A.C.I.T. 2(3), MUMBAI V. THREE M PAPER MFG. CO. PVT. LTD., MUMBAI

ITA 2512/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78741 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2014
• Appeal Filed By: Department
• Bench Allotted: E
• Next Hearing Date: 28-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 16-04-2012
• Court: TRIBUNAL
• Department Lawyers: ASHOK SURI
• Keywords: Question of law

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIVEK VARMA, JM ./I.T.A. NO.25 12 /M/2012 ( / ASSESSMENT YEAR: 2008 - 200 9 ) ACIT - 2(3), R.NO.552, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 20. / VS. THREE M PAPER MFG. CO. PVT. LTD., E/2, RANJIT STUDIO COMPOUND, DADASAHEB PHALKE ROAD, DADAR (E), MUMBAI 400 014. ./ PAN : AAACL 1838 J ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI ASHOK SURI, DR / RESPONDENT BY : SHRI NILESH PATEL / DATE OF HEARING : 28.04.2014 / DATE OF PRONOUNCEMENT : 28.04.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 16.4.2012 IS AGAINST THE ORDER OF THE CIT (A) - 6, MUMBAI DATED 19.1.2012 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING EFFECTIVE GROUND WHICH READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ADDITION OF RS. 10,75,831/ - MADE IN THE CLOSING STOCK VALUATION OF THE FINISHED GOODS. THE CIT (A) ERR ED IN OVERLOOKING THE PROVISIONS OF SECTION 145A(B) WHICH SPECIFICALLY PROVIDES THAT AFTER THE VALUATION OF INVENTORY AS PER THE REGULAR METHOD OF ACCOUNTING EMPLOYED BY THE ASSESSEE, THERE HAS TO BE FURTHER ADJUSTMENT TO THE SAID VALUATION BY ADDING THE A MOUNT OF ANY TAX, DUTY, CESS OR FEE ACTUALLY PAID OR INCURRED BY THE ASSESSEE AS ON THE DATE OF VALUATION. 3. AT THE OUTSET, LD DR SHRI ASHOK SURI MENTIONED THAT THERE IS A SOLITARY GROUND RAISED IN THE INSTANT APPEAL OTHERWISE, HE FAIRLY MENTIONED THAT T HE GROUNDS ARE NOT HAPPILY DRAFTED. THE ONLY ISSUE NEEDS TO BE ADJUDICATED RELATES TO THE APPLICABILITY OF THE PROVISIONS OF SECTION 145A(B) AND THE BINDING DECISIONS OF THE JURISDICTIONAL HIGH 2 COURT IN THE CASE OF CIT VS. MAHALAXMI GLASS WORKS (P) LTD [2009] 318 ITR 116 (BOM) A S WELL AS ANOTHER DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MAHAVIR ALLUMINIUM LTD [2008] 168 TAXMAN 27 (DELHI) AND THE DECISIONS OF THE COORDINATE BENCHES OF THE ITAT, MUMBAI. FURTHER, HE MENTIONED THAT IT IS A LEGAL CONCLUDED ISSUE THAT WHEN THE PROVISIONS OF SECTION 145A A R E APPLIED, ALL THE INVENTORIES INCLUDE OPENING STOCK AND CLOSING STOCK HAVE TO BE ADJUSTED TO REMOVE THE ANOMALIES IN MATTERS OF VALUATION. 4. IN THIS REGARD, LD COUNSEL BROUGHT OUR ATTENTION TO THE CONTENTS OF TH E ORDER OF THE CIT (A) WHEREIN HE HELD THAT THE APPELLANTS WITHOUT PREJUDICE SUBMISSION THAT SIMILAR ADJUSTMENTS SHOULD BE IN THE OPENING STOCK ALSO OF THE RELEVANT FINANCIAL YEAR IS CORRECT AS THE ADJUSTMENT AS PER SECTION 145A IS TO BE MADE IN THE VALU ATION OF INVENTORY. THE AO IS THEREFORE, DIRECTED TO MAKE ADJUSTMENT OF EXCISE DUTY BOTH IN OPENING AND CLOSING STOCK. (PARA 1.3 OF THE CIT (A)S ORDER IS RELEVANT). THE ABOVE VIEW IS IN TUNE WITH THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF MAHALAXMI GLASS WORKS (P) LTD (SUPRA) WHICH IS RELEVANT FOR THE PROPOSITION THAT THE CLOSING STOCK OF THE PREVIOUS YEAR BE TAKEN AS OPENING STOCK OF THE NEXT YEAR AND THAT THE ASSESSING OFFICER BE DIRECTED TO ESTABLISH THE VALUATION FOR CLOSING ST OCK AS OPENING STOCK OF THE NEXT YEAR AND THE DEPARTMENTAL REPRESENTATIVE STATED THAT HE HAD NO OBJECTED FOR THE SAME, NO QUESTION OF LAW AROSE FROM THE TRIBUNALS ORDER UPHOLDING THE ORDER OF THE COMMISSIONS (APPEALS). ANOTHER DECISION OF THE HONBLE DE LHI HIGH COURT IN THE CASE OF MAHAVIR ALLUMINIUM LTD (SUPRA) CONCURS THE ABOVE VIEW BY HOLDING THAT SECTION 145A BEGINS WITH A NON OBSTANTE CLAUSE AND, THEREFORE, TO GIVE EFFECT TO SECTION 145A, IF THERE IS A CHANGE IN THE CLOSING STOCK AS ON 31.3.1999, T HERE MUST NECESSARILY BE A CORRESPONDING ADJUSTMENT MADE IN THE OPENING STOCK AS ON 1.4.1998. THE ABOVE JUDGMENTS OF THE HIGH COURT S ARE RELIED ON BY THE MUMBAI BENCHES OF THE TRIBUNAL IN THE CASES OF (I) R.R. KABEL LTD VS. ACIT [2012] 25 TAXMANN.COM 559 (MUM); (II) NAVDEEP CHEMICALS P. LTD VIDE ITA NO.3755/M/2011, DATED 20.3.2012 AND (III) GOPALDAS VISRAM VIDE ITA NO.6028/M/2010 DATED 16.12.2011. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE JUDGMENT S OF THE HONBLE HIGH COURTS AND THE ORDERS OF 3 THE TRIBUNAL. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ABOVE CITED JUDGMENTS, WE ARE OF THE OPINION THAT THE ISSUE UNDER CONSIDERATION RELATES TO THE APPLICABILITY OF THE PROVISIONS OF SECTION 145A(B ) A N D IS A SETTLED ISSUE AT THE LEVEL OF THE HIGHER JUDICIARY. CONSIDERING THE SETTLED NATURE OF THE ISSUE, WE ARE OF THE OPINION THAT THE DECISION OF THE CIT (A) WHICH IS GIVEN IN PARA 1.3 OF HIS O RDER IS FAIR AND REASONABLE AND DOES NOT CALL FOR ANY INTERFE RENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH APRIL, 2014. S D / - S D / - (VIVEK VARMA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 28.4.2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI