M/s. K.B.Zaveri Exports, Ahmedabad V. The ACIT, Circle-10, Ahmedabad

ITA 2847/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0464 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 04-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NO. 2847/AHD/2013 / ASSESSMENT YEAR : 2009-10 M/S. K.B. ZAVERI EXPORTS, 9, PARISEEM COMPLEX, CG ROAD, AHMEDABAD PAN : AABFK 7254 M VS ACIT, CIRCLE-10, AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI S N DIVATIA, AR REVENUE BY : SHRI SATISH SOLANKI, SR DR / DATE OF HEARING : 17/08/2016 / DATE OF PRONOUNCEMENT: 29/09/2016 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XVI, AHMEDABAD DATED 29.10.2013 FOR AY 2009-10. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE TO THE EF FECT THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN:- A) UPHOLDING ADDITION OF RS.3,27,509/- TOWARDS STOCK V ALUATION BY REJECTING THE METHOD OF VALUATION CONSISTENTLY FOLL OWED BY THE ASSESSEE; B) CONFIRMING ADDITION OF RS.2,97,354/- TOWARDS THE VA LUATION OF CLOSING STOCK BY INCLUDING VAT IN THE VALUE; 3. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE A SSESSEE WAS FOLLOWING CONSISTENT METHOD OF VALUATION OF STOCK WHICH HAS B EEN REJECTED WITHOUT ANY JUSTIFIABLE BASIS. BESIDES, THE ISSUE OF VAT NOT T O BE CONSIDERED IN THE VALUATION OF CLOSING STOCK CAME UP BEFORE THE ITAT, AHMEDABAD BENCH IN ITA NO.1980/AHD/2011 IN THE CASE OF FALGUNBHAI HASM UKHBHAI PARIKH VS. SMC-ITA NO. 2847/AHD/2013 M/S. K B ZAVERI EXPORTS VS. ACIT AY : 2009-10 2 ACIT AND THE ISSUE WAS DECIDED IN FAVOUR OF THE ASS ESSEE, BY FOLLOWING OBSERVATIONS:- 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RES PECT TO ADDITION OF EXCISE DUTY AND VAT TO THE VALUE OF CLOSING STOCK. BEFORE US, IT IS ASSESSEES SUBMISSION THAT ASSESSEE IS CONSISTENTLY FOLLOWING EXCLUSIVE METHOD OF ACCOUNTING FOR THE PURPOSE OF VALUATION OF CLOSING STOCK AND THEREBY NOT INCLUDING THE VAT AND EXCISE DUTY TO EITHER THE CLOS ING STOCK AND OPENING STOCK. IT IS ALSO THE ASSESSEES SUBMISSION THAT TH E METHOD ADOPTED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE REVENUE AUTHORITI ES. BEFORE US, NO MATERIAL HAS BEEN BROUGHT BY THE REVENUE TO CONTROVERT THE S UBMISSIONS OF THE ASSESSEE. WE FURTHER FIND THAT THE AUDITOR IN THE T AX AUDIT REPORT HAS CERTIFIED IN THE STATEMENT MADE FOR ADJUSTMENT U/S 145A THAT T HE EXERCISE OF INCLUDING EXCISE DUTY AND VAT TO THE STOCK IS REVENUE NEUTRAL. BEFORE US, REVENUE HAS NOT POINTED OUT ANY MISTAKE IN THE AFORESAID STATEM ENT WHICH HAS BEEN CERTIFIED BY THE CHARTERED ACCOUNTANT. FURTHER, WHEN THE METHOD OF VALUATION OF STOCK HAS BEEN ACCEPTED BY THE REVENUE AUTHORITIES IN PRECEDING AND SUCCEEDING YEARS AND THERE BEING NO CHANGE IN T HE FACTS, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION TO THE CLOSING STOCK. WE THUS DIRECT THE DELETION OF ADDIT ION MADE BY THE ASSESSING OFFICER AND THUS, THIS GROUND OF THE ASSESSEE IS AL LOWED. 4. FURTHER, RELIANCE IS PLACED ON HONBLE SUPREME C OURT JUDGMENT IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD, REPORTED IN ( 2013) 358 ITR 295 (SC), FOR THE PROPOSITION THAT HIGHER VALUATION OF CLOSING ST OCK IN THIS YEAR WILL RESULT IN INCREASED VALUE OF OPENING STOCK IN SUBSEQUENT Y EAR WHICH AT THE MOST WILL AMOUNT TO POSTPONEMENT OF LIABILITY AND SUCH A DDITION SHOULD NOT BE MADE. 5. LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE OR DER OF THE ASSESSING OFFICER. 6. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE LOWER AUT HORITIES. IN MY CONSIDERED VIEW, THE ASSESSEES CASE IS SQUARELY CO VERED BY THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF EXCEL INDUSTRI ES LTD (SUPRA) AND THE SMC-ITA NO. 2847/AHD/2013 M/S. K B ZAVERI EXPORTS VS. ACIT AY : 2009-10 3 DECISION OF ITAT, AHMEDABAD BENCH IN THE CASE OF FA LGUNBHAI HASMUKHBHAI PARIKH (SUPRA). RESPECTFULLY FOLLOWING THEM, I SEE NO JUSTIFICATION IN INCREASING THE VALUE OF CLOSING ST OCK AND VAT; AND THEREFORE, THE ADDITIONS ARE DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 29 TH SEPTEMBER, 2016 AT AHMEDABAD. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 29/09/2016 *BIJU T. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD