BAJAJ VENTURES LTD ( FORMERLY KNOWN AS BLACK & DECKER BAJAJ LTD), MUMBAI V. DCIT 3(1), MUMBAI

ITA 1675/MUM/2012

• Counselvise Citation: 167519914 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 12-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AS HIAM K MODI
• Assessee Lawyers: CHARUL TOPRANI
• Keywords: Depreciation; Unabsorbed depreciation

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE S/SHRI B.R.MITTAL,(JM) AND RAJENDRA (AM) . . , , ./I.T.A. NO.1675/MUM/2012 ( / ASSESSMENT YEAR : 2007-08) STANLEY BLACK AND DECKER INDIA LIMITED, (FORMERLY KNOWN AS BAJAJ VENTURES LIMITED), GATE NO.133, CHAKAN TALEGAON ROAD, VILLAGE MAHALUNGE, TALUKA KHED, PUNE-410501 / VS. DY. COMMISSIONER OF INCOME TAX,3(1), ROOM NO.607, AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020 ( & / APPELLANT) .. ( ' & / RESPONDENT) ./ ./PAN/GIR NO. :AAACB4681R & / APPELLANT BY : SHRI CHARUL TOPRANI ' & * /RESPONDENT BY : SHRI ASHIAM K MODI * - / DATE OF HEARING : 12.2.2014 * - /DATE OF PRONOUNCEMENT : 21.2.2014 / O R D E R PER B.R.MITTAL, JM: THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2007-08 AGAINST ORDER OF LD. COMMISSIONER OF INCOME TAX(A) DATED 12.12.2 011. 2. GROUND NO.1 OF THE APPEAL TAKEN BY ASSESSEE IS A S UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CAS E AND IN LAW, THE CIT(A) (A) ERRED IN UPHOLDING THE ACTION OF AO IN DISALLO WING PROVISION FOR OUTSTANDING EXPENSE AMOUNTING TO RS.8,67,820/- 3. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. 4. THE ASSESSEE CREDITED PROVISION OF RS.42,03,97 2/- TOWARDS MEETING THE OUTSTANDING EXPENSES AS ON 31.3.2007. AO DISALLOW ED THE SAID CLAIM OF THE ASSESSEE I.T.A. NO.1675/MUM/2012 2 ON THE GROUND THAT THE LIABILITY OF THE ASSESSEE HA D NOT CRYSTALLIZED DURING THE RELEVANT ASSESSMENT YEAR. IN THE FIRST APPEAL, THE LD. CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HAS RESTRICTED THE DISALLOWANCE O F RS.8,67,820/- ON THE GROUND THAT THE ASSESSEE HAS MADE PAYMENT OF RS.33,36,152/- BE FORE FINALIZATION OF BOOKS OF ACCOUNT BUT FOR THE AMOUNT OF RS.6,66,480/-, CREDIT NOTE HAS BEEN ISSUED OR ACTUAL PAYMENT HAS BEEN MADE AFTER FINALIZATION OF BOOKS O F AND FOR THE BALANCE AMOUNT OF RS.2,01,340/- IT WAS WRITTEN BACK ON 31.3.2011. THEREFORE TOTAL AMOUNT OF RS.8,67,820/- (RS.6,66,480 +RS.2,01,340), THE LIABI LITY HAS NOT BEEN ASCERTAINED AND QUANTIFIED TILL THE FINALIZATION OF BOOKS OF ACCOUN T. 5. AT THE TIME OF HEARING, LD. AR REFERRED PAGE 3 1 OF THE PAPER BOOK WHICH CONTAINS THE DETAILS OF THE TOTAL AMOUNT OF RS.42 ,03,972/-, THE AMOUNT DISALLOWED BY AO AND THE ASSESSEE MADE THE PROVISIONS. HOWEVER , LD. AR DID NOT DISPUTE THE FACT THAT THE ABOVE AMOUNT AGGREGATING TO RS.8,67,820/- WHICH HAS BEEN DISALLOWED BY LD. CIT(A) WAS ASCERTAINED AND CRYSTALLIZED AFTER FINAL IZATION OF BOOKS OF ACCOUNT IN THE NEXT FINANCIAL YEAR. CONSIDERING THE FACTS OF THE CASE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). HENCE, GROUND NO.1 T AKEN BY ASSESSEE IS REJECTED. 6. GROUND NO.2 OF THE APPEAL TAKEN BY ASSESSEE IS A S UNDER : 2. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE CIT(A) (A) ERRED IN HOLDING THAT THE PROVISIONS OF SECTIO N 145A OF THE IT ACT, 1961 HAVE NOT BEEN ADOPTED BY THE APPELLANT FULLY AND THEREBY DIRECTING THE AO TO RECOMPUTE THE PROFITS OF THE APPELLANT IN RESPECT O F UNUTILIZED MODVAT WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HAD ALREAD Y FOLLOWED THE METHOD OF VALUATION PRESCRIBED UNDER SECTION 145A OF THE ACT AND ACCORDINGLY THERE WAS NO QUESTION OF MAKING ANY FURTHER ADDITION IN RESPEC T OF UNUTILIZED MODVAT 7. WE OBSERVE THAT THE AO HAS STATED THAT THERE WA S UNUTILIZED MODVAT CREDIT OF RS.5,46,729/- AS ON 31.3.2007 AND ADDED THE SAME TO THE CLOSING STOCK. THE LD. CIT(A) HAS STATED VIDE PARA 4.1 OF THE IMPUGNED ORDER THAT THE ASSESSEE IS FOLLOWING EXCLUSIVE METHOD AND AS A RESULT OF PURCHASE AND SALES AS W ELL AS INVENTORY ARE PREPARED EXCLUDING ELEMENT OF TAX, DUTY, CESS OR FEE PAID. IT IS RELEVANT TO STATE THAT THE LD. CIT(A) HAS WRONGLY/DUE TO TYPOGRAPHICAL MISTAKE HAS MENTIONED THAT AS PER SECTION 145A, THE ASSESSEE HAS FOLLOWED COMPULSORY EXCLUS IVE METHOD AS AGAINST PRACTICE OF FOLLOWING THE SAME BY INCLUSIVE METHOD. WE OBSERVE THAT THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE HAS DIRECTE D THE AO TO RECOMPUTE THE PROFIT AFTER MAKING ADJUSTMENT WITH REFERENCE TO THE OPENI NG STOCK, CLOSING STOCK, PURCHASES I.T.A. NO.1675/MUM/2012 3 AND SALES AFTER CONSIDERING THE MODVAT CREDIT AVAI LABLE TO THE ASSESSEE WHICH IS TO BE INCLUDED WHILE VALUING THE CLOSING STOCK. 8. AT THE TIME OF HEARING, LD. AR REFERRED PAGE 32 OF THE PAPER BOOK AND SUBMITTED THAT THE ASSESSEE HAS ALSO NOT INCLUDED IN THE PURC HASES EXCISE DUTY AND SALES TAX AND IF THE UNAVAILED MODVAT CREDIT IS TO BE INCLUDED IN THE CLOSING STOCK, THE SAID EXCISE DUTY AND SALES TAX ETC HAVE TO BE INCLUDED IN THE PURCH ASES. THE ASSESSEE AT PAGE 32 HAS PLACED CHART GIVING DETAILS OF THE OPENING STOCK, P URCHASES, INCREASE IN STOCK AND RAW MATERIAL AS ON 31.3.2007 ON INCLUSION OF EXCISE DUT Y AND ALSO STATED THAT IF THE MODVAT CREDIT AVAILED AND CRYSTALLIZED ON RAW MATERIALS THE SAME IS CONSIDERED, THERE IS NO IMPACT ON THE PROFIT FOR THE YEAR. 9. LD. DR, AT THE TIME OF HEARING COULD NOT CONTROV ERT THE SAID SUBMISSION PLACED AT PAGE 32 OF THE PAPER BOOK. 10. CONSIDERING THE FACTS OF THE CASE, WE HOLD THAT UNUTILIZED MODVAT OF RS.5,46,829/- IS NOT TO BE INCLUDED IN THE CLOSING STOCK AS THE ASSESSEE HAS ADOPTED EXCLUSIVE METHOD IN RESPECT OF PURCHASES OF RAW MAT ERIAL AND ACCORDINGLY, THE CLOSING STOCK HAS BEEN VALUED. HENCE. GROUND NO.2 OF THE A PPEAL TAKEN BY ASSESSEE IS ALLOWED BY DELETING THE ADDITION OF UNAVAILED MODVAT C REDIT OF RS.5,46,829/-. 11. GROUND NO.3 OF THE APPEAL TAKEN BY ASSESSEE IS AS UNDER : 3. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CAS E AND IN LAW, THE APPELLANT PRAYS THAT THE AO BE DIRECTED TO DETERMIN E THE BROUGHT FORWARD UNABSORBED DEPRECIATION ALLOWANCE AVAILABLE TO BE CARRIED FORWARD TO ASSESSMENT YEAR 2007-08 BY CONSIDERING THE ORDER OF THE CIT DATED 30.3.2011 PASSED UNDER SECTION 264 OF THE ACT FOR THE AY 200 6-07 12. AT THE TIME OF HEARING, LD. AR SUBMITTED THAT THE SAID GROUND IS NOT PRESS FOR. HENCE, GROUND NO.3 OF THE APPEAL IS REJECTED AS NO T PRESS FOR. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN PART. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 21ST FEBRUARY, 2014 . 1 2 21ST FEBRUARY, 2014 * SD SD ( / RAJENDRA) ( . . /B.R.MITTAL) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI: ON THIS 21ST DAY OF FEBRUARY, 2014 I.T.A. NO.1675/MUM/2012 4 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. & / THE APPELLANT 2. ' & / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- CONCERNED 4. 6 / CIT CONCERNED 5. 7 '9 , - 9 , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) - 9 , /ITAT, MUMBAI