The ITO, Ward-3(2)(7), Ahmedabad V. Shri Kiritbhai Narottamdas Patel, Ahmedabad

ITA 2676/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7852 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 14-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Cost of acquisition
• Section: 143(3)

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO. 2676/AHD/2016 ( ASSESSMENT YEAR : 2012-13) ITO, WARD 3(2)(7), AHMEDABAD / VS. SHRI KIRITBHAI NAROTTAMDAS PATEL, PROP. KARNAVATI ENGINEERING WORKS, PLOT NO.619/A, PHASE-IV, GIDC, AHMEDABAD ./ ./ PAN/GIR NO. : AENPP8130R ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI ALOK KUMAR, SR. D.R. / RESPONDENT BY : SHRI M. K. PATEL, A.R. DATE OF HEARING 02/07/2018 !'# / DATE OF PRONOUNCEMENT 17/07/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE CIT(A)-3, AHMEDABA D (CIT(A) IN SHORT), DATED 4 TH AUGUST, 2016 ARISING IN THE ASSESSMENT ORDER DATED 26.03.2015 PASSED BY THE ASSESSING OFFICER (AO) UND ER S. 143(3) OF ITA NO. 2676/AHD/16 [ITO VS. SHRI KIRITBHAI N. PATE L] A.Y. 2012-13 - 2 - THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING ASSES SMENT YEAR 2012- 13. 2. WITH THE ASSISTANCE OF THE REPRESENTATIVES FOR R EVENUE AND THE ASSESSEE, WE HAVE CAREFULLY EXAMINED THE ISSUE. WH ILE IT IS THE CASE OF THE REVENUE THAT THE ELEMENT OF EXCISE DUTY AND VAT AMOUNTING TO RS.38,74,927/- REPRESENTS PART OF THE CLOSING STOCK OF THE ASSESSEE IN TERMS OF SECTION 145A OF THE ACT, IT IS THE CASE OF THE ASSESSEE ON THE OTHER HAND THAT SECTION 145A HAS NO APPLICATION TO THE FACTS OF THE CASE. IT IS FURTHER CASE OF THE ASSESSEE THAT THE ASSESSEE FOLLOWS EXCLUSIVE METHOD OF ACCOUNTING FOR VALUATION OF INV ENTORY AND THEREFORE, ENTIRE EXERCISE WOULD BE TAXED NEUTRAL. IT IS THE CASE OF THE ASSESSEE THAT ON ACCOUNT OF THE EXCLUSIVE METHOD OF ACCOUNTING, THE EXCISE DUTY AND VAT IS EXCLUDED AT THE THRESHOLD AN D ACCOUNTED FOR SEPARATELY AS A BALANCE SHEET ITEM. THUS, WHEN THE PURCHASE COST DOES NOT INCLUDE THE EXCISE DUTY AND VAT ETC. AND CONSEQ UENTLY DO NOT FORM PART OF THE PROFIT & LOSS ACCOUNT, THERE IS NO WARRANT TO INCLUDE SUCH DUTY AND COSTS IN THE CLOSING STOCK. IT IS TH E CASE OF THE ASSESSEE THAT WHEN SEEN IN PERSPECTIVE, ACCOUNTING METHOD AD OPTED BY THE ASSESSEE IS REVENUE NEUTRAL AND DOES NOT MAKE ANY I MPACT ON THE PROFITABILITY OF THE CONCERN PER SE . IN THE BACKDROP OF FACTS NOTED ABOVE, WE DO NOT SEE ANY ERROR IN THE CONCLUSION DR AWN BY THE CIT(A). IN ESSENCE, THERE WILL BE NO INFRINGEMENT OF SECTIO N 145A WHERE THE ACTION OF ASSESSEE IS REVENUE NEUTRAL. IN THIS REG ARD, THE CIT(A) ITA NO. 2676/AHD/16 [ITO VS. SHRI KIRITBHAI N. PATE L] A.Y. 2012-13 - 3 - OBSERVED THAT THE ISSUE IS NO LONGER RES INTEGRA AND ADJUDICATED THE ISSUE IN FAVOUR OF THE ASSESSEE PLACING RELIANCE UP ON SEVERAL DECISIONS OF THE CO-ORDINATE BENCH OF TRIBUNAL AS LISTED IN T HE ORDER OF THE CIT(A). THE CONCLUSION OF CIT(A) IS ON LEGALLY SOU ND FOOTING. IN THESE CIRCUMSTANCES, WE DECLINE TO INTERFERE WITH T HE ORDER OF THE CIT(A). 3. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. SD/- SD/- (MADHUMITA ROY) (PRADIP K UMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 17/07/2018 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 17/07/20 18