M/s. BOMBAY OXYGEN CORPORATION LTD., MUMBAI V. ITO - 10(3)(1), MUMBAI

ITA 2352/MUM/2007

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 4296 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 19-08-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 23-03-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: DIVYESH SHAH
• Section: 143(3); 234B; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER. AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO.2352/MUM./2007 (ASSESSMENT YEAR : 19992000 ) DATE OF HEARING: 19.8.2010 BOMBAY OXYGEN CORPORATION LTD. 22/B, MITTAL TOWER B WING NARIMAN POINT, MUMBAI 400 021 PAN AAACB1753A .. APPELLANT VERSUS INCOME TAX OFFICER, WARD10(3)(1) MUMBAI .... RESPONDENT ASSESSEE BY : SHRI DIVYESH SHAH REVENUE BY : SHRI S.K. SINGH O R D E R PER S.V. MEHROTRA, A.M. THIS APPEAL BY THE ASSESSEE, IS DIRECTED AGAINST TH E ORDER DATED 18 TH JANUARY 2007, PASSED BY THE LEARNED CIT(A)X, MUMBA I, FOR ASSESSMENT YEAR 19992000. 2. LEARNED COUNSEL FOR THE ASSESSEE DID NOT WISH TO PR ESS GROUND NO.1, BEFORE US. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, DID NOT DISPUTE THE SUBMISSION OF THE ASSESSEE. CONSEQUENTL Y, THIS GROUND OF APPEAL IS DISMISSED AS NOT PRESSED . 3. GROUND NO.2, RAISED BY THE ASSESSEE, READS AS UNDER :- 2. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN MAKING AN ADDITION TO THE APPE LLANTS INCOME IN ITA NO.2352/MUM./2007 BOMBAY OXYGEN CORPORATION LTD. 2 RESPECT OF MODVAT CREDIT REFERABLE TO THE CLOSING S TOCK WHILST DIRECTING THE A.O. TO VERIFY THE CORRECTNESS OF THE ADDITION REQUIRED TO BE MADE. 4. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE COMP ANY, IN THE RELEVANT ASSESSMENT YEAR, ENGAGED IN MANUFACTURING AND TRADI NG OF INDUSTRIAL GAS, FILED RETURN OF INCOME DECLARING TOTAL LOSS OF ` 7,94,240. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE INCOME TAX AC T, 1961, AT ` 24,22,250. THEREAFTER, NOTICE UNDER SECTION 148 WAS ISSUED ON 22 ND FEBRUARY 2006, FOR THE REASON THAT THE ADJUSTMENT REQUIRED U NDER SECTION 145A OF THE ACT REGARDING INCLUSION OF EXCISE DUTY PAYABLE WITH REFERENCE TO INVENTORY WAS NOT CARRIED OUT. THE ASSESSING OFFICER HAD RECO RDED THE FOLLOWING REASONS: AS PER TAX AUDIT REPORT, NO ADJUSTMENT OF VALUATION OF INVENTORY HAS BEEN MADE WITH EXCISE DUTY PAYABLE ON IT. UNDER THE PROVISIONS OF SECTION 145A, THE VALUATION OF INVENTORY FOR THE PU RPOSE OF INCOME TAX SHALL BE FURTHER ADJUSTED WITH EXCISE DUTY PAYABLE ON IT. IN ITS PROFIT & LOSS ACCOUNT, THE ASSESSEE HAS SHOWN THE SALES AT R S.12,04,98,000 WHICH WAS NET EXCISE DUTY PAYABLE AT RS.2,01,03,000 . THE VALUE OF INVENTORY SHOWN WAS RS.1,82,21,000. THE EXCISE DUTY PAYABLE ON ITS PROPORTION TO SALES WORKED OUT TO RS.30,40,358 WHIC H HAS REMAINED TO BE ADDED TO THE VALUE OF INVENTORY AS PER SECTION 1 45A. THIS CAUSED UNDER-ASSESSMENT OF INCOME BY RS.30,10,358 WITH CON SEQUENT SHORT LEVY OF TAX OF RS.10,64,125 AND INTEREST U/S 234B A T RS.5,58,655. 5. THE ASSESSING OFFICER, AFTER CONSIDERING THE SUBMIS SION OF THE ASSESSEE ON THE ISSUE OF RE-OPENING, REJECTED THE SAME AND P ROCEEDED TO MAKE ADDITION OF ` 30,40,358 ON ACCOUNT OF UNDER ASSESSMENT OF INCOME DUE TO NON-INCLUSION OF EXCISE DUTY PAYABLE ON INVENTORY I N ACCORDANCE WITH THE PROVISIONS OF SECTION 145A. 6. THE ASSESSEE BEING AGGRIEVED BY THE STAND OF THE AS SESSING OFFICER, CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT (A), WHO CONFIRMED THE ASSESSING OFFICERS ACTION AND DIRECTED HIM TO VERI FY THE CORRECTNESS OF THE ADDITION REQUIRED TO BE MADE AND EFFECT OF THIS ADD ITION BE GIVEN IN THE OPENING STOCK OF THE NEXT YEAR. THE ASSESSEE IS AGG RIEVED AND IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. ITA NO.2352/MUM./2007 BOMBAY OXYGEN CORPORATION LTD. 3 7. LEARNED COUNSEL FOR THE ASSESSEE, BEFORE US, SUBMIT TED THAT SINCE THE CLOSING STOCK HAD BEEN ADJUSTED FOR EXCISE DUTY PAY ABLE THEREON CORRESPONDING OPENING STOCK OF THE YEAR UNDER CONSI DERATION HAVE ALSO TO BE ADJUSTED IN VIEW OF THE DECISION OF THE HONBLE BOM BAY HIGH COURT IN CIT VS MAHALAXMI GLASS WORKS PVT. LTD., (2009) 318 ITR 116 (BOM.) AND ALSO IN VIEW OF HONBLE DELHI HIGH COURT IN CIT VS MAHAVIR ALUMINIUM LTD., (2008) 297 ITR 77 (DEL.). LEARNED DEPARTMENTAL REPRESENTAT IVE, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 8. HAVING HEARD THE RIVAL SUBMISSIONS AND HAVING PERUS ED THE MATERIAL AVAILABLE ON RECORD AND THE ORDERS OF THE AUTHORITI ES BELOW, WE FIND THAT IN MAHALAXMI GLASS WORKS PVT. LTD. (SUPRA), THE DIRECT ION OF THE HONBLE BOMBAY HIGH COURT WAS TO ADJUST THE OPENING STOCK O F THE NEXT YEAR IN CONFORMITY WITH THE ENHANCED VALUATION OF CLOSING S TOCK OF PREVIOUS YEAR ON ACCOUNT OF INCLUSION OF EXCISE DUTY PAYABLE THEREON . IN THE CASE OF MAHAVIR ALUMINIUM LTD. (SUPRA), THE HONBLE DELHI HIGH COUR T DIRECTED THAT THE OPENING STOCK OF THE CONCERNED YEAR ITSELF HAS TO B E ADJUSTED. WE, THEREFORE, MODIFY THE LEARNED CIT(A)S DIRECTION TO THE EXTENT THAT THE OPENING STOCK OF THE CONCERNED YEAR IS ALSO REQUIRED TO BE ADJUSTED TO BRING IT IN CONFORMITY WITH THE DECISION OF THE HONBLE DELHI HIGH COURT I N MAHAVIR ALUMINIUM LTD. (SUPRA) AND, ACCORDINGLY, DIRECT THE ASSESSING OFFI CER TO CONSIDER THE ISSUE AND MAKE THE NECESSARY ADJUSTMENT IN THE OPENING ST OCK IN ACCORDANCE WITH LAW. 9. IN THE RESULT, ASSESSEES APPEAL STANDS PARTLY ALLO WED IN TERMS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 22.10.2010. SD/- VIJAY PAL RAO JUDICIAL MEMBER SD/- S.V. MEHROTRA ACCOUNTANT MEMBER MUMBAI, DATED: 22.10.2010 ITA NO.2352/MUM./2007 BOMBAY OXYGEN CORPORATION LTD. 4 COPY TO : (1) THE ASSESSEE (2) THE RESPONDENT (3) THE CIT(A), MUMBAI, CONCERNED (4) THE CIT, MUMBAI CITY CONCERNED (5) THE DR, I BENCH, ITAT, MUMBAI TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY DATE INITIAL 1. DRAFT DICTATED ON 26.8.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 27.8.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 30.8.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 30.8.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 30.8.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 22.10.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK 22.10.2010 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER