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

ITA 1397/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8746 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-03-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 09-04-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAGDEO
• Keywords: Tax effect; Reassessment proceedings; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI T.K.SHARMA, JUDICIAL MEMBER AND SHRI N.S.SAINI, ACCOUNTANT MEMBER DATE OF HEARING : 15/03/10 DRAFTED ON: 15 /03/10 ITA NO.1397/AHD/2007 ASSESSMENT YEAR : 2000-01 THE DCIT CIRCLE-8 AHMEDABAD VS. YASH ORGANICS LTD. A-27, SHRI RAMNAGAR SOCIETY VEJALPUR AHMEDABAD PAN/GIR NO. : AAACY0532A (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI JAGDEO, CIT RESPONDENT BY: SHRI SAKAR SHARMA, A.R. O R D E R PER SHRI T.K.SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF THE LEARNED CIT(APPEALS)-XIV, AHMEDABAD DATED 29/0 1/2007 PASSED FOR ASSESSMENT YEAR 2000-01, BY RAISING FOL LOWING EFFECTIVE GROUND:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.1,97,56,008/- OUT OF TOTAL ADDITION MADE OF RS.1,97,87,564/- ON ACCOUNT OF DISALLOWANCE OF EXCI SE DUTY. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A LIMITED COMPANY. THE ASSESSMENT WAS COMPLETED U/S.143(3) O F THE I.T. ACT, 1961 ON 28/02/2003 DETERMINING A LOSS OF RS.9,13,20 3/- AS AGAINST THE ITA NO.1397/AHD /2008 DCIT VS. YASH ORGANICS LTD. ASST.YEAR - 2000-01 - 2 - RETURNED LOSS OF RS.9,53,946/-. THE SAID ASSESSME NT WAS REOPENED U/S.148 OF THE I.T. ACT, 1961. 3. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, T HE A.O. FOUND THAT ASSESSEE HAS NOT DONE CORRECT METHOD OF EXCISE DUTY AND MODAVAT AS REQUIRED BY SECTION 145A OF THE I.T.ACT,1961. A.O. ACCORDINGLY MADE FRESH ASSESSMENT U/S.143(3) R.W.S. 147 ON 31.3.2006 AT A TOTAL INCOME OF RS.1,90,80,040/- WHICH INTERALIA INCLUDES EXCISE DU TY DISALLOWED AMOUNTING TO RS.1,97,87,564/-. 4. ON APPEAL BEFORE THE LD. CIT(A) ASSESSEE PLEADED THAT IT FOLLOWED EXCLUSIVE METHOD OF ACCOUNTING FOR MODVAT CREDIT IN ITS BOOKS OF ACCOUNT. ACCORDINGLY, IT HAS CREDITED PURCHASE ACCOUNT AND D EBITED MODVAT RECEIVABLE A/C. EVERY MONTH BY ACTUAL AMOUNT OF MOD VAT AVAILED AS PER EXCISE RECORDS. HENCE, HE HAD ONLY DEBITED IN THE PROFIT & LOSS ACCOUNT A/C. NET PURCHASES. HOWEVER, FOR THE SALES, IT HA S CREDITED IN THE P&L A/C. THE GROSS SALES INCLUDING THE EXCISE DUTY PAID AND THE MODVAT CREDIT RECEIVED. WHEN IT IS CREDITING THE GROSS SALES IN CLUDING EXCISE DUTY PAID AND MODVAT CREDIT, IT HAS RIGHTLY DEBITED THE EXCIS E DUTY PAID AND MODVAT CREDIT RECEIVED IN THE PROFIT & LOSS ACCOUNT A/C. IT HAS FILED DETAILS AND THE COPIES OF ACCOUNT OF MODVAT CREDIT RECEIVABLE A ND EXCISE DUTY PAYABLE AND PAID AND THE SALES AND PURCHASES. THE APPELLAN T ALSO FURNISHED THE PROFIT & LOSS ACCOUNT BY FOLLOWING INCLUSIVE METHOD OF ACCOUNTING FOR MODVAT CREDIT AND EXCISE DUTY, WHICH SHOWS THAT BY FOLLOWING THE INCLUSIVE METHOD EXCISE DUTY AND MODVAT CREDIT, THE RE IS NO EFFECT WITH THE PROFIT & LOSS ACCOUNT. HENCE, IT HAS SUBMITTE D THAT THE ASSESSEE HAS CORRECT FOLLOWED THE ACCOUNTING PRINCIPLE AND THERE IS NO CASE FOR DISALLOWING EXCISE DUTY ACTUALLY PAID AND MODVAT CR EDIT RECEIVED. THE ITA NO.1397/AHD /2008 DCIT VS. YASH ORGANICS LTD. ASST.YEAR - 2000-01 - 3 - SUBMISSIONS OF THE COPY OF ACCOUNT WERE SENT TO THE AO FOR HIS COMMENTS AND THE REPORT OF THE AO HAS BEEN DULY CO NSIDERED THEREAFTER THE LD. LEARNED CIT(APPEALS) 4. IN APPEAL, THE LEARNED CIT(APPEALS) GIVEN RELIEF TO THE ASSESSEE BY OBSERVING AS UNDER:- 2.3. I HAVE CONSIDERED THE FACTS OF THE CASE AND T HE SUBMISSIONS MADE BY THE APPELLANT ALONG WITH THE DE TAILS FILED. I AM INCLINED TO AGREE WITH THE APPELLANTS VIEW TH AT IT HAS DEBITED ONLY THE NET PURCHASES BY FOLLOWING EXCLUSI VE METHOD OF ACCOUNTING FOR MODVAT CREDIT, BUT FOR SALES, IT WAS CREDITING THE GROSS SALES INCLUDING THE EXCISE DUTY PAID AND MODVAT CREDIT RECEIVED. HENCE, THE APPELLANT HAS RIGHTLY CLAIMED THE EXCISE DUTY PAID AND MODVAT RECEIVABLE IN THE P&L A /C. THE APPELLANT HAS PREPARED THE P&L A/C. BY FOLLOWING TH E INCLUSIVE METHOD OF ACCOUNTING AND THAT SHOWS BY FO LLOWING THE INCLUSIVE METHOD ALSO, THERE IS NO TAX EFFECT O N THE P&L A/C. AND THE NET PROFIT SHOWN BY THE APPELLANT IS C ORRECT. HOWEVER, BY SEEING THE PROFIT & LOSS ACCOUNT PREPA RED BY FOLLOWING THE INCLUSIVE METHOD OF ACCOUNTING, THERE IS A MINOR DIFFERENCE OF RS.31,556/-. THEREFORE, I HOLD THAT THE ADDITION IS ONLY JUSTIFIED TO THE EXTENT OF RS.31,556/- AND THE APPELLANT IS ALLOWED RELIEF FOR THE BALANCE AMOUNT. 5. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(APPEAL S), THE REVENUE IS IN APPEAL BEFORE US. 6. AT THE TIME OF HEARING ON BEHALF OF REVENUE SHER I JAGDEO APPEARED AND CONTENDED THAT IN THE IMPUGNED ORDER L D.CIT(A) HAS NOT DISCUSSED THE REMAND REPORT SUBMITTED BY THE AS SESSING OFFICER. ITA NO.1397/AHD /2008 DCIT VS. YASH ORGANICS LTD. ASST.YEAR - 2000-01 - 4 - IT IS NOT KNOWN HOW THE LD.CIT(A) RESTRICTED THE AD DITION TO THE EXTENT OF RS.31,556/-. HE ACCORDINGLY SUBMITTED THA T SINCE THE LEARNED CIT(APPEALS) HAS NOT PASSED A SPEAKING ORDE R, THEREFORE, THE ORDER OF LD. C.I,.T.(APPEALS) BE SET ASIDE AND THE MATTER BE RESTORED TO THE FILE OF A.O. WHO WILL RE-VERIFY THE WORKING WHICH WAS SUBMITTED BEFORE THE LEARNED CIT(APPEALS) AND R E-ADJUDICATE THE ADDITION TO RS.1,97,56,006/-. ON THE OTHER HAND SHRI SAKAR SHARMA, A.R. OF THE ASSESSEE OBJECTED TO THE SUBMIS SIONS MADE BY THE LD. COUNSEL OBJECTED TO THE SAME ON THE GROUND THAT IN THE IMPUGNED ORDER LD.CIT(A) HAS DULY CONSIDERED THE R EMAND ORDER. THEREFORE, VIEW TAKEN BY THE CIT (A) BE UPHELD. 7. HAVING HEARD BOTH THE SIDE WE HAVE CAREFULLY GON E THROUGH THE ORDER OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER, LD. CIT (A) HAS NOT CONSIDERED THE OBJECTION OF A.O. AS PER THE PROVISIONS CONTAINED IN THE SECTIO N 145A FROM THE ASSESSMENT YEAR 1999-00 THE AMOUNT OF ANY TAX, DUTY , CESS, COURT FEE (BY WHATEVER NAME CALLED FOR) ACTUALLY PAID OR INCU RRED BY THE ASSESSEE TO BRING THE GOODS TO THE PLACE OF ITS LO CATION ARE REQUIRED TO BE INCLUDED. BEFORE THE LD.CIT(A) ASSESSEE HAS F URNISHED TWO PROFIT AND LOSS ACCOUNT FOLLOWING BOTH METHODS. HOW EVER, IN THE IMPUGNED ORDER THE LD. LEARNED CIT(APPEALS) WITHOUT DISCUSSING THE COMMENTS OF THE A.O. DELETED THE ADDITION. WE T HEREFORE, SET ASIDE THE ORDER OF LD. LEARNED CIT(APPEALS) WITH TH E DIRECTION THAT ASSESSEE SHOULD FURNISH WHATEVER MATERIAL/EXPLANATI ON IT HAS ITA NO.1397/AHD /2008 DCIT VS. YASH ORGANICS LTD. ASST.YEAR - 2000-01 - 5 - FURNISHED BEFORE LD.CIT(A), A.O.WILL RE-EXAMINE THE SAME AND RE- ADJUDICATE THE ADDITION TO THE EXTENT OF RS.1,97,56 ,006/- MADE BY ASSESSING OFFICER AFRESH KEEPING IN VIEW THE PROVIS IONS CONTAINED IN SECTION 145A OF THE I.T.ACT,1961. 8. IN THE RESULT, FOR STATISTICAL PURPOSES THE APPE AL OF THE REVENUE IS ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 31/03/2010. SD/- SD/- ( N.S. SAINI ) ( T.K.SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 31/ 03 /2010 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XIV, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD