED . PRONOUNCED IN THE OPEN COURT ON THIS THE 20 TH DAY OF SEPTEMBER, 2016. SD/- SD/- (AMARJIT SINGH) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD: DATED 20/09/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ()*+ ,--. ./0 / DR, ITAT, AHMEDABAD 1+2345 / GUARD FILE. BY ORDER / . // ./0
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