Maruti Dyechem Industries, Ahmedabad V. The Asstt. Commissioner of Income Tax, Circle-7(2), Ahmedabad

ITA 1903/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8459 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 19-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH
• Assessee Lawyers: BHADRESH C GANDHAKWALA
• Keywords: Cost of acquisition

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO. 1903/AHD/2016 / ASSTT. YEAR: 2012-2013 MARUTI DYECHEM INDUSTRIES, C- 1, B. NO. 6, RAJMATA RUBBER PRODUCTS COMPOUND, GIDC, NARODA, AHMEDABAD-382330 VS. THE ACIT, CIRCLE-7(2), ROOM NO. 402, 4 TH FLOOR, NATURVIEW BUILDING, ASHRAM ROAD, AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : BHADRESH C. GANDHAKWALA, A.R REVENUE BY : SAURABH SINGH, SR. D.R ! / DATE OF HEARING : 13/03/2018 '#$ ! / DATE OF PRONOUNCEMENT: 10/04/2018 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAIN ST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) DATED 01.06.2016 PASSED FOR ASSESSMENT YEAR 2012-2013. ITA NO.1903/AHD/2016 A.Y. 2012-13 2 2. IN THE SOLITARY SUBSTANTIAL GROUND OF APPEAL, AS SESSEE HAS PLEADED THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 33,58,003/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FI RM AT THE RELEVANT TIME WAS ENGAGED IN MANUFACTURE EXPORT AND TRADING IN ALL TYPES OF REACTIVE DYES. IT HAS FILED ITS RETURN OF INCOME ON 24.09.2012 DECLARING TOTAL INCOME OF RS. 1,66,53,62 0/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMEN T AND A NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. THE LD. ASSESSING OFFICER HAD ENQUIRED FROM THE ASS ESSEE, WHETHER IT HAS INCLUDED MODVAT CREDIT IN THE VALUE OF CLOSING STOCK AS CONTEMPLATED UNDER SECTION 145A OF THE INCOME TAX A CT OR NOT. THE ASSESSEE FILED WRITTEN SUBMISSIONS AND CONTENDED TH AT IT HAS BEEN MAINTAINING SEPARATE ACCOUNTS FOR EXCISE AND VAT AN D OTHER LEVIES. THESE AMOUNTS WERE NOT DEBITED WHILE MAKING THE PUR CHASES, IN OTHER WORDS THE CENVAT AND OTHER EXCISE COMPONENT WERE NOT CLAIMED BY THE ASSESSEE IN THE PURCHASE COST. ACCOR DINGLY THEY ARE NOT BEING INCLUDED IN THE CLOSING STOCK. THE ASSESS ING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. HE ESTIMATED THE VALUE OF EXCISE DUTY AND VAT ACCORDING TO THE RATES ON THE ITEMS AVAILABLE IN THE CLOSING STOCK AND MADE AN ADDITION OF RS. 33,58,003/-. 4. DISSATISFIED WITH THE ADDITION ASSESSEE CARRIED OUT THE MATTER IN APPEAL BEFORE CIT(A). LD. CIT(A) HAS CONFIRMED T HE ADDITION BY FOLLOWING THE ORDER OF HIS PREDECESSOR IN ASSESSMEN T YEAR 2011-12. HE HAS REPRODUCED THE ORDER OF CIT(A) PASSED ON 201 1-12 PAGES 3 TO 8 OF THE IMPUGNED ORDER THEREAFTER LD. CIT(A) HA S OBSERVED AS UNDER:- ITA NO.1903/AHD/2016 A.Y. 2012-13 3 5.2.1 RESPECTFULLY FOLLOWING THE DECISION OF MY LEA RNED PREDECESSOR AND CONSIDERING THE FACTS THAT THE IDEN TICAL ISSUE IS UNDER CONSIDERATION THIS YEAR AS WELL, THE AO IS DI RECTED TO MAKE ADJUSTMENTS IN ACCORDANCE WITH THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF MAHAVIR ALUMINUM LTD. GROUND O F APPEAL NOS. 2.1 TO 2.3 ARE ALLOWED, SUBJECT TO RECOMPUTATION BY THE ASSESSING OFFICER. 5. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AN I DENTICAL ISSUE CROPPED UP FIRST TIME IN ASSESSMENT YEAR 2007-08 WH EN DISPUTE TRAVELLED UP TO THE TRIBUNAL. THE TRIBUNAL HAS DELE TED THE ADDITION VIDE ITA NO. 278/AHD/2011. IN ASSESSMENT YEAR 2011- 12 WHEN THIS DISPUTE CAME UP BEFORE THE TRIBUNAL IN ITA NO. 1585/AHD/2015 ASSESSEE RELIED UPON THE ORDER OF THE ITAT PASSED I N A.Y. 2007-08 AND TRIBUNAL HAS DELETED THE ADDITION. HE PLACED ON RECORD COPIES OF BOTH THE ORDERS. 6. ON THE OTHER HAND LD. D.R RELIED UPON THE ORDERS OF REVENUE AUTHORITIES. 7. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT LD. FIRS T APPELLATE AUTHORITY HAS PLACED HER RELIANCE ON THE FINDING OF HER PREDECESSOR RECORDED IN A.Y. 2011-12, WHILE CONFIRMING THE ADDI TION. THAT FINDING HAS ALREADY BEEN SET ASIDE BY THE ITAT IN I TA NO. 1589/AHD/2015. THUS THERE IS NO FOUNDATION AVAILABL E WITH THE DEPARTMENT IN SUPPORT OF THE CIT(A) ORDER. THE TRIB UNAL IN ASSESSMENT YEAR 2007-08 HAS CONSIDERED THIS ISSUE E LABORATELY AND RECORDED FOLLOWING FINDINGS:- ITA NO.1903/AHD/2016 A.Y. 2012-13 4 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO INCLUSION OF UNUTILIZED CENYAT CREDIT AND OTHER TAXES TO THE CLOSING STOCK. IT IS AN UNDISPUTED FACT THAT ASSESS EE IS FOLLOWING EXCLUSIVE METHOD OF ACCOUNTING WHEREBY IT DOES NOT DEBITS THE TAXES PAID TO THE PURCHASES, CONSUMPTION OF STOCK A ND THE AFORESAID METHOD OF ACCOUNTING OF TAXES HAS BEEN CO NSISTENTLY FOLLOWED BY THE ASSESSEE IN EARLIER AND SUCCEEDING YEARS AND IS ALSO STATED TO HAVE BEEN ACCEPTED BY REVENUE, WE FI ND THAT THE HON'BLE APEX COURT IN THE CASE OF CIT VS. INDO NIPPON CHEMICALS CO.LTD. REPORTED AT (2003) 261 1TR 275 (SC) HAS OBSERVED THAT UNAVAILED MODVAT CREDIT CANNOT BE CO NSTRUED AS INCOME AND THERE IS NO LIABILITY TO PAY TAX ON S UCH UNAVAILED MODVAT CREDIT. WE FURTHER FIND THAT ON IDENTICAL FA CTS, THE COORDINATE BENCH OF TRIBUNAL IN THE CASE OF SHRI PA RAGBHAI RAMANIAL PATEL (SUPRA) HAS DECIDED THE ISSUE IN FAV OUR OF ASSESSEE OBSERVING AS UNDER: - '8. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT ID C1T(A) AFTER RE LYING ON THE DECISION CITED IN THE ORDER HAS HELD THAT AS SESSEE MUST SHOW THE EFFECT OF SECTION 145A BY FOLLOWING T HE INCLUSIVE METHOD I.E. BY INCLUDING ALL TAXES, DUES, CESS ETC. IN THE CLOSING STOCK. HE HAS FARTHER HELD THAT EXCISE DUTY WHICH IS ADDED TO THE CLOSING STOCK HAS TO BE ALLOWED U/S.43B OF THE ACT ON ON PAYMENT BASIS. BEF ORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD. CIT(A) NOR HAS BROUG HT ANY CONTRARY BINDING DECISION IN ITS SUPPORT. WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDE R OF LD.CIT(A). THUS THIS GROUND OF REVENUE IS DISMISSED .' 5.1. FURTHER, BEFORE US, REVENUE HAS NOT BROUGHT AN Y CONTRARY BINDING DECISION IN ITS SUPPORT. IN VIEW OF THE AFO RESAID FACTS AND FOLLOWING THE DECISIONS CITED HEREINABOVE, WE A RE OF THE VIEW THAT NO ADDITION CAN BE MADE IN THE PRESENT CA SE AND THUS THIS GROUND OF ASSESSEE IS ALLOWED. ITA NO.1903/AHD/2016 A.Y. 2012-13 5 8. WE DO NOT SEE ANY DISPARITY ON FACTS, THEREFORE RESPECTFULLY FOLLOWING THE ORDERS OF THE CO-ORDINATE BENCH IN EA RLIER YEARS. WE ALLOW THIS GROUND OF APPEAL AND DELETE THE ADDITION . 10. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 10 TH APRIL, 2018. SD/- SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 10/04/2018 %& '() *%)$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. + / THE RESPONDENT. 3. ,, - / CONCERNED CIT 4. - ( ) / THE CIT(A) 5. )./ '' , / DR, ITAT, 6. /01 2 / GUARD FILE. %& / BY ORDER, 3 / ,4 (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD