ITO 7(1)(3), MUMBAI V. PENWALT AGRU PLASTICS P.LTD, NAVI MUMBAI

ITA 2243/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3741 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 04-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: Y N THAKKAR
• Section: 145

Judgement Text

C IN THE INCOME TAX APPELLATE TRIBUNAL C BENC H, MUMBAI . . , . , ! ' BEFORE SHRI I.P. BANSAL, JM AND SHRI D. KARUNAKARA RAO, AM ./I.T.A. NO. 2243/M/2012 ( # $ %$ / ASSESSMENT YEAR :2007-2008) ITO-7(1)(3), AAYAKAR BHAVAN, R.NO.670B, 6 TH FLOOR, M.K.ROAD, MUMBAI 400 020. # / VS. M/S. PENWALT AGRU PLASTIC P. LTD., D-22, TTC-MIDC INDUSTRIAL AREA, THANE BELAPUR ROAD, NERUL, NAVI MUMBAI 400 706. & ! ./PAN : AABCP 3757 B ( &' /APPELLANT) .. ( ()&' / RESPONDENT) &' * + / APPELLANT BY : SHRI RAJARSHI DWIVEDY, SR. DR ()&' * + / RESPONDENT BY : SHRI NITESH JOSHI & Y.N. THAKKAR # * ,! /DATE OF HEARING : 17.4.2013 -.% * ,! /DATE OF PRONOUNCEMENT : 8/5/2013 / / / / / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 4.4.2012 IS AGA INST THE ORDER OF CIT (A)- 20, MUMBAI DATED 13.1.2012 FOR THE ASSESSMENT YEAR 2007-08. 2. IN THIS APPEAL, REVENUE RAISED THE GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ADDITION MADE BY THE AO O N ACCOUNT OF UNUTILIZED MODVAT CREDIT BY HOLDING THAT THE NET IMPACT ON THE TRADING ACCO UNT IS NIL FOLLOWING THE INCLUSIVE OR EXCLUSIVE METHOD OF VALU ATION OF CLOSING STOCK. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ADDITION MADE BY THE AO I N RESPECT OF UNUTILIZED ILLUSTRATION GIVEN BY THE AO, SHOWING THE IMPACT ON THE NET PROFIT FOLLOWING THE EXCLUSIVE METHOD AND INCLUSIVE METHOD OF VALUATION OF CLOSING STOCK. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH AT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING IN POLYET HYLENE PIPES AND FITTINGS. ASSESSEE FILED THE RETURN OF INCOME DECLARING LOSS OF RS. 39,262/-. AS A RESULT OF 2 SCRUTINY ASSESSMENT, THE ASSESSING OFFICER ASSESSED THE INCOME OF THE ASSESSEE AT RS. NIL. DURING THE ASSESSMENT PROCEEDINGS, AO MADE AN ADDITION OF RS. 45,50,160/- BEING MODVAT CREDIT APART FROM OTHER AD DITIONS. AGGRIEVED WITH THE DECISION OF THE AO, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLAT E AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, CIT (A) PARTL Y ALLOWED THE APPEAL OF THE ASSESSEE. PARA NO. 3.2 OF THE CIT (A)S ORDER IS R ELEVANT, FOR THE DELETION OF THE ADDITION OF RS. 45,50,160/-, IN RESPECT OF MODVAT C REDIT AND THE SAME IS REPRODUCED HERE UNDER: 3.2. I HAVE PERUSED THE ASSESSMENT ORDER AND WRITTE N SUBMISSIONS OF THE APPELLANT. THIS ISSUE HAS BEEN EXAMINED BY HONBLE BOMBAY HIGH COURT IN MAHALAXMI GLASS WORKS (318 ITR 116) WHICH FOLLOWED THE DECISI ON OF HONBLE HIGH COURT IN THE CASE OF MAHAVIR ALUMINIUM (297 ITR 77) WHEREBY THE APPELLANT IS EXPECTED TO SUBMIT THE DETAILED OF MODVAT CREDIT EITHER BOTH ON EXCLUSI ONS AS WELL AS INCLUSION BASIS AND IF THERE IS ANY IMPACT ON PROFITS THE SAME IS ADDED U/S 145 OF THE IT ACT, 1961. THE ASSESSING OFFICER HAS MADE ADJUSTMENT IN THE CLOSIN G STOCK WITHOUT CORRESPONDING ADJUSTMENT IN OPENING STOCK. IN THIS CONNECTION TH E APPELLANT DREW ATTENTION TO CLAUSE 12(B) OF TAX AUDIT REPORT, WHERE IT IS SEEN THAT IRRESPECTIVE OF METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE INCLUSIVE METHO D IN ACCORDANCE WITH SECTION 145A OR EXCLUSIVE METHOD IN ACCORDANCE WITH AS-2 IS SUED BY ICAI THERE WAS NO IMPACT ON THE PROFITS. AS SUCH, THE ONE SIDED ADDI TION U/S 145A TO THE CLOSING STOCK IS DELETED. 4.1. AGGRIEVED, REVENUE FILED THE PRESENT APPEAL BE FORE THE TRIBUNAL WITH THE ABOVE MENTIONED GROUNDS. 5. DURING THE PROCEEDINGS BEFORE US, LD DR DUTIFULL Y RELIED ON THE ORDER OF THE AO. 6. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE R ELIED ON THE ORDER OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE HIM. 7. WE HAVE HEARD THE LD DR, PERUSED THE ORDERS OF T HE REVENUE AUTHORITIES AND THE MATERIAL PLACED BEFORE US. IT IS THE CASE OF TH E ASSESSEE THAT THE ASSESSING OFFICER MADE ADJUSTMENT IN THE CLOSING STOCK WITH OUT MAKING CORRESPONDING ADJUSTMENT IN OPENING STOCK AND OTHER INVENTORIES . FURTHER, IN VIEW OF CLAUSE 12(B) OF THE TAX AUDIT REPORT, WHEREIN IT CAN BE NOTICED THAT IRRESPECTIVE OF METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IE INCLUSIVE M ETHOD IN ACCORDANCE WITH SECTION 145A OR EXCLUSIVE METHOD IN ACCORDANCE WITH AS-2 ISSUED BY ICAI, THERE WAS NO 3 IMPACT ON THE PROFITS. IT IS A SETTLED ISSUE THAT THE ADJUSTMENT IF AT ALL HAS TO BE MADE, THE SAME SHOULD BE DONE ALL THE INVENTORIES S UCH AS OPENING STOCK, CLOSING STOCK AND THE PURCHASES. CONSIDERING THE SETTLED NA TURE OF THE ISSUE, IN VIEW OF THE BINDING JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MAHALAXMI GLASS WORKS (SUPRA ) AND THE MAHAVIR ALUMINIUM (SUPRA) , WE ARE OF THE OPINION THAT THE ORDER OF THE CIT (A) DOES NOT CALL FOR ANY INTE RFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DIS MISSED. 0 ,1 2 * !02 * 2, 34 ORDER PRONOUNCED IN THE OPEN COURT ON 08/5/2013. . / * -.% ! 5#1 08/05/2013 . * 6 SD/- SD/- (I.P. BANSAL) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER MUMBAI; 5# DATED: 08/05/2013 . # . ./ OKK , SR. PS / / / / * ** * (,78 (,78 (,78 (,78 98%, 98%, 98%, 98%, / COPY OF THE ORDER FORWARDED TO : 1. &' / THE APPELLANT 2. ()&' / THE RESPONDENT. 3. : ( ) / THE CIT(A)- 4. : / CIT 5. 8;6 (,# , , / DR, ITAT, MUMBAI 6. 6$ < / GUARD FILE. )8, (, //TRUE COPY// /# /# /# /# / BY ORDER, = == = / 3 3 3 3 2 2 2 2 (DY./ASSTT. REGISTRAR) 4 , / ITAT, MUMBAI