Vardhman Stampings Pvt. Ltd., Ahmedabad V. The Dy.CIT(OSD), Circle-8 ( Now DY.CIT, Circle-4(1)(2),), Ahmedabad

ITA 1132/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8588 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 05-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I S. S. GODARA , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER VARDHMAN STAMPINGS PVT. LTD. S - 2, MURLIDHAR COMPLEX, S.M. ROAD, AMBAWADI, AHMEDABAD PAN: AAACV7624G (APPELLANT) VS THE DY.CIT, CIRCLE - 8, AHMEDABAD (RESPONDENT) REVENUE BY : S H RI PRASOON KABRA , SR. D . R. ASSESSEE BY: NONE DATE OF HEARING : 30 - 08 - 2 017 DATE OF PRONOUNCEMENT : 14 - 09 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 20 11 - 12 , AR IS ES FROM ORDER OF THE CIT(A) - 4, AHMEDABAD DATED 26 - 03 - 2009 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE GRIEVANCE OF THE ASSESSEE IS AGAINST THE DECISION OF THE LD. CIT(A) CONFIRMING THE DECISION OF THE ASSESSING OFFICER OF SUSTAINING I T A NO . 1132 / A HD/20 15 A SSESS MEN T YEAR 2011 - 12 I.T.A NO. 1132 /AHD/20 15 A.Y. 2011 - 12 PAGE NO VARDHMAN STAMPINGS PVT. LTD. VS . D Y. CIT 2 THE ADDITION OF RS. 58 , 26 , 826/ - MADE BY THE ASSESSING OFFICER U/S. 145A OF THE ACT . THE ASSESSING OFFICER OBSERVED DURING THE COURSE OF ASSESSMENT PROCEE DINGS THAT ASSESS HAS SHOWN AMOUNT OF RS. 2, 51 , 8745 0/ - A S UN - UTILIZED MODVAT/CENVAT UNDER LOAN AND ADVANCES BUT WAS NOT INCLUDED IN THE VALUE OF CLOSING STOCK. . THE ASSESSING OFFICER FURTHER OBSERVED THAT TAXES/DUTY / CESS/FEES RELATED TO STOCK NEED TO BE INCLUDED IN THE VALUE OF THE CLOSING STOCK AS PER PROVISION OF SECTION 145A OF THE ACT . CONSEQUENTLY , THE ASSESSING OFFICER CONCLUDED THAT THE SUM OF RS. 2 , 5 1, 87 , 45 0 / - WAS REQUIRED TO BE ADDED TO THE VALUE OF CLOSING STOCK. THEREAFTER, THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 58,26,826/ - (RS. 2,51,87450/ - - RS. 193,60,624/ - ) TO THE TOTAL INCOME OF THE ASSESSEE . THE ASSESSING OFFICER HAD ALSO MADE SIMILAR ADDITIONS IN THE PRECEDING ASSESSMENT YEAR 2010 - 11 FOR THE AMOUNT OF RS. 1,93,60,624/ - . 3. THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). TH E LD. CIT(A) HELD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN INCREASING THE VALUE OF CLOSING STOCK IN VIEW OF PROVISION OF SECTION 145A OF THE ACT. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US THE LD. DR HAS SUPPORTED THE ORDER OF THE LD. CIT(A) . BUT WE HAVE NOTICED THAT CO - ORDINATE BENCH OF ITAT IN THE CAS E OF THE ASSESSEE ITSELF FOR THE ASSESSMENT YEAR 2010 - 11 ON THE IDENTICAL ISSUE HAS DELETED THE ADDITION MADE BY ASSESSING OFFICER BY O BS E R V ING AS UNDER: - 12. WE FURTHER, OBSERVE THAT SIMI LAR ISSUE RELATING TO ADDITION MADE BY INVOKING PROVISIONS OF 145A OF THE ACT, CAME UP BEFORE THE CO - ORDINATE BENCH IN THE CASE OF ITO V/S MAMATA BRAMPTOM ENGG. PVT. LTD (SU PRA) AND WAS DECIDED AGAINST THE REVENUE, FOLLOWING THE JUDGMENT OF JURISDICTION AL HIGH COURT IN THE CASE OF NARMADA CHEMATUR PETROCHEMICALS LTD.(327 ITR 369) BY OBSERVING AS FOLLOWS: I.T.A NO. 1132 /AHD/20 15 A.Y. 2011 - 12 PAGE NO VARDHMAN STAMPINGS PVT. LTD. VS . D Y. CIT 3 WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE IN THE P RESENT CASE IS WITH RESPECT TO THE ADDITION OF UNUTILIZED CENVAT CREDIT TO THE CLOSING STOCK. WE FIND THAT THE LD.CIT(A) WHILE DECIDING THE ISSUE IN FAVOUR OF ASSESSEE HAS GIVEN A FINDING THAT ASSESSEE IS FOLLOWING EXCLUSIVE METHOD OF ACCOUNTING WHEREBY TH E EXCISE DUTY IS NOT INCLUDED IN THE VALUATION OF STOCK AND RAW - MATERIALS AS THE EXCISE DUTY PAID AND COLLECTED IS NOT MADE PART AND PARCEL OF THE PROFIT & LOSS A/C. HE HAS FURTHER GIVEN A FINDING THAT ASSESSEE HAS COMPLIED WITH THE PROVISIONS OF SECTION 1 45A OF THE ACT AND THE EFFECT OF INCLUDING EXCISE DUTY IS VALUATION OF CLOSING STOCK DOES NOT AFFECT THE PROFIT AND IS REVENUE NEUTRAL. HE HAS FURTHER RELIED ON THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF NARMADA CHEMATUR PETROCHEMICALS LTD.( SUPRA). BEFORE US, REVENUE HAS NEITHER CONTROVERTED THE FINDING OF LD.CIT(A) NOR HAS PLACED ANY CONTRARY BINDING DECISION IN ITS SUPPORT. WE FURTHER FIND THAT THE HON BLE APEX COURT IN THE CASE OF INDO NIPPO CHEMICALS (2003) 261 ITR 375 HAS HELD THAT UNAVA ILED MODVAT CREDIT CANNOT BE CONSTRUED AS INCOME AND THERE IS NO LIABILITY TO PAY TX ON SUCH UNAVAILED MODVAT CREDIT. IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A). THIS GROUND OF REVENUE IS DISMISSED 13 . RESPECTFULLY FOLLOWING THE DECISION OF CO - ORDINATE BENCH, AND IN VIEW OF TOTALITY OF FACTS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT UNAVAILED CENVAT CREDIT CANNOT BE CONSTRUED HAS INCOME AS THERE IS NOT LIABILITY TO PAY TAX ON SUCH UNAVAILED CENVAT CREDI T AND ALSO THERE WILL BE NIL EFFECT ON THE PROFIT AS THE TAXES AND DUTIES IF ADDED TO THE CLOSING STOCK WILL FORM PART OF THE OPENING STOCK IN THE SUBSEQUENT YEAR. WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A). WE UPHOLD THE SAME. 4. RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH, WE ARE OF THE VIEW THAT UNAVAILED CENVAT CREDIT WILL HAVE NIL EFFECT ON THE PROFIT AS THE TAXES AND DUTIES IF ADDED TO THE CLOSING STOCK WILL FORM PART OF THE OPENING STOCK IN THE SUBSEQU ENT YEAR , THER E FORE, WE ARE NOT INCLINED WITH THE DECISION OF THE LD. CIT(A) . THEREFORE, THE APPEAL OF THE ASSESSEE IS ALLOWED. 5. IN THE RESULT , THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 14 - 09 - 201 7 SD/ - SD/ - ( S.S. GODARA ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 14 /09 /2017 I.T.A NO. 1132 /AHD/20 15 A.Y. 2011 - 12 PAGE NO VARDHMAN STAMPINGS PVT. LTD. VS . D Y. CIT 4 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,