The DCIT, Circle-1, Ahmedabad V. Associated Dyestuff Pvt.Ltd., Ahmedabad

ITA 2450/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89578 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-06-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 28-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: URVASHI SHODHAN A R
• Section: 43B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ ././ ./ ITA NO. 2450/AHD/2011 / ASSESSMENT YEAR: 2005-06 DCIT, CIRCLE-1, AHMEDABAD V/S. M/S. ASSOCIATED DYESTUFF PVT LTD PLOT NO.A-1/5, GIDC ESTATE, PHASE-I, NR. SHAH TEXTILE, VATVA AHMEDABAD / // / (APPELLANT) ! ! ! ! / // / (RESPONDENT) REVENUE BY : SHRI DINESH SINGH, SR.DR. ASSESSEE(S) BY : MS. URVASHI SHODHAN, AR '# $ %&'/ // / DATE OF HEARING : 01/06/2015 () $ %&' / // / DATE OF PRONOUNCEMENT: 05/06/2015 *+ *+ *+ *+/ // / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIREC TED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX(APPEALS )-VI, AHMEDABAD DATED 28.07.2011, PERTAINING TO ASSESSMENT YEAR 200 5-06. 2. THE ONLY GROUND RAISED IN THIS APPEAL BY THE REV ENUE READS AS UNDER:- THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DIRECTI NG THE A.O. TO EXAMINE IF THE APPELLANT PAID EXCISE DUTY WITHIN DUE DATE OF F ILING RETURN OF INCOME OR NOT AND IF SO, TO ALLOW THE DEDUCTION U/S 43B, SINC E SECTION 43B PROVIDES THAT ANY DEDUCTION WHICH IS OTHERWISE ALLOWABLE UNDER TH E PROVISIONS WILL BE ALLOWED SUBJECT TO PAYMENT BEFORE FILING OF RETURN WHEREAS THE EXCISE DUTY INCLUDED IN THE CLOSING STOCK U/S 145A IS NOT OTHER WISE ALLOWABLE 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. THE ASSESSEE DERIVES INCOME FROM MANUFA CTURING, TRADING AND ITA NO. 2450/AHD/2011 DCIT VS. ASSOCIATED DYESTUFF PVT LTD FOR AY 2005-06 2 EXPORT OF DYES INTERMEDIATES. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS NOT I NCLUDED THE EXCISE DUTY WHILE VALUING THE CLOSING STOCK OF FINISHED GOODS. HE, THEREFORE, MADE THE ADDITION OF RS.9,77,860/-. ON APPEAL, THE CIT(A) N OTED THAT IN THE CLOSING STOCK OF RS.1,19,83,575/-, THE WORK-IN-PROCESS WAS RS.1,01,99,214/- AND FINISHED GOODS WAS RS.17,84,361/-. THE CIT(A) OBSE RVED THAT NO EXCISE DUTY IS PAYABLE ON WORK-IN-PROGRESS AND THEREFORE, THE A DDITION U/S 145A FOR THE EXCISE DUTY ON THE WORK-IN-PROGRESS CANNOT BE MADE. HE DELETED THE ADDITION PERTAINING TO EXCISE DUTY ON WORK-IN-PROGR ESS. WITH REGARD TO ADDITION FOR EXCISE DUTY ON FINISHED GOODS, THE CIT (A) SUSTAINED THE ADDITION; HOWEVER, HE ALSO DIRECTED THE ASSESSING O FFICER TO EXAMINE THE ALLOWABILITY OF ASSESSEES CLAIM U/S 43B IF THE EXC ISE DUTY IS PAID BEFORE THE DUE DATE OF FILING OF RETURN. THE RELEVANT FINDING OF THE CIT(A) IS REPRODUCED HEREIN BELOW FOR READY REFERENCE:- 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE; ASSES SMENT ORDER AND APPELLANT'S SUBMISSION. ASSESSING OFFICER MADE ADDITION OF EXCI SE DUTY PAYABLE ON CLOSING STOCK OF WORK IN PROGRESS AS WELL AS FINISHED GOODS UNDER SECTION 145A. I AGREE WITH THE ASSESSING OFFICER THAT AFTER INTRODU CTION TO SECTION 145A, ALL DUTIES AND FAXES ARE TO BE INCLUDED IN THE VALUE OF CLOSING STOCK. HOWEVER EXCISE DUTY IS PAYABLE ONLY ON FINISHED GOODS AND N OT ON WORK IN PROGRESS, THEREFORE ADDITION OF EXCISE DUTY ON THE VALUE OF W ORK IN PROGRESS CANNOT BE MADE. ACCORDINGLY ADDITION OF EXCISE DUTY MADE BY T HE ASSESSING OFFICER ON WORK IN PROGRESS INVENTORY IS DELETED. AS REGARDS ADDITION OF EXCISE DUTY ON FINISHED GOOD S CLOSING STOCK, ASSESSING OFFICER IS JUSTIFIED AS PER THE PROVISION S OF SECTION 145A AND ACCORDINGLY ADDITION MADE BY THE ASSESSING OFFICER ON FINISHED GOODS INVENTORY IS CONFIRMED. HOWEVER IF THE EXCISE DUTY BEING INCLUDED IN THE VALUE OF CLOSING STOCK IS PAID BEFORE DUE DATE OF F ILING RETURN OF INCOME, THEN THE CLAIM IS ALLOWABLE UNDER SECTION 43B. ASSESSING OFFICER IS THEREFORE DIRECTED TO EXAMINE IF APPELLANT PAID EXCISE DUTY W ITHIN THE DUE DATE OF FILING RETURN OF INCOME OR NOT. IF EXCISE DUTY ON FINISHED GOODS IS PAID BEFORE DUE DATE OF FILING RETURN, THEN ADDITION MADE ON ACCOUN T OF EXCISE DUTY WILL BE ALLOWABLE AS DEDUCTION UNDER SECTION 43B. THIS GROU ND IS ACCORDINGLY DISPOSED OFF. ITA NO. 2450/AHD/2011 DCIT VS. ASSOCIATED DYESTUFF PVT LTD FOR AY 2005-06 3 4. AFTER CONSIDERING THE FACTS OF THE CASE AND ARGU MENTS OF BOTH THE SIDES, WE DO NOT FIND ANY JUSTIFICATION TO INTERFER E WITH THE ORDER OF THE CIT(A). ADMITTEDLY, THE EXCISE DUTY IS NOT PAYABLE ON WORK-IN-PROGRESS, SO THE QUESTION OF ADDITION OF EXCISE DUTY WHILE VALUI NG WORK-IN-PROGRESS DOES NOT ARISE. SO FAR AS THE VALUATION OF FINISHED GOO DS IS CONCERNED, THE CIT(A) HAS SUSTAINED THE ADDITION TO THE VALUATION OF CLOS ING STOCK. HOWEVER, U/S 43B, THE LIABILITY OF THE EXCISE DUTY IS TO BE ALLO WED, PROVIDED THE PAYMENT IS MADE BEFORE THE DUE DATE OF FILING OF RETURN. THERE FORE, THE DIRECTION OF THE CIT(A) TO CONSIDER THE ASSESSEES CLAIM FOR ALLOWAB ILITY OF DEDUCTION U/S 43B IN RESPECT OF LIABILITY OF EXCISE DUTY U/S 43B IS A LSO FULLY JUSTIFIED IN VIEW OF THE PROVISIONS OF SECTION 43B. THEREFORE, WE UPHOL D THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 5. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE COURT ON 5 TH JUNE, 2015 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 05/06/2015 BIJU T., PS *+ $ %, -*,% *+ $ %, -*,% *+ $ %, -*,% *+ $ %, -*,%/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. % '. / CONCERNED CIT 4. '. ( ) / THE CIT(A) 5. ,12 % , , / DR, ITAT, AHMEDABAD 6. 24 5# / GUARD FILE . *+' *+' *+' *+' / BY ORDER, TRUE COPY 6 66 6/ // / 7 7 7 7 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD