OTIS ELEVATORS COMPANY (I) LTD, MUMBAI V. DCIT 9(2),

ITA 1750/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83722 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARVIND SONDE

Judgement Text

C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE S/SHRI VIJAY PAL RAO, JM AND N.K. BILLAIYA, AM , . . , !./ I.T.A. NO.1750 /MUM/2013 ( / ASSESSMENT YEAR : 2008-09 OTIS ELEVATOR COMPANY (INDIA) LTD., 9 TH FLOOR, MAGNUS TOWERS, MALAD LINK ROAD, MALAD, MUMBAI- 400 064. / VS. THE DY. COMMISSIONER OF INCOME TAX 9(2), AAYAKAR BHAVAN, MUMBAI 400 020. # ! ./ PAN : AAACO0481E ( #$ / APPELLANT ) .. ( %&#$ / RESPONDENT ) A PPELLANT BY SHRI ARVIND SONDE DEPARTMENT BY SHRI O.P. MEENA ' ( ) * + / DATE OF HEARING : 10-09-2014 ,-./ ) * + / DATE OF PRONOUNCEMENT : 17-09-2014 [ 0 / O R D E R PER N.K. BILLAIYA, A.M . : . . , THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF LD. CIT(A) - 20, MUMBAI DATED 03-12-2012 PERTAINING TO A.Y. 2008 -09. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS. 91,93,035/- TO THE VA LUE OF CLOSING STOCK AS ON MARCH, 31, 2008 ON ACCOUNT OF UNUTILIZED CENVAT CRE DIT BY APPLYING PROVISIONS OF SECTION 145-A OF THE INCOME TAX ACT, 1961. ITA 1750/M/13 2 3. THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING , ERECTION AND MAINTENANCE OF ELEVATORS. RETURN FOR THE YEAR WAS E LECTRONICALLY FILED DECLARING INCOME OF RS. 211,43,90,835/- ON 28-9-2008 WHICH WA S SUBSEQUENTLY REVISED BY SHOWING TOTAL INCOME OF RS. 209,97,29,985/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT, STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE A.O. NOTED THAT THE ASSESSEE HAS UNUTILIZED CENVAT CREDI T OF RS. 91,93,035/-. THE A.O. ASKED THE ASSESSEE TO EXPLAIN THE UNUTILIZED C ENVAT CREDIT IN THE LIGHT OF PROVISIONS OF SECTION 145-A OF THE ACT. ACCORDING T O THE A.O., THE VALUE OF INVENTORIES HAS TO BE INCLUSIVE OF THE UNUTILIZED C ENVAT CREDIT AS WELL AS THE EXCISE DUTY PAYABLE ON THE STOCK OF FINISHED GOODS. THE ASSESSEE EXPLAINED BY WAY OF NOTE ON ADJUSTMENT U/S 145-A OF THE ACT WHIC H HAS BEEN INCORPORATED BY THE A.O. IN PAGES 3 TO 9 OF HIS ORDER. THIS EXP LANATION DID NOT FIND FAVOUR WITH THE A.O. WHO PROCEEDED BY ADDING THE UNUTILIZE D CENVAT CREDIT OF RS. 91,93,035/- TO THE VALUE OF CLOSING STOCK. AGGRIEVE D BY THIS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). IT WAS C ONTENDED BEFORE THE LD. CIT(A) THAT THE ASSESSEE HAS BEEN CONSISTENTLY AND REGULAR LY FOLLOWING THE EXCLUSIVE METHOD FOR THE PURPOSE OF ACCOUNTING FOR PURCHASES/ OPENING AND CLOSING STOCK. IT WAS EXPLAINED THAT AS PER EXCLUSIVE METHO D, PURCHASES AND INVENTORIES ARE ACCOUNTED NET OF EXCISE DUTIES. AC CORDINGLY THE ASSESSEE HAS VALUED THE OPENING STOCK AS WELL AS CLOSING STOCK O F RAW MATERIAL AND WORK-IN- PROGRESS NET OF CENVAT CREDIT. IT WAS FURTHER SUBM ITTED THAT THE COST WHICH HAS NOT BEEN DEBITED TO THE P&L ACCOUNT SHOULD NOT BE CONSIDERED FOR VALUATION OF CLOSING STOCK AND SINCE THERE IS NO CL OSING STOCK OF FINISHED GOODS, NO SUCH ADJUSTMENT CAN BE MADE. AFTER CONSI DERING THE FACTS AND SUBMISSIONS, THE LD. CIT(A) WAS OF THE OPINION THAT THERE IS WORK-IN-PROGRESS AS ON 31-3-2008 AND ALSO THERE IS INVENTORIES, THER EFORE, THE ELEMENT OF CENVAT HAS TO BE TAKEN INTO ACCOUNT AND ACCORDINGLY CONFIRMED THE FINDINGS OF THE A.O. ITA 1750/M/13 3 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REIT ERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. IT IS THE SAY OF THE LD. COUNSEL FOR THE ASSESSEE THAT ONLY ON THE COMPLETION OF THE INSTALL ATION OF ELEVATORS, THE SALES ARE BOOKED IN THE BOOKS, THEREFORE, THERE IS NO CLO SING STOCK AND AS THERE IS NO CLOSING STOCK, THE QUESTION OF ANY ADJUSTMENT OF CENVAT DOES NOT ARISE. 5. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 6. WE HAVE CAREFULLY PERUSED THE ORDER OF THE AUTHO RITIES BELOW AND THE BALANCE SHEET AS ON 31-3-2008. THE AMOUNT OF CENVA T CREDIT IS SHOWN UNDER SCHEDULE 10 LOANS AND ADVANCES WITH THE BALANCES WITH PORT TRUST, CUSTOMS, EXCISE ETC. IN THE SCHEDULES - NOTES TO AC COUNTS, IT IS CLEARLY MENTIONED THAT FOLLOWING THE INDUSTRY PATTERN, THE COMPANY CONSIDERS A LIFT/ESCALATOR AS PRODUCED WHEN TOTAL COMPONENTS CO MPRISING A COMPLETE LIFT/ESCALATOR ARE DISPATCHED FROM THE SHIPPING DEP ARTMENT. ACCORDINGLY, THERE IS NO CLOSING STOCK OF GOODS PRODUCED AS ON 3 1-3-2008. A PERUSAL OF THE QUANTITATIVE DETAILS OF THE NUMBER OF ITEMS OF FINI SHED GOODS SHOWS THAT THERE IS NEITHER ANY OPENING STOCK NOR THERE IS ANY CLOSI NG STOCK. THE RELEVANT PROVISION OF SECTION 145-A OF THE ACT UNDER CONSIDE RATION HAS BEEN BROUGHT IN THE STATUTE W.E.F. 1-4-1999. WE ARE IN ASSESSMENT Y EAR 2008-09. THE ASSESSEE IS FOLLOWING THIS METHOD OF ACCOUNTING SINCE PAST M ANY YEARS. NO SUCH ADDITION/ADJUSTMENT HAS BEEN MADE IN THE EARLIER AS SESSMENT YEAR. THOUGH THE PROVISION OF SECTION 145-A OF THE ACT AS APPLIE D BY THE A.O. FOR THE YEAR UNDER CONSIDERATION WAS VERY MUCH IN EXISTENCE. CO NSIDERING THIS IN THE LIGHT OF THE FACT THAT THERE IS NO CLOSING STOCK OF FINIS HED GOODS AS AT THE END OF THE YEAR, WE DO NOT FIND ANY REASON FOR MAKING THE ADJU STMENT OF UNUTILIZED CENVAT CREDIT. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE ADDITION OF RS. 91,93,035/-. ITA 1750/M/13 4 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER, 2014. 0 ) ,-./ ' 1 2!3 17 -9-2014 - ) 4( SD/- SD/- (VIJAY PAL RAO) (N.K. BILLAIYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER ' !( MUMBAI ; 2! DATED 17-09-2014. [ .../ R.K. , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. #$ / THE APPELLANT 2. %&#$ / THE RESPONDENT. 3. ' G* ( ) / THE CIT(A) 20, MUMBAI 4. ' G* / CIT- -9, MUMBAI 5. J4 %*KL , + KL / , ' !( / DR, ITAT, MUMBAI C BENCH 6. 4MN O( / GUARD FILE. ! ( / BY ORDER, &* %* //TRUE COPY// )/(* + ( DY./ASSTT. REGISTRAR) , ' !( / ITAT, MUMBAI