The DCIT(OSD-1)Circle-4, Ahmedabad V. Kiri Dyes & Chemicals Ltd., Ahmedabad

ITA 2979/AHD/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6320 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 20-07-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 13-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: T P HEMANI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 2979/AHD/2013 (ASSESSMENT YEAR: 2008-09) THE DCIT (OSD)-1 CIRCLE- 4, AHMEDABAD V/S KIRI DYES &CHEMICALS LTD. 7 TH FLOOR, HASUBHAI CHAMBERS, ELLISBRIDGE, OPP TOWNHALL AHMEDABAD-380006 (APPELLANT) (RESPONDENT) PAN: AAACK9025C APPELLANT BY : SHRI V.K. SINGH, SR. D.R. RESPONDENT BY : SHRI T. P. HEMANI, A.R. ( )/ ORDER DATE OF HEARING : 04 -01-201 8 DATE OF PRONOUNCEMENT : 10-01-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)- VIII, AHMEDABAD DATED 20.09.2013 PERTAINING TO A.Y. 2008-09. ITA NO. 2979 -AHD-2013 . A.Y. 2008-09 2 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN DELETING THE ADDITION OF RS. 89,11,684/- MADE U/S. 145A OF THE A CT ON ACCOUNT OF UNUTILIZED CENVAT CREDIT. 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS AND ON VERIFICATION OF THE BALANCE SHEET OF THE ASSESSEE, THE A.O. NOTI CED THAT THE BALANCE OF CENVAT RECEIVABLE AS ON 01.04.2007 WAS RS. 1,77,54, 832/- AS AGAINST THE CENVAT RECEIVABLE AS ON 31.03.2008 OF RS. 2,66,66,5 16/-. THE A.O. WAS OF THE OPINION THAT THE DIFFERENCE IN CENVAT RECEIVABL E AMOUNTING TO RS. 89,11,684/- HAS TO BE ADDED IN THE CLOSING STOCK OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 145A OF THE ACT. THE A.O. ACC ORDINGLY COMPLETED THE ASSESSMENT BY MAKING ADDITION OF RS. 89,11,684/-. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND VEHEMENTLY STATED THAT IT IS MAINTAINING EXCLUSIVE METHOD OF ACCOUNTING SINCE PAST MANY YEARS. IT WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT EVEN I F THE ASSESSEE FOLLOWED INCLUSIVE METHOD OF ACCOUNTING, THE EFFECT THERETO TO THE PROFIT AND LOS ACCOUNT WOULD HAVE BEEN ZERO. IT WAS FURTHER CONTEN DED THAT AS PER THE GUIDELINES ISSUED BY THE ICAI, THE ASSESSEE CAN HAV E EITHER INCLUSIVE METHOD FOR ACCOUNTING ENTRIES WITH REGARD TO MODVAT OR EX CLUSIVE METHOD. 5. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) WAS CONVINCED WITH THE CONTENTION OF THE ASSESSEE AND DRAWING SUP PORT FROM VARIOUS JUDICIAL DECISIONS DIRECTED THE A.O. TO DELETE THE IMPUGNED ADDITIONS. 6. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. ITA NO. 2979 -AHD-2013 . A.Y. 2008-09 3 7. THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN S TATED BEFORE THE LOWER AUTHORITIES. 8. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. IT IS TRUE THAT THE ASSESSEE HAS BEEN FOLLOW ING EXCLUSIVE METHOD OF ACCOUNTING WHICH MEANS THAT THE COST OF RAW MATERIA L DEBITED IN THE PURCHASE ACCOUNT IS NET OF MODVAT ELEMENT. A SEPARATE ACCOUN T FOR ACCOUNTING FOR THE EXCISE DUTY PAYABLE AND THE MODVAT CREDIT AVAIL ABLE IS MAINTAINED IN THE INCLUSIVE METHOD, THE PURCHASE OF RAW MATERIAL DE BITED IN THE BOOKS OF ACCOUNTS IS INCLUSIVE OF THE CORRESPONDING MODVAT E LEMENT. THIS MEANS THAT IF THE ASSESSEE IS FOLLOWING INCLUSIVE METHOD THE N THE CLOSING STOCK HAS TO BE VALUED INCLUSIVE OF MODVAT ELEMENT. IN EITHER CASE, THE EFFECT WOULD BE NEUTRAL. THIS CAN BE UNDERSTOOD FROM THE FOLLOWING CHART:- INCREASE IN EXPENDITURE/DECREASE IN PROFITABILITY AMT (RS.) INCREASE IN INCOME/INCREASE IN PROFITABILITY AMT (RS.) BALANCE OF MODVAT/CENVAT CREDIT AT THE BEGINNING OF THE YEAR. 1,77,54,832 MODVAT/CENVAT CREDIT UTILIZED DURING THE YEAR. 21,75,73,749 MODVAT/CENVAT CREDIT AVAILABLE DURING THE YEAR 22,64,85,433 BALANCE OF MODVAT/CENVAT CREDIT AT THE END OF THE YEAR 2,66,66,516 TOTAL 24,42,40,265 24,42,40,2 65 9. A PERUSAL OF THE AFOREMENTIONED CHART SHOWS THAT TH ERE IS NO IMPACT OF PROFITABILITY WHETHER AN ASSESSEE FOLLOWS EXCLUSIV E METHOD OR INCLUSIVE METHOD. ACCORDINGLY, NO ADDITION IS CALLED FOR U/S . 145A OF THE ACT. FOR THIS PROPOSITION WE DRAW SUPPORT FROM THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF INDO NIPPON CHEMICALS CO. LTD. 261 I TR 275 AND HONBLE HIGH ITA NO. 2979 -AHD-2013 . A.Y. 2008-09 4 COURT OF GUJARAT IN THE CASE OF NARMADA CHEMATUR PE TROCHEMICALS 327 ITR 369. 10. CONSIDERING THE JUDICIAL DECISIONS IN FAVOUR OF THE ASSESSEE. WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). APP EAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 10 - 01- 20 18 SD/ SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 10 /01/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD