Umedica Laboratories Pvt. Ltd., Vapi V. The Jt.CIT.,Vapi Circle, Vapi

ITA 2316/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4403 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-11-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 12-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS SRDR
• Keywords: Depreciation

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BENCH, AHMEDABAD .., ! '# '# '# '# $ %&, ! BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER #./ I.T.A. NO.2316/AHD/2010 ( ( ')( ( ')( ( ')( ( ')( / / / / ASSESSMENT YEAR : 2005-06) M/S.UMEDICA LABORATORIES PVT.LTD. PLOT NO.221, GIDC VAPI / VS. THE JCIT VAPI CIRCLE VAPI !* #./+, #./ PAN/GIR NO. : AAACU 2966 Q ( *- / // / APPELLANT ) .. ( ./*- / RESPONDENT ) *- 0 / APPELLANT BY : MS.URVASHI SHODHAN, A.R. ./*- 1 0 / RESPONDENT BY : SHRI K.C. MATHEWS, SR.DR $'2 1 & / / / / DATE OF HEARING : 21/11/2013 34) 1 & / DATE OF PRONOUNCEMENT : 28/11/2013 5 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-VALSAD (CIT(A) FOR SHORT) DATED 17/05/2010 PERTAINING TO ASSESSMENT YEAR (AY) 2005- 06 AND THE SOLITARY GROUND READS AS UNDER:- 1. THE LEARNED ADDL.COMM.OF INCOME TAX ERRED IN D ISALLOWING ADJUSTMENT U/S.145(A) OF RS.4,64,949/- WITHOUT CONSIDERING THE FACTS. HE HAS NOT CONSIDERED SAME PRINCIPLES SHOULD APPLY WHILE VALUI NG OPENING STOCK ALSO. THE ADDITION MADE ON THIS GROUND IS REQUIRED TO BE DELETED. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE A SSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143(3) O F THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED V IDE ORDER DATED 23/12/2008, THEREBY THE ASSESSING OFFICER(AO) MADE ADDITION ON ACCOUNT OF EXCESS ITA NO.2316 /AH D/2010 M/S. UMEDICA LABORATORIES PVT.LTD. VS. JCIT ASST.YEAR 2005-06 - 2 - DEPRECIATION CLAIMED, DISALLOWANCE OF THE EXPENSES OUT OF FOREIGN TRAVEL EXPENDITURE, DISALLOWANCE U/S.40(A)(IA) AND ADDITIO N IN RESPECT OF ADJUSTMENT U/S.145A OF THE ACT. THE ASSESSEE PREFERRED AN APP EAL BEFORE THE LD.CIT(A) AGAINST THE DISALLOWANCE ON TRAVELING EXPENSES OF R S.51,761/- AND DISALLOWANCE OF RS.4,64,949/- MADE U/S.145A OF THE ACT. THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS, DELETED THE ADDITION O F RS.51,761/- AND SUSTAINED THE ADDITION OF RS.4,64,949/-. AGAINST THIS, THE A SSESSEE IS IN APPEAL BEFORE US. 3. TRHE LD.COUNSEL FOR THE ASSESSEE MS.URVASHI SHOD HAN SUBMITTED THAT THE AO ERRED IN DISALLOWING U/S.145A OF THE ACT AMO UNTING TO RS.4,64,949/- WITHOUT CONSIDERING THE FACTS. SHE SUBMITTED THAT THE EXPENSES ARE DISALLOWED CONSIDERING THE AUDIT NOTE. HOWEVER, LD.CIT(A) FAI LED TO REFER THE AUDIT NOTES FOR PREVIOUS ASSESSMENT YEARS, I.E. AY 2004-0 5. THE SAME PRACTICE IS FOLLOWED FOR ALL PRECEDING ASSESSMENT YEARS. AS IN THE CLOSING STOCK OF CURRENT YEAR, EXCISE DUTY OF RS.4,64,949/- IS NOT INCLUDED ALSO EXCISE DUTY OF RS.4,03,662/- IS NOT INCLUDED IN THE OPENING STOCK OF THE CURRENT ASSESSMENT YEAR. THE AO HAS NOT CONSIDERED THAT SAME CONSIS TENCE POLICY IS FOLLOWED FOR ALL THE PRECEDING ASSESSMENT YEARS. SHE SUBMITTED THAT AO HAS NOT FOLLOWED THE SAME PRINCIPLES WHILE CONSIDERING THE VALUE OF OPENING STOCK. SHE SUBMITTED THAT CONSIDERING THIS FACTS, ADDITION MAD E ON THIS GROUND ARE REQUIRED TO BE DELETED OR THE ADDITIONS SHOULD BE RESTRICTED TO RS.61,287/- CONSIDERING THE VALUATION OF OPENING STOCK, WHICH IS ALSO EXCLU SIVE OF EXCISE DUTY. THE LD.COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE FO LLOWING CASE-LAWS:- SL.NO(S) DECISION IN THE CASE OF REPORTED IN 1. CIT VS. DYNAVISION LTD. (2012) 348 ITR 380 (SC) DATED 30/08/2012 2. CIT VS. MAHALAXMI GLASS WORKS P.LTD. (2009) 318 ITR 116 (BOM) DATED 01/04/2009 ITA NO.2316 /AH D/2010 M/S. UMEDICA LABORATORIES PVT.LTD. VS. JCIT ASST.YEAR 2005-06 - 3 - 3. ITO VS. NAVJIVAN SYNTHETICS (2013) 32 TAXMANN.COM 125 (AHD.) (ITAT AHMEDABAD BENCH D DATED 06/07/2012 3.1. THE LD.COUNSEL FOR THE ASSESSEE CONTENTED THAT BOTH THE CLOSING STOCK AS WELL AS OPENING STOCK ARE TO BE GIVEN EFFECT AND IN SUPPORT OF HER CONTENTION, SHE RELIED UPON THE DECISION RENDERED IN THE CASE O F ITO VS. NAVJIVAN SYNTHE TICS(SUPRA). 3.2. ON THE CONTRARY, LD.SR.DR SHRI K.C.MATHEWS SUP PORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE LD.CIT(A) HAS DECIDED THIS ISSUE VIDE PARAGRAPH NO. 5.2 OF HIS ORDER BY OBSERVING AS UNDER:- 5.2. I HAVE CAREFULLY CONSIDERED THE ORDER OF THE AO AND THE SUBMISSION MADE BY THE APPELLANT. THE ISSUE RELATING TO WHETH ER THE VALUE OF CLOSING STOCK OF THE INPUTS, WORK-IN-PROGRESS AND FINISHED GOODS MUST NECESSARY INCLUDE THE ELEMENT FOR WHICH MODVAT CREDIT IS AVAI LABLE WAS A HOTLY DEBATED TOPIC. SEC. 145A WAS INDUCTED TO CLARIFY T HAT WHILE COMPUTING THE VALUE OF THE INVENTORY AS PER THE METHOD OF ACCOUNT ING REGULARLY EMPLOYED BY THE ASSESSEE, THE SAME SHALL INCLUDE THE AMOUNT OF ANY TAX, DUTY, CESS OR FEES PAID OR LIABILITY INCURRED FOR THE SAME UNDER ANY L AW IN FORCE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION1 45. THE EXPLANATION TO SECTION 145A PROVIDES THAT FOR THE PURPOSES OF THIS SECTION , ANY TAX, DUTY, CESS OR FEES (BY WHATEVER NAME CALLED) UNDER ANY LAW FOR THE TIM E BEING IN FORCE, SHALL INCLUDE ALL SUCH PAYMENT NOTWITHSTANDING ANY RIGHT ARISING AS A CONSEQUENCE TO SUCH PAYMENT. IN THIS CIRCUMSTANCES THE APPELLA NT HAS NO CHOICE BUT TO INCLUDE THE EXCISE DUTY LIABILITY FOR THE INVENTORY . THEREFORE, THIS GROUND OF APPEAL IS DISMISSED. 4.1. IN THE DECISION OF THE LD.CIT(A) THE CASE-LAW AS RELIED UPON BY THE LD.COUNSEL FOR THE ASSESSEE WAS NOT CONSIDERED. TH E HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. MAHAVIR ALUMINIUM LTD. REPORTED AT (2008) 297 ITA NO.2316 /AH D/2010 M/S. UMEDICA LABORATORIES PVT.LTD. VS. JCIT ASST.YEAR 2005-06 - 4 - ITR 77 :: 168 TAXMAN 27 (DELHI) HAS HELD THAT WHENE VER ANY ADJUSTMENT IS MADE IN THE VALUATION OF STOCK, THIS WILL EFFECT B OTH; OPENING AS WELL AS CLOSING STOCK. IN THE PRESENT CASE ALSO, THE AO HA S NOT TAKEN INTO CONSIDERATION THE OPENING AS WELL AS CLOSING STOCK. THEREFORE, R ESPECTFULLY FOLLOWING THE AFORESAID DECISION, WE HEREBY DIRECT THE AO TO REST RICT THE ADDITION TO RS.61,387/- AND DELETE A SUM OF RS.4,03,662/-, THU S, THIS GROUND OF ASSESSEES APPEAL IS ALLOWED TO THAT EXTENT. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED AS DIRECTED ABOVE. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) ($ %&) ! ! ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 28/11/2013 8.., '.../ T.C. NAIR, SR. PS 5 1 .&9 :9)& 5 1 .&9 :9)& 5 1 .&9 :9)& 5 1 .&9 :9)&/ COPY OF THE ORDER FORWARDED TO : 1. *- / THE APPELLANT 2. ./*- / THE RESPONDENT. 3. ## & $; / CONCERNED CIT 4. $;() / THE CIT(A)-VALSAD 5. 9'%< .& , , / DR, ITAT, AHMEDABAD 6. <( =2 / GUARD FILE. 5$ 5$ 5$ 5$ / BY ORDER, /9& .& //TRUE COPY// > >> >/ // / #+ #+ #+ #+ ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION ..25.11.13 (DICTATION-PAD 7-PAGE S ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25.11.13 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PP 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.28.11.13 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 28.11.13 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER