The ITO, Ward-4(4), Ahmedabad V. Mamata Brampton Engg. Pvt. Ltd,., Ahmedabad

ITA 2387/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0636 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 04-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M J SHAH
• Section: 43B; 145

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ I.T.A. NO.2387/AHD/2013 ( / ASSESSMENT YEAR : 2008-09) INCOME TAX OFFICER WARD-4(4) AHMEDABAD / VS. MAMATA BRAMPTON ENGG.PVT.LTD. 53, MADHUBAN ELLIS BRIDGE AHMEDABAD-380 006 $ ./ ./ PAN/GIR NO. : AABCM 0530 D ( $& / APPELLANT ) .. ( '($& / RESPONDENT ) $&) / APPELLANT BY : SHRI JAMES KURIAN, SR.DR '($&*) / RESPONDENT BY : SHRI M.J. SHAH, AR +* / DATE OF HEARING 04/08/2016 ,-./* / DATE OF PRONOUNCEMENT 31/08/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-VIII, AHMEDABAD DATED 29/07/2013 FOR THE ASSESSMENT YEAR (AY) 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- ITA NO.2387/AHD /2013 ITO VS. MAMATA BRAMPTON ENGG.PVT.LTD. ASST.YEAR 2008-09 - 2 - 2.1. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING OF BLOW FILM EXTRUSION MACHINES. ASS ESSEE FILED ITS RETURN OF INCOME FOR AY 2008-09 ON 29/09/2008 DECLARING TOTAL INCOME OF RS. 1,34,75,950/-. THEREAFTER, ASSESSMEN T WAS INITIALLY FRAMED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') VIDE ORDER DATED 30/11/2010 AND THE TOTAL IN COME WAS DETERMINED AT RS.1,59,50,747/-. THEREAFTER, THE CASE WAS REO PENED U/S.147 OF THE ACT AND THE NOTICE U/S.148 OF THE ACT WAS ISSUED AN D SERVED ON ASSESSEE ON 23/10/2012. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS RE-FRAMED U/S.143(3) R.W.S.147 OF THE ACT VIDE ORDER DATED 16/01/2013 AND THE TOTAL INCOME WAS DETERMI NED AT RS. 2,71,74,210/-. AGGRIEVED BY THE ORDER OF THE A SSESSING OFFICER(AO) ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), W HO VIDE ORDER DATED 29/07/2013 (IN APPEAL NO.CIT(A)-VIII/ITO/WD.4(4)/79 /12-13) DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED F OLLOWING GROUND:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,12,23,462/- MADE TO THE CLOSING STOCK ON AC COUNT OF CENVAT CREDIT AS MANDATED BY THE PROVISIONS OF SEC.145A OF THE IT ACT. 3. ON PERUSING THE ACCOUNTS AND OTHER DETAILS FURNI SHED BY THE ASSESSEE AO NOTICED THAT THE PURCHASES, SALES AND C LOSING STOCK WERE ACCOUNTED NET OF EXCISE DUTY BY FOLLOWING THE EXCLU SIVE METHOD OF ACCOUNTING AND THE UNUTILISED BALANCE OF CENVAT CRE DIT AS AT THE END OF THE YEAR WAS RS.1,12,23,462/-. AO WAS OF THE VIEW THAT THE AFORESAID ITA NO.2387/AHD /2013 ITO VS. MAMATA BRAMPTON ENGG.PVT.LTD. ASST.YEAR 2008-09 - 3 - AMOUNT SHOULD HAVE BEEN ADDED TO THE VALUE OF CLOSI NG STOCK AS REQUIRED U/S.145A OF THE ACT. ACCORDING TO THE AO, SINCE TH E BALANCE OF CENVAT CREDIT WAS NOT ADDED TO THE CLOSING STOCK, T HE ASSESSEE HAD NOT WORKED OUT THE CORRECT VALUE OF CLOSING STOCK. HE ACCORDINGLY MADE AN ADDITION OF RS.1,12,23,462/- TO THE CLOSING STOCK. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A) , WHO UPHELD THE ADDITION BY HOLDING AS UNDER:- 2.4 DECISION: I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER, F ACTS OF THE CASE AND THE WRITTEN SUBMISSION OF THE APPELLANT. THE A.O HAS MA DE AN ADDITION OF RS.L,12,23,462/- ON ACCOUNT OF UNUTILISED BALANCE O F CENVAT. IT WAS HELD BY THE AO THAT THE APPELLANT SHOULD HAVE INCLUDED THIS UNUTILISED CREDIT IN THE VALUATION OF CLOSING STOCK AS PER THE PROVISIONS OF SECTION 145A. THE APPELLANT HAS SUBMITTED THAT IT WAS FOLLOWING EXCLUSIVE METHO D OF ACCOUNTING AND UNUTILISED CREDIT HAS NO ITS IMPACT ON THE VALUATIO N OF CLOSING STOCK. EVEN IF THE VALUATION IS DONE ACCORDING TO THE PROVISIONS O F SECTION 145 A IT WOULD BE REVENUE NEUTRAL. THE APPELLANT HAS FURTHER SUBMITTED THAT OUT OF THE ADDITION OF RS. 1,12,23,462/- MADE BY THE AO THERE IS A COMPONENT O F CENVAT OF SERVICE TAX, WHICH IS RECEIVABLE ON ACCOUNT OF THE SERVICE TAX PAID BY THE APPELLANT ON THE SERVICES AVAILED AND CENVAT OF EDUCATION CESS A ND WAS UNUTILISED DURING THE YEAR. THE APPELLANT HAS SUBMITTED THAT EVEN IF THE SUBMISSION REGARDING NO INCLUSION OF CENVAT CREDIT WAS NOT ACCEPTED THE COM PONENT OF SERVICE TAX CREDIT AND EDUCATION CESS CANNOT BE ADDED TO THE VA LUATION OF CLOSING STOCK. THE SUBMISSION OF THE APPELLANT HAS MERIT. THE SERV ICE TAX AND EDUCATION CESS COMPONENT WHICH REMAIN TO BE UTILISED CANNOT BE ADD ED IN THE VALUATION OF CLOSING STOCK AS IT HAS NO IMPACT ON THE PURCHASE O F RAW MATERIAL AS WELL AS IN THE VALUATION OF CLOSING STOCK. THEREFORE THE COMPO NENT OF SERVICE TAX AND EDUCATION, CESS WHICH HAS BEEN ADDED BY THE A.O AMO UNTING TO RS. 44,98,454/- AND RS.1,07,860/- ARE DIRECTED TO B E DELETED. REGARDING THE CENVAT CREDIT ON PURCHASE OF RAW MATE RIAL IT IS NOTED THAT THE APPELLANT IS FOLLOWING EXCLUSIVE METHOD OF ACCOUNTING WHEREIN THE EXCISE DUTY IS NOT INCLUDED IN VALUATION OF THE STO CK AND RAW MATERIAL. THE EXCISE DUTY PAID AND COLLECTED BY THE APPELLANT IS NOT MADE PART OF THE PROFIT ITA NO.2387/AHD /2013 ITO VS. MAMATA BRAMPTON ENGG.PVT.LTD. ASST.YEAR 2008-09 - 4 - AND LOSS ACCOUNT. IT IS ALSO OBSERVED THAT THE APPE LLANT HAS BEEN COMPLYING WITH THE PROVISIONS OF SECTION 145A BY ENCLOSING AN ANNEXURE IN 3CD REPORT. ACCORDING TO THE REPORT THE EFFECT OF INCLUDING EXC ISE DUTY IN THE VALUATION OF CLOSING THE STOCK IS REVENUE NEUTRAL. THE APPELLANT HAS BEEN FOLLOWING THIS PRACTICE SINCE LAST SEVERAL YEARS. IT HAS FURNISHED BEFORE ME 3CD REPORT OF PRECEDING THREE YEARS AND IT IS NOTED THAT THE ANNE XURE COMPLYING WITH THE PROVISIONS OF SECTION 145A WAS ENCLOSED FOR ALL THE SE YEARS AND AS PER THE ANNEXURE THE IMPACT OF INCLUDING EXCISE DUTY IS PRO FIT NEUTRAL. THE APPELLANT HAS RIGHTLY RELIED ON THE JUDGEMENT O F HONOURABLE HIGH COURT OF GUJARAT IN THE CASE OF NARMADA CHEMATUR PETROCHE MICALS LTD (327 ITR 369) WHICH HAS BEEN FOLLOWED IN SEVERAL DECISIONS B Y HONOURABLE ITAT AHMEDABAD. IT HAS BEEN CONSISTENTLY HELD BY VARIOUS AUTHORITIES THAT IF THE APPELLANT HAS DEMONSTRATED THAT THE EFFECT OF INCLU DING EXCISE DUTY IS PROFIT NEUTRAL NO ADDITION CAN BE MADE. IT IS ALSO BEEN HE LD BY SEVERAL JUDICIAL FORUMS THAT UNUTILISED CENVAT CREDIT CANNOT BE TREA TED AS PROFIT OF THE APPELLANT. HONOURABLE ITAT BENCH OF AHMEDABAD IN A DECISION IN THE CASE OF ALPANIL INDUSTREIS VS. ACIT IN ITA NO.169/AHD/2005 AND 170/AHD/2005 FOR A. Y. 1999-2000 & 2000-01 HAS DISCUSSED THE PRINCIPLE RELATED TO VALUATION OF CLOSING STOCK U/S. 145A OF THE ACT AND IT WOULD BE RELEVANT TO QUOTE THE FINDING OF THE HONOURABLE BENCH WHICH CLARIFIES THE ISSUE C OMPLETELY. '77. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE DISPUTE IS REGARDING VALUATION OF CLOSING STOCK IN VIEW OF THE INSERTION OF PROVISIONS OF SECTION 145A OF THE ACT. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT INCLUDED THE ELE MENT OF EXCISE DUTY WHICH WAS PAID BY THE ASSESSEE ON HIS PURCHASES OF RAW MA TERIAL. IN VIEW OF NON INCLUSION OF THIS EXCISE DUTY IN RESPECT OF WHICH M ODVAT CREDIT WAS AVAILABLE TO THE ASSESSEE, ACCORDING TO THE LEARNED COMMISSIO NER OF INCOME TAX(APPEALS), INCOME OF RS.26,95,884/- WAS UNDERSTA TED BY THE ASSESSEE. ON THE OTHER HAND THE CLAIM OF THE ASSESSEE IS THAT BY INCLUSION OF THIS EXCISE DUTY IN THE CLOSING STOCK THERE WILL NO EFFECT IN T HE PROFIT AS THE CORRESPONDING AMOUNT WILL ALSO BE THEN INCLUDED IN THE PURCHASES. THE ASSESSEE IN SUPPORT OF THE ABOVE ARGUMENT RELIED UP ON THE VIEW EXPRESSED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA IN ITS GUIDELINES, WHEREIN IT WAS EXPLAINED THAT FOLLOWING OF EITHER INCLUSIVE ME THOD OF ACCOUNTING OR EXCLUSIVE METHOD OF ACCOUNTING WILL NOT HAVE ANY EF FECT ON THE PROFIT DISCLOSED BY THE PROFIT AND LOSS ACCOUNT. THE ONLY EFFECT OF FOLLOWING INCLUSIVE METHOD WILL BE THAT THE EXCISE DUTY LIABI LITY WILL APPEAR IN THE BALANCE SHEET WHICH WILL BE ADDED BACK TO THE INCOM E OF THE ASSESSEE IN VIEW ITA NO.2387/AHD /2013 ITO VS. MAMATA BRAMPTON ENGG.PVT.LTD. ASST.YEAR 2008-09 - 5 - OF THE PROVISIONS OF SECTION 43B TO THE EXTENT NOT PAID BY THE ASSESSEE BEFORE THE DUE DATE OF FURNISHING OF RETURN OF INCOME UNDE R SECTION 139(1) OF THE ACT. THE ABOVE VIEW WAS ALSO EXPRESSED BY THIS BENC H OF THE TRIBUNAL IN THE CASE OF THE DEPUTY COMMISSIONER OF INCOME TAX, CIRC LE-1, BARODA VS. GUJARAT FLUORO-CHEMICALS LTD. IN ITA NO.3742/AHD/20 02 ASSESSMENT YEAR 1999-00 ORDER DATED 28.09.2006. IN OUR CONSIDERED O PINION, THE LOWER AUTHORITIES HAVE NOT PROPERLY APPRECIATED THE EFFEC T OF SECTION 145A OF THE ACT. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS ) BY WAY OF AN ILLUSTRATION CONCLUDED THAT THERE WILL BE A DIFFERE NCE IN THE PROFIT ON FOLLOWING INCLUSIVE AND EXCLUSIVE METHOD OF ACCOUNT ING FOR EXCISE DUTY. IN THE ILLUSTRATION CITED IN THE ORDER, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) FOUND THE DIFFERENCE AT RS.80/-. ACCOR DING TO THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE INCLUSIV E METHOD IN THE ILLUSTRATION, THE ASSESSEE'S PROFIT WORKED OUT TO R S.380/- WHEREAS IN THE EXCLUSIVE METHOD, THE ASSESSEE'S PROFIT COMES TO RS .300/-. THUS, THERE WAS A DIFFERENCE OF RS.80/- IN THE PROFIT. WE ON A CLOSER LOOK AT THE ILLUSTRATION FIND THAT THE DIFFERENCE HAS OCCURRED DUE TO AN ERROR BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN NOT CONSIDER ING THE EXCISE DUTY EXPENDITURE OF THE ASSESSEE. IT WAS OBSERVED FROM T HE ILLUSTRATION THAT ASSESSEE HAS COLLECTED EXCISE DUTY OF RS.180/- BY U TILIZING THE RAW MATERIAL ON WHICH EXCISE DUTY OFRS.100/- WAS PAID TO THE GOV ERNMENT. THUS, THE ASSESSEE WAS LIABLE TO PAY A FURTHER EXCISE DUTY OF RS.80/- TO THE GOVERNMENT. WHEN THE EXPENDITURE OF RS.80/- IS TAKEN INTO ACCOU NT IN THE ILLUSTRATION, GIVEN FOR INCLUSIVE METHOD THEN THE PROFIT AS PER I NCLUSIVE METHOD ALSO WORKS OUT TO RS.300/- WHICH IS EXACTLY THE SAME AS PER EX CLUSIVE METHOD. FURTHER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE ILLUSTRATION CITED IN HIS ORDER HAS NOT ACCOUNTED FOR THE AMOUNT OF MO DVAT UTILISED BY THE ASSESSEE IN PAYMENT OF EXCISE DUTY IN RESPECT OF RA W MATERIAL NOT UTILISED FOR MANUFACTURING. IN THE ILLUSTRATION, THE LEARNED COM MISSIONER OF INCOME TAX(APPEALS) HAS SHOWN THAT ASSESSEE HAS UTILISED A MOUNT OF RS.180/- OUT OF AMOUNT OF RS.200/- OF EXCISE DUTY PAID ON PURCHASE AGAINST THE EXCISE DUTY LIABILITY OF RS.180 ON SALES. HOWEVER, THIS UTILIZA TION OF RS.180/- WAS ALLOWED TO THE ASSESSEE IN RESPECT OF STOCK WHICH WAS NOT U SED FOR MANUFACTURING ALSO TO THE EXTENT OF RS.80/-. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IGNORED THE FACT THAT IF IN FUTURE THE CLOSING STOC K IS NOT UTILISED FOR MANUFACTURING, THEN THE MODVAT CREDIT UTILISED WOUL D BE REVERSED AND THE ASSESSEE WOULD BE FURTHER LIABLE TO PAY RS. 80/- TO THE GOVERNMENT. IN A NUTSHELL THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS) ARRIVED AT A WRONG CONCLUSION BECAUSE OF NOT CONSIDERING THE ASS ESSEE'S LIABILITY FOR UTILIZATION OF MODVAT CREDIT IN RESPECT OF UNCONSUM ED RAW MATERIAL. THE ISSUE CAN BE LOOKED INTO FROM YET ANOTHER ANGLE. SE CTION 145A REQUIRES REVALUATION OF NOT INVENTORY ALONE BUT ALSO REQUIRE S REVALUATION OF PURCHASE AND SALES. ON REVALUATION OF PURCHASE BY INCLUDING THE AMOUNT OF EXCISE DUTY IN RESPECT OF WHICH MODVAT CREDIT IS AVAILABLE TO T HE ASSESSEE, THE PURCHASE ITA NO.2387/AHD /2013 ITO VS. MAMATA BRAMPTON ENGG.PVT.LTD. ASST.YEAR 2008-09 - 6 - OF THE ASSESSEE WILL INCREASE RESULTING IN CORRESPO NDING DECREASE IN THE PROFIT OF THE ASSESSEE. THE ASSESSEE'S CONTENTION THAT VAL UE OF CLOSING STOCK IS CREDITED IN THE PROFIT AND LOSS ACCOUNT TO SET OFF THE VALUE OF UNCONSUMED ITEMS OF PURCHASE AND THEREFORE, BOTH SHOULD HAVE S AME BASIS CANNOT BE CONTROVERTED. THE ONLY EXCEPTION TO THIS THEORY IS THAT WHEN THE MODVAT VALUE IS LESS THAN THE COST THEN EFFECTIVELY UNREALISED L OSS IS ALLOWED AS A DEDUCTION TO THE ASSESSEE ON THE WELL SETTLED PRINCIPLES. IN THE INSTANT CASE, THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN REVALUING ONLY CL OSING STOCK SO AS TO INCLUDE THE AMOUNT OF EXCISE DUTY PAID ON PURCHASE WITHOUT REVALUING THE CORRESPONDING PURCHASES. WE HAVE GONE THROUGH THE G UIDELINES EXPLAINED BY THE ICAI AND FIND OURSELVES IN AGREEMENT THEREWITH THAT THERE WILL NOT BE ANY EFFECT ON THE PROFIT OF LOSS ARRIVED AT EITHER BY F OLLOWING INCLUSIVE METHOD OF ACCOUNTING OR EXCLUSIVE METHOD OF ACCOUNTING FOR EX CISE DUTY. THE ONLY EFFECT WILL BE THAT THE EXCISE DUTY PAYABLE ON CLOSING STO CK OF FINISHED GOODS WILL BE TO THE EXTENT NOT DEPOSITED WITH THE GOVERNMENT BEF ORE THE DUE DATE OF FURNISHING OF RETURN WILL BE ADDED TO THE INCOME OF THE ASSESSEE IN VIEW OF PROVISION OF SECTION 43B OF THE ACT. IN VIEW OF THE DISCUSSION MADE HEREINABOVE, IN OUR CONSIDERED OPINION, THERE WILL BE NO EFFECT IN THE TAXABLE PROFIT OF THE ASSESSEE BY INCLUDING THE AMOUNT OF E XCISE DUTY PAID ON PURCHASES IN THE VALUE OF CLOSING STOCK OF RAW MATE RIAL, WHETHER AS RAW MATERIAL OR AS FORMING PART OF WORK-IN PROGRESS OR FINISHED GOODS. WE THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHOR ITIES ON THIS ISSUE IN BOTH THE YEAR UNDER APPEAL AND ALLOW THE GROUNDS OF APPE AL OF THE ASSESSEE.' THE ABOVE FINDINGS OF THE JURISDICTIONAL BENCH OF I TAT ARE CLEAR AND, THEREFORE, NO ADDITION ON ACCOUNT OF UNUTILISED CEN VAT / MODVAT CREDIT CAN BE MADE TO THE INCOME OF THE APPELLANT. RESPECT FULLY FOLLOWING THE PREVAILING JUDICIAL OPINION, IT IS HELD THAT NO ADD ITION ON THIS GROUND CAN BE MADE. THE ADDITION OF RS. 66,17,145/- IS ALSO DIREC TED TO BE DELETED. THE GROUND OF APPEAL IS ACCORDINGLY ALLOWED. IN THE RESULT THE TOTAL ADDITION OF RS.1,12,23,462/ - IS DIRECTED TO BE DELETED. THE GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 4. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 4.1. BEFORE US, LD.SR.DR SUPPORTED THE ORDER OF A.O . LD.AR ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE T HE AO AND LD.CIT(A) ITA NO.2387/AHD /2013 ITO VS. MAMATA BRAMPTON ENGG.PVT.LTD. ASST.YEAR 2008-09 - 7 - AND FURTHER SUBMITTED THAT THE LD.CIT(A) WHILE DELE TING THE ADDITION HAS RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COUR T IN THE CASE OF NARMADA CHEMATUR PETROCHEMICALS LTD. (327 ITR 369). HE FURTHER SUBMITTED THAT THERE ARE VARIOUS DECISIONS OF SIMIL AR ISSUES WHERE THE COORDINATE BENCH OF TRIBUNAL (ITAT D BENCH AHMED ABAD) HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. HE PLACED ON RECORD THE COPY OF THE DECISION IN THE CASE OF M/S.GH INDUSTRIES VS. ACIT PASSED IN ITA NO.2613/AHD/2011 FOR AY 2008-09, DATED 12/02/2016. HE THUS SUPPORTED THE ORDER OF LD.CIT(A). 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 TH E ADDITION OF UNUTILISED CENVAT CREDIT TO THE CLOSING STOCK. WE FIND THAT THE LD.CIT(A) WHILE DECIDING THE ISSUE IN FAVOUR OF ASSESSEE HAS GIVEN A FINDING THAT ASSESSEE IS FOLLOWING EXCLUSIVE METHOD OF ACCOUNTING WHEREBY THE EXCISE DUTY IS NOT INCLUDED IN THE VALUATION OF STOCK AND RAW-MATE RIALS AS THE EXCISE DUTY PAID AND COLLECTED IS NOT MADE PART AND PARCEL OF THE PROFIT & LOSS A/C. HE HAS FURTHER GIVEN A FINDING THAT ASSESSEE HAS COMPLIED WITH THE PROVISIONS OF SECTION 145A OF THE ACT AND THE EFFEC T OF INCLUDING EXCISE DUTY IN VALUATION OF CLOSING STOCK DOES NOT AFFECT THE PROFIT AND IS REVENUE NEUTRAL. HE HAS FURTHER RELIED ON THE DECI SION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF NARMADA CHEMATUR PETROCHEMICALS ITA NO.2387/AHD /2013 ITO VS. MAMATA BRAMPTON ENGG.PVT.LTD. ASST.YEAR 2008-09 - 8 - LTD.(SUPRA). BEFORE US, REVENUE HAS NEITHER CONTRO VERTED THE FINDING OF LD.CIT(A) NOR HAS PLACED ANY CONTRARY BINDING DECIS ION IN ITS SUPPORT. WE FURTHER FIND THAT THE HONBLE APEX COURT IN THE CASE OF INDO NIPPO CHEMICALS (2003) 261 ITR 375 HAS HELD THAT UNAVAILE D MODVAT CREDIT CANNOT BE CONSTRUED AS INCOME AND THERE IS NO LIABI LITY TO PAY TAX ON SUCH UNAVAILED MODVAT CREDIT. IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) . THUS, THIS GROUND OF REVENUE IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 31 /0 8 /2016 SD/- SD/- () () (RAJPAL YADAV) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 31/ 08 /2016 3..,.../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT. 3. 456 7 / CONCERNED CIT 4. 7 ( ) / THE CIT(A)-VIII, AHMEDABAD 5. 89:'56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<=+ / GUARD FILE. / BY ORDER, (8' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD