DCIT, CIR-5(1), KOLKATA, Kolkata V. M/s Kesoram Industries Ltd., Kolkata

ITA 1660/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1293 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 18-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K SRIHARI
• Section: 43B

Judgement Text

1 ITA NO.1660/KOL/2016 KESORAM INDUSTRIES LTD.,AY- 2003-04 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) BEFORE . . , /AND . . , ) [BEFORE SHRI P. M. JAGTAP, AM & SHRI A. T. VARKEY, JM] I.T.A. NO. 1660/KOL/2016 ASSESSMENT YEAR: 2003-04 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-5(1), KOLKATA. VS. M/S. KESORAM INDUSTRIES LTD., (PAN: AABCK2417P) APPELLANT RESPONDENT DATE OF HEARING 05.03.2018 DATE OF PRONOUNCEMENT 07.03.2018 FOR THE APPELLANT SHRI P. K. SRIHARI, CIT, DR FOR THE RESPONDENT SHRI AKKAL DUDHWEWALA, AR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY REVENUE IS AGAINST THE ORD ER OF LD. CIT(A)-17, KOLKATA DATED 06.01.2016 FOR AY 2003-04. 2. THE SOLE GROUND OF ADDITION IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE TOWARDS EXCISE DUTY ON CLOSING ST OCK OF FINISHED GOODS AMOUNTING TO RS.5,66,83,746/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. AT THE OUTSET ITSELF, IT WAS BROUGHT TO OUR NOTI CE THAT SIMILAR ISSUE CROPPED UP IN ASSESSEES OWN CASE IN AY 2007-08 WHEREIN THE REVEN UE CHALLENGES THE ACTION OF THE LD. CIT(A) DELETING THE ADDITION MADE BY THE AO BY INVO KING SEC. 43B OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). THE L D. COUNSEL FOR THE ASSESSEE SHRI AKKAL DUDHEWAWALA DREW OUR ATTENTION TO PARA 3 OF THE TRI BUNALS ORDER FOR AY 2007-08 WHEREIN THE ISSUE HAS BEEN FRAMED AS UNDER: 2 ITA NO.1660/KOL/2016 KESORAM INDUSTRIES LTD.,AY- 2003-04 3. THE SECOND ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE TOWARDS EXCISE DUTY O N CLOSING STOCK OF FINISHED GOODS AMOUNTING TO RS.5,40,34,736/- IN THE FACTS AND CIRC UMSTANCES OF THE CASE. 4. SO, WE NOTE THAT THE ISSUE IS IDENTICAL AND THE TRIBUNAL HAS UPHELD THE ORDER OF LD. CIT(A) VIDE PARA 3.4 OF ITS ORDER BY HOLDING AS UND ER: 3.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE DETAILED PAPER BOOK FILED BY THE ASSE SSEE. WE FIND THAT THIS ADDITION HAD BEEN MADE WITHOUT APPRECIATING THE ACCOUNTING TREATMENT AND THE TAX TREATMENT GIVEN BY THE ASSESSEE IN THE COMPUTATION OF TOTAL INCOME. WE FI ND THAT THE ADDITION MADE IS WITHOUT ANY BASIS AND WITHOUT APPRECIATING THE FACTS AND REQUIR EMENTS OF LAW. WE FIND THAT THE LD. CIT(A) HAD DULY APPRECIATED THE SAME AND HENCE WE DO NOT F IND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN THIS REGARD. ACCORDINGLY, THE GROUND NO. 2 RAISED BY THE REVENUE IS DISMISSED. WE NOTE THAT THE LD. CIT(A) HAS DELETED THE ADDITIO N BY HOLDING AS UNDER: 3.2. FURTHER, THE ASSESSEE HAS CLAIMED THAT THE I SSUE UNDER CONSIDERATION IS COVERED BY THE ORDER OF LD. CIT(APPEALS)-VI IN APPEAL NO. 119/13-1 4/CIT(A)-VI/RANGE-5/KOL DTD. 17.03.2014. A COPY OF THE SAID ORDER HAS BEEN FILE D BY THE A/R ALONG WITH THE WRITTEN SUBMISSION. THE OPERATIVE PARA OF THE SAID ORDER IS REPRODUCED AS FOLLOWS: 'IT IS SEEN THAT THE APPELLANT IS CONSISTENTLY FOLL OWING THE AFORESAID METHOD OF ACCOUNTING FOR EXCISE DUTY ON STOCK AND CLAIM OF DE DUCTION THEREOF OVER THE YEARS. IT CREDITS SALES NET OF EXCISE DUTY TO ITS TRADING ACC OUNT AND INCLUDES EXCISE DUTY IN VALUATION OF STOCK (OPENING AND CLOSING) IN ACCORDA NCE WITH SECTION 145A OF THE I T. ACT, 1961. SINCE THE CLOSING STOCK IS CLEARED IN TH E SUBSEQUENT YEAR PRIOR TO DUE DATE OF FILING OF RETURN OF INCOME, IT CLAIMS DEDUCTION FOR EXCISE DUTY ON THE SAME AS PER PROVISO OF SECTION 43B OF THE IT. ACT, 1961. AS AND WHEN IT FILES RETURN OF INCOME FOR THE SUBSEQUENT YEAR, IT ADDS BACK EXCISE DUTY ON OP ENING STOCK AS THE SAME HAD ALREADY BEEN CLAIMED AS DEDUCTION IN THE RETURN OF THE PRECEDING YEAR IN FORM OF EXCISE DUTY ON (THE THEN) CLOSING STOCK. I DO NOT S EE AS TO HOW THE SAME CAN BE CALLED CLAIMING DEDUCTION DOUBLY. IN FACT, THE ENTIRE EXER CISE IS REVENUE NEUTRAL OVER THE PERIOD OF A FEW YEARS. EVEN FOR A SINGLE YEAR, THE METHOD APPEARS TO BE IN CONFORMITY WITH WELL ACCEPTED PRINCIPLE OF ACCOUNTING AS WELL AS THE PROVISION OF SECTION 145A AND SECTION 43B OF THE INCOME TAX ACT, 1961. THE IS SUE CAME UP FOR CONSIDERATION BEFORE TRIBUNAL IN THE CASE OF DCIT CIRCLE-I, KOLKA TA VS. EXIDE INDUSTRIES LTD. I.T.A. NO. 1491/KO1/2007, WHERE THE ASSESSEE WAS FOLLOWING A SIMILAR SYSTEM OF ACCOUNTING. IN ITS DECISION IN THE SAID APPEAL, IT HAS BEEN HELD BY HON'BLE TRIBUNAL THAT THE ACCOUNTING SYSTEM BEING FOLLOWED BY THE AS SESSEE DID NOT AMOUNT TO CLAIMING DOUBLE DEDUCTION. WHILE DELIVERING THIS DE CISION, HON'BLE TRIBUNAL ALSO REFERRED TO THE DECISION OF SUPREME COURT IN THE CA SE OF BERGER, PAINTS (I) LTD. 266 FIR 99. THE RATIO SQUARELY APPLIES ON THE APPELLANT 'S CASE. MOREOVER, THOUGH THE APPELLANT HAS BEEN FOLLOWING THE SAME SYSTEM CONSIS TENTLY, NO SUCH ADDITION HAS BEEN MADE IN THE EARLIER YEARS AND THE DEPARTMENT H AS ALSO ACCEPTED THE SAME. FURTHER, IN THE SCRUTINY ASSESSMENT OF THE SUBSEQUE NT YEAR I. E. A. Y. 2010-11 WHICH WAS ALSO COMPLETED AROUND SAME TIME AS THE IMPUGNED ORDER, NO ADDITION ON THE ISSUE OF EXCISE DUTY ON CLOSING STOCK IS STATED TO BE MADE. THUS, THE ASSESSING OFFICER HAS IN THE PRECEDING AS WELL AS SUBSEQUENT YEAR ACC EPTED THE SYSTEM FOLLOWED BY THE 3 ITA NO.1660/KOL/2016 KESORAM INDUSTRIES LTD.,AY- 2003-04 APPELLANT. THEREFORE, FOLLOWING THE PRINCIPLE OF CO NSISTENCY AND TAKING INTO CONSIDERATION THE DECISION OF APEX COURT IN THE CAS E OF CIT VS. RADHASOAMI SATSANG [193 ITR 321 (SC)], I AM OF THE VIEW THAT THERE WAS HARDLY ANY JUSTIFICATION FOR DISTURBING THE CONSISTENT AND WELL-FOUNDED SYSTEM O F ACCOUNTING FOLLOWED BY THE APPELLANT. EVEN OTHERWISE, IN VIEW OF THE RATIO GIV EN BY JURISDICTIONAL BENCH OF HON'BLE TRIBUNAL IN THE CASE OF EXIDE INDUSTRIES LT D. (SUPRA), IT IS TO BE HELD THAT THERE IS NO INFIRMITY IN THE APPELLANT'S TREATMENT OF EXCISE DUTY AND THE SAME DOES NOT RESULT IN DOUBLE DEDUCTION. THE ADDITION OF RS.5,40 ,34,736/- IS, THEREFORE, DELETED. ' 3.3 RESPECTFULLY FOLLOWING THE ABOVE ORDER OF LD. CIT(APPEALS)-VL, KOLKATA FOR A.YR 2007-08 IN THE CASE OF THE ASSESSEE AND THE ORDER O F THE SUPREME COURT IN BERGER PAINTS 266 ITR 99, THE ADDITION MADE IN THIS CASE OF RS.5,66,8 3,746/- IS HEREBY DELETED. 5. WE TAKE NOTE THAT THE ISSUE BEFORE US WAS DECID ED IN ASSESSEES FAVOUR IN AY 2007- 08 BY THE THEN LD. CIT(A) WHICH ORDER HAS BEEN UPHE LD BY THE TRIBUNAL (SUPRA). RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL FO R AY 2007-08, WE CONFIRM THE ACTION OF LD. CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER IS PRONOUNCED IN THE OPEN COURT ON 07.03.201 8 SD/- SD/- (P. M. JAGTAP) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 7TH MARCH, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT DCIT, CIRCLE-5(1), KOLKATA 2 RESPONDENT M/S. KESORAM INDUSTRIES LTD., 9/1, R . N. MUKHERJEE ROAD, KOLKATA-700 001. 3. THE CIT(A) KOLKATA 4. 5. CIT KOLKATA DR, ITAT, KOLKATA. / TRUE COPY, BY ORDER, SR. PVT. SECRETARY