The DCIT, Circle-1, Ahmedabad V. M/s. Archon Engicon Pvt. Ltd., Ahmedabad

ITA 1318/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8643 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 14-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.1318/AHD/2015 ( / ASSESSMENT YEAR : 2008-09) THE DCIT CIRCLE-1(1)(1) AHMEDABAD / VS. ARCHON ENGICON PVT.LTD. A-1, SIVAM SUNDRAM COMPLEX, ABOVE ADC BANK OPP.HARESH DUDHIA, GURUKUL ROAD MAMNAGAR-380 052 # ./ ./ PAN/GIR NO. : AAECA 9924 A ( #& / APPELLANT ) .. ( '#& / RESPONDENT ) #&( / APPELLANT BY : SHRI MUDIT NAGPAL, SR.DR '#& )( / RESPONDENT BY : SHRI SUNIL TALATI, AR *+ ), / DATE OF HEARING 05/09/2017 -./0 ), / DATE OF PRONOUNCEMENT 08/ 09 /2017 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-1, AHMED ABAD [CIT(A) IN SHORT] DATED 24/02/2016 FOR THE ASSESSMENT YEAR (AY) 2008-09. ITA NO. 1318/AH D/2015 DCIT VS. M/S.ARCHON ENGICON PVT.LTD. ASST.YEAR 2008-09 - 2 - 2. THE REVENUE IN THE IMPUGNED APPEAL HAS AGITATED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS.84,42,783/- M ADE TOWARDS UNUTILIZED CENVAT CREDIT BY INVOKING SECTION 145A O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT'). 3. THE LD.AR FOR THE ASSESSEE SHRI SUNIL TALATI AT THE OUTSET SUBMITTED IN THE REVENUE APPEAL THAT THE ASSESSING OFFICER (AO) HAD MISDIRECTED HIMSELF IN LAW AND ON FACTS IN MAKING A DDITION OF AFORESAID AMOUNT OF RS.84,42,783/- TO THE VALUE OF CLOSING ST OCK BY RESORTING TO SECTION 145A OF THE ACT ON ACCOUNT OF UNUTILIZED CE NVAT CREDIT. THE LD.AR SUBMITTED THAT ASSESSEE IS FOLLOWING EXCLUSIV E METHOD OF ACCOUNTING WHEREBY AT THE TIME OF DEBITING COSTS TO WARDS PURCHASE, THE EXCISE DUTY IS EXCLUDED AT THE THRESHOLD AND ACCOUN TED FOR A SEPARATE ITEM OF BALANCE-SHEET ITEM. THUS, WHEN THE PURCHASE COS T DOES NOT INCLUDE THE CENVAT COST AND DOES NOT FORM PART OF THE PROFIT & LOSS ACCOUNT, THERE IS NO WARRANT TO INCLUDE CENVAT COST IN THE CLOSING STOCK. THE LD.AR SUBMITTED THAT, WHEN SEEN IN PROSPECTIVE, ACCOUN TING METHOD ADOPTED BY THE ASSESSEE IS REVENUE NEUTRAL AND DOES NOT MAK E ANY IMPACT ON THE PROFITABILITY OF CONCERN PER SE . THE LD.AR ACCORDINGLY SUBMITTED THAT THE ACTION OF THE AO WAS ON ACCOUNT OF WRONG APPREC IATION OF FACTS WHICH HAS BEEN RIGHTLY REVERSED BY THE CIT(A) AFTER OBJECTIVE CONSIDERATION OF FACTS. ITA NO. 1318/AH D/2015 DCIT VS. M/S.ARCHON ENGICON PVT.LTD. ASST.YEAR 2008-09 - 3 - 4. THE LD.DR, ON THE OTHER HAND, SUPPORTED THE ORDE R OF THE AO AND SUBMITTED THAT ASSESSEE WAS REQUIRED TO FOLLOW THE STATUTORY MANDATE OF SECTION 145A OF THE ACT. THE LD.DR THUS SUBMITTED THAT THE CIT(A) COMMITTED ERROR IN GRANTING RELIEF TO THE ASSESSEE. 5. WE HAVE CAREFULLY EXAMINED THE ISSUE. WHILE IT IS THE CASE OF THE REVENUE THAT UNUTILIZED MODVAT/CENVAT CREDIT OF RS. 84,42,783/- REPRESENTS PART OF CLOSING STOCK OF THE ASSESSEE IN TERMS OF SECTION 145A OF THE ACT, IT IS THE CASE OF THE ASSESSEE ON THE O THER HAND THAT S.145A HAS NO APPLICATION TO THE FACTS OF THE CASE. THE ISSU E INVOLVED IS ESSENTIALLY FACTUAL IN NATURE. THE ASSESSEE ASSERTED BOTH BEFO RE THE AO AS WELL AS BEFORE THE CIT(A) THAT IT FOLLOWS EXCLUSIVE METHOD WHILE ACCOUNTING FOR THE PURCHASE COSTS AND WHILE DOING SO, THE ULTIMATE PROFIT IS NOT IMPACTED AT ALL. A WORKING TO THE EFFECT DEMONSTRATING SUC H LACK OF IMPACT BY FOLLOWING EXCLUSIVE METHOD OF ACCOUNTING WAS ALSO F URNISHED BEFORE US. NEEDLESS TO SAY, THE ADDITION TOWARDS CENVAT CREDIT IS NOT PERMISSIBLE BY RESORTING TO SECTION 145A OF THE ACT WHEN THE AC TION OF ASSESSEE IS FOUND TO BE TAX NEUTRAL. THIS BEING SO, WE DO NOT FIND ANY ERROR IN THE CONCLUSION DRAWN BY THE CIT(A). THUS, WE REFUSE TO INTERFERE WITH THE ORDER OF THE CIT(A). ITA NO. 1318/AH D/2015 DCIT VS. M/S.ARCHON ENGICON PVT.LTD. ASST.YEAR 2008-09 - 4 - 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 08 / 0 9 /201 7 SD/- SD/- ( ) ( ) ( MAHAVIR PRASAD ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 08/ 09 /2017 4..*,.*../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '#& / THE RESPONDENT. 3. 567, 8, / CONCERNED CIT 4. 8, ( ) / THE CIT(A)-1, AHMEDABAD 5. 9:;,*67 , 67 0 , 5 / DR, ITAT, AHMEDABAD 6. ;<+ / GUARD FILE. / BY ORDER, '9,, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 5.9.17 (DICTATION-PAD 7- PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 6.9.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.8.9.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8.9.17 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 DESPATCH OF THE ORDER