Saroj Buildcon Pvt. Ltd., Ahmedabad V. The Income Tax Officer, Ward-8(1), Ahmedabad

ITA 2698/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8852 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 19-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD , , BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.2698/AHD/2013 ( / ASSESSMENT YEAR : 2010-11) SAROJ BUILDCON PVT.LTD. C/3, RAMKRUPA APARTMENT PANCHVATI FIRST LANE AHMEDABAD-380 006 / VS. THE INCOME TAX OFFICER WARD-8(1) AHMEDABAD # ./ ./ PAN/GIR NO. : AAFCS 9492 J ( #& / APPELLANT ) .. ( '#& / RESPONDENT ) #&( / APPELLANT BY : SHRI M.S. CHHAJED, C.A. '#& )( / RESPONDENT BY : SHRI SUMIT KUMAR VERMA, SR.DR *+ ), / DATE OF HEARING 21/03/2017 -./0 ), / DATE OF PRONOUNCEMENT 24/03 /2017 / O R D E R PER PRADIP KUMAR KEDIA, AM: THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, AHMED ABAD [CIT(A) IN SHORT] DATED 24/09/2013 FOR THE ASSESSMENT YEAR (AY) 2010-11. 2. THE ASSESSEE ASSAILED THE ORDER OF THE CIT(A) O N FOLLOWING GROUNDS:- ITA NO.2698/AHD /2013 SAROJ BUILDCON PVT.LTD. VS. ITO ASST.YEAR 2010-11 - 2 - 3. WITH REFERENCE TO GROUND NO.1, THE LD.AR FOR T HE ASSESSEE SUBMITTED THAT THE ASSESSEE DEBITED RS.28,66,387/- TOWARDS TRAVELLING EXPENSES. THE ESTIMATED EXPENSES OF 10% THEREON WA S DISALLOWED ON THE GROUND THAT CORRESPONDING TRAVELLING EXPENSES IN TH E EARLIER YEAR STANDS AT RS.24,70,954/-. THE INCREASE IN TRAVELLING EXPENSE S BY RS.3,95,433/- WAS NOT FOUND JUSTIFIED HAVING REGARD TO THE BILLS AND VOUCHERS AND ABSENCE OF GROWTH IN THE BUSINESS. THE CIT(A) DISMISSED THE G RIEVANCES OF THE ASSESSEE ON THE GROUND THAT IT HAS NOT BEEN PRESSED BEFORE HIM. ON ENQUIRY FROM THE BENCH, THE LD.AR FAIRLY SUBMITTED THAT NO OBJECTION HAS BEEN RAISED BEFORE THE CIT(A) BY WAY OF RECTIFICATI ON AGAINST THE FINDINGS OF THE CIT(A). THUS, HAVING WAIVED THE REMEDIAL AC TION BEFORE CIT(A) AGAINST THE OBSERVATIONS OF THE CIT(A) FOR DISMISSA L AS NOT PRESSED, THE GRIEVANCE OF THE ASSESSEE ON THE ISSUE DOES NOT SUR VIVE ANY MORE BEFORE THE ITAT. AS A RESULT, THE GROUND PERTAINING TO T RAVELLING EXPENSES STANDS DISMISSED. 4. AS REGARD SECOND GROUND PERTAINING TO DISALLOWAN CE TOWARDS VAT DIFFERENCE, THE LD.AR SUBMITTED THAT DETAILS OF CLO SING STOCK AND OPENING STOCK OF GOODS WERE FURNISHED TO THE ASSESSING OFFI CER (AO) IN THE COURSE OF THE ASSESSMENT. THE AO OBSERVED THAT THE OPENING STOCK AS WELL AS THE CLOSING STOCK DOES NOT INCLUDE THE AMOU NT OF VAT FOR THE PURPOSE OF STOCK VALUATIONS. HE ACCORDINGLY ADDED THE DIFFERENCE IN VAT (VALUE ADDED TAX) AMOUNTING TO RS.1,10,623/- TO THE TOTAL INCOME OF THE ASSESSEE. IT IS THE CASE OF THE LD.AR ON BEHAL F OF THE ASSESSEE THAT THE ITA NO.2698/AHD /2013 SAROJ BUILDCON PVT.LTD. VS. ITO ASST.YEAR 2010-11 - 3 - ASSESSEE-COMPANY HAS BEEN CONSTANTLY FOLLOWING THE METHOD OF STOCK AT COST (WITHOUT CONSIDERING VAT) OR MARKET PRICE WHI CHEVER IS LESS YEAR- AFTER-YEAR. THEREFORE IN VIEW OF THE CONSISTENCY A ND UNIFORMITY IN THE VALUATION OF CLOSING STOCK WITHOUT VAT, THE ACTION OF THE ASSESSEE IS REVENUE NEUTRAL. THE LD.AR ALSO CONTENDED THAT TH E VALUE ADDED TAX HAS NOT BEEN ACCOUNTED FOR IN THE P&L ACCOUNT AS AN ITEM OF EXPENDITURE. THEREFORE, THE ACTION OF THE ASSESSEE IN EXCLUDING VAT FOR THE PURPOSE OF CLOSING STOCK HAS NO IMPACT ON THE DETERMINATION OF THE PROFITS OF THE COMPANY. THE LD.AR RELIED UPON THE JUDGMENTS OF TH E HONBLE GUJARAT HIGH COURT IN THE CASE OF ASSTT.CIT VS. NARMADA CH EMATUR PETROCHEMICALS LTD. REPORTED IN (2010)327 ITR 369(G UJ.) AND OF CIT VS. UNIQUE INDUSTRIES REPORTED IN 307 ITR 350 (GUJ.) T O SUPPORT HIS ACTION. THE LD.AR POINTED OUT THAT SIMILAR METHOD OF VALUIN G CLOSING STOCK EXCLUDING VAT WAS ADMITTED WITHOUT OBJECTION IN THE SUBSEQUENT ASSESSMENT YEARS AS WELL AS IN THE EARLIER ASSESSME NT YEARS. 5. THE LD.DR RELIED UPON THE ORDER OF THE CIT(A). 6. WE FIND FORCE IN THE ARGUMENT OF THE ASSESSEE. THE ACTION OF THE ASSESSEE IS REVENUE NEUTRAL AND, THEREFORE, NO PREJ UDICE IS CAUSED TO THE REVENUE. THE METHOD ADOPTED BY THE ASSESSEE HAS BE EN ACCEPTED BY THE REVENUE IN OTHER ASSESSMENT YEARS. THE CLAIM OF TH E ASSESSEE THAT ACCOUNTING SYSTEM ADOPTED BY THE ASSESSEE WHERE VAT EXPENSES IS NOT ROUTED THROUGH P&L ACCOUNT AND THEREFORE DOES NOT I MPACT THE VALUATION ITA NO.2698/AHD /2013 SAROJ BUILDCON PVT.LTD. VS. ITO ASST.YEAR 2010-11 - 4 - OF CLOSING STOCK IS ALSO TAKEN NOTE OF. RESULTANTL Y, OWING TO THE METHOD OF CLOSING STOCK ADOPTED BY THE ASSESSEE EXCLUDING VAT WHICH, ON FACTS, IS STATED TO HAVE NO BEARING ON ULTIMATE PROFITS RE QUIRES TO BE VIEWED FAVOURABLY. 7. IN THE RESULT, SECOND GROUND OF THE ASSESSEE CON CERNING ADDITION TOWARDS VAT DIFFERENCE IS ALLOWED. 8. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. THIS ORDER PRONOUNCED IN OPEN COURT ON 24 / 0 3 /201 7 SD/- SD/- ( ) ( ) ( MAHAVIR PRASAD ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 24/ 03 /2017 4..*,.*../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '#& / THE RESPONDENT. 3. 567, 8, / CONCERNED CIT 4. 8, ( ) / THE CIT(A)-I, AHMEDABAD 5. 9:;,*67 , 67 0 , 5 / DR, ITAT, AHMEDABAD 6. ;<+ / GUARD FILE. / BY ORDER, '9,, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD