ITO, Ward - 10(4), Kolkata, Kolkata V. M/s. Associated Pigments Ltd., Kolkata

ITA 1429/KOL/2011

• Counselvise Citation: 142923514 RSA 2011
• Duration Of Justice: 2 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 21-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: M SATNALIWALA

Judgement Text

I.T.A. NO.: 1429/KOL./2011 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 3 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA CORAM : SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI ABRAHAM P. GEORGE (ACCOUNTANT MEMBER) I.T.A. NO.: 1429/KOL./ 2011 ASSESSMENT YEAR : 2007-2008 INCOME TAX OFFICER,...........................,.... ...........APPELLANT WARD-10(4), KOLKATA, P-7, CHOWRINGHEE SQUARE, 3 RD FLOOR, ROOM NO. 73 KOLKATA-700 069 -VS.- M/S. ASSOCIATED PIGMENTS LTD.,..................... .............RESPONDENT 210, B.T. ROAD, SUKCHAR, 24-PARGANAS (NORTH) KOLKATA-700 115 [PAN : AACCA 4246 P] APPEARANCES BY: SMT. RANU BISWAS, JCIT, SR. D.R., FOR THE DEPARTMEN T SHRI M. SATNALIWALA, FCA, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : DECEMBER 16, 2013 DATE OF PRONOUNCING THE ORDER : DECEMBER 19, 2013 O R D E R PER ABRAHAM P. GEROGE: 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST AN O RDER DATED 04.07.2011 OF COMMISSIONER OF INCOME TAX (APPEALS)- XII, KOLKATA FOR THE ASSESSMENT YEAR 2007-08. IT HAS RAISED TWO GROUNDS, WHICH ARE REPRODUCED HEREUNDER :- (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT(A) IS JUSTIFIED IN DELETING THE ADDIT ION OF RS.74,58,713/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF EXCISE DUTY PERTAINING TO FINISHED GOODS, IN ACC ORDANCE WITH THE PROVISION OF SECTION 145A. (2) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS JUSTIFIED IN DELETING DISALLOWA NCE OF I.T.A. NO.: 1429/KOL./2011 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 3 2 INTEREST OF RS.16,17,541/- PERTAINING TO CAPITAL WO RK-IN- PROGRESS WITHOUT GOING INTO MERITS OF THE CASE. 2. GROUND NO. 1 RELATES TO AN ADDITION OF RS.74,58, 713/- MADE FOR EXCISE DUTY RELATING TO FINISHED GOODS. 3. ASSESSING OFFICER HAD RELYING ON SECTION 145A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), INCLUDED EXCISE DUT Y IN CLOSING STOCK OF FINISHED GOODS AND MADE AN ADDITION OF RS.74,58,713 /-. EXPLANATION OF THE ASSESSEE WAS THAT IT HAD NOT PROVIDED FOR ANY LIABI LITY ON ACCOUNT OF EXCISE DUTY OF FINISHED GOODS WAS NOT ACCEPTED. ASS ESSEE APPEALED BEFORE LD. CIT(APPEALS) AND WAS SUCCESSFUL. LD. CIT(APPEAL S) RELYING ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS.- NARMADA CHEMATUR PETRO CHEMICALS LTD. [327 ITR 369 (GUJ.)] HELD THAT EXCISE DUTY CANNOT BE INCLUDED IN THE CLOSING STOCK OF FINISHED GOODS. 4. WE HAVE HEARD BOTH COUNSELS. WE FIND THAT HONBL E GUJARAT HIGH COURT HAD CONSIDERED THE EFFECT OF SECTION 145A OF THE ACT WHEN IT HELD THAT INCLUSION OF EXCISE DUTY WHILE VALUING CLOSING STOCK COULD BE DONE ONLY IF ANY DUTIES STOOD PAID OR LIABILITY WAS INCU RRED. CRUX OF THE DECISION WAS THAT CLEARANCE OF THE GOODS WAS ESSENT IAL FOR FASTENING THE LIABILITY TO PAY EXCISE DUTY. WE ARE OF THE VIEW TH AT LD. CIT(APPEALS) WAS JUSTIFIED IN RELYING ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT. GROUND NO. 1 STANDS DISMISSED. 5. VIDE GROUND NO. 2 REVENUE HAS ASSAILED THE DELET ION OF DISALLOWANCE OF INTEREST OF RS.16,17,541/-. 6. ASSESSING OFFICER IN HIS ASSESSMENT ORDER HAD DI SALLOWED THE INTEREST CLAIM FOR A REASON THAT CAPITAL WORK-IN-PR OGRESS WOULD HAVE BEEN FUNDED BY LOANS AND, THEREFORE, INTEREST CLAIMED FO R CAPITAL WORK-IN- PROGRESS COULD NOT BE ALLOWED. THOUGH ASSESSEE SUBM ITTED THAT NO I.T.A. NO.: 1429/KOL./2011 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 3 3 INTEREST WAS CHARGED IN RESPECT OF FUNDING OF CAPIT AL WORK-IN-PROGRESS THIS WAS NOT ACCEPTED BY THE ASSESSING OFFICER. 7. ASSESSEE APPEALED BEFORE THE LD. CIT(APPEALS) AN D WAS SUCCESSFUL. LD. CIT(APPEALS) GAVE A CLEAR FINDING THAT NO INTER EST WAS CHARGED ON ANY BORROWED CAPITAL USED FOR FUNDING THE CAPITAL WORK- IN-PROGRESS. NOTHING HAS BEEN BROUGHT BEFORE US BY THE LD D.R. TO SHOW T HAT THIS FINDING OF LD. CIT(APPEALS) WAS NOT IN ACCORDANCE WITH THE RECORDS PRODUCED BY THE ASSESSEE. ASSESSEE HAS PLACED FULL BREAK-UP OF INTE REST AS ON 31.03.2007 AND SUCH BREAK-UP CLEARLY SHOW THAT THERE WAS NO LO AN WHATSOEVER TAKEN BY THE ASSESSEE FOR FUNDING ITS CAPITAL WORK-IN-PRO GRESS. WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(APPEALS) IN THIS REGARD. GROUND NO. 2 STANDS DISMISSED. 8. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DAY OF DECEMBER, 2013. SD/- SD/- MAHAVIR SINGH ABRAHAM P. GEORGE (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 19 TH DAY OF DECEMBER, 2013 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.