The Dy. CIT., Circle-1, Ahmedabad V. Bloom Dekor Ltd., Ahmedabad

ITA 328/AHD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2127 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-05-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 04-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR
• Assessee Lawyers: NOMAN SIDDIQUI
• Section: 143(3); 145; 148

Judgement Text

ITA NO 328/AHD/2013 . A.Y. 2006- 07 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BEN CH, AHMEDABAD (BEFORE SHRI MUKUL KUMAR SHRAWAT J.M. & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 328 /AHD/2013 (ASSESSMENT YEAR:2006-07 THE DCIT, CIRCLE 1, A WING, ROOM NO. 309, 3 RD FLOOR, PRATYAKHA KAR BHAVAN, AMBAWADI, AHMEDABAD 380015. (APPELLANT) VS. M/S BLOOM DEKOR LTD. 2/F, SUMEL COMPLEX, OPP. GNFC INFO TOWER, THALTEJ, AHMED (RESPONDENT) PAN: AAACB6221B APPELLANT BY : SHRI SUMIT KUMAR D.R. RESPONDENT BY : SHRI NOMAN SIDDIQUI ( )/ ORDER DATE OF HEARING : 15-04-201 3 DATE OF PRONOUNCEMENT : 24 -05 -2013 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-1, AHMEDABAD DATED 1.11.2012 FOR ASSESSMENT YEAR 2006- 07. ON THE DATE OF HEARING, AS APPLICATION WAS MOVED BY THE AS SESSEE FOR ADJOURNMENT. THE ADJOURNMENT APPLICATION WAS REJECT ED AND THE ISSUE WAS DECIDED ON THE BASIS OF MATERIAL ON RECORD. 2. THE FACTS AS CULLED OUT FROM THE ORDER OF THE LO WER AUTHORITIES ARE AS UNDER. ITA NO 328/AHD/2013 . A.Y. 2006- 07 2 3. ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF DECORATIVE AND INDUSTRIAL LAMINATED SHEETS. ASSESSE E FILED ITS RETURN OF INCOME FOR A.Y. 2006-07 FROM 21.12.2006 DECLARING T OTAL LOSS AT RS. 84,87,650/-. THEREAFTER ASSESSMENT UNDER 143(3) WA S COMPLETED ON 17.11.2008 AND THE TOTAL LOSS WAS DETERMINED AT RS. 82,36,735/-. THEREAFTER CASE WAS TAKEN UP FOR REASSESSMENT AND N OTICE UNDER SECTION 148 WAS ISSUED ON 27.7.2010. IN RESPONSE T O THE NOTICE ASSESSEE VIDE LETTER DATED 25.08.2010 REQUESTED TO TREAT THE RETURN OF INCOME FILED ON 21.12.2006 AS THE RETURN OF INCOME FILED AS RETURN PURSUANT TO NOTICE UNDER SECTION 148 OF THE ACT. 4. ON PERUSING THE FINANCIAL STATEMENTS ASSESSING OFFICER NOTICED THAT AS PER THE NOTES TO ACCOUNTS, EXCISE DUTY ON FINISHED GOODS NOT CLEARED AS PER FACTORY WAS ESTIMATED AT R. 47.38 LACS AND CUST OM DUTY ON STOCK LYING AT PORT ESTIMATED AT RS. 46.5 LACS WAS NOT PR OVIDED FOR IN THE BOOKS AND WAS ALSO NOT CONSIDERED IN THE VALUATION OF INVENTORIES. ASSESSING OFFICER WAS OF THE VIEW THAT AS PER PROVI SION OF SECTION 145A INSERTED WITH EFFECT FROM 1.04.1999 EXCISE DUTY HAS TO BE ADDED WHILE VALUING FINISHED GOODS. HE THUS CONSIDERED THE AMOU NT OF EXCISE DUTY ON FINISHED GOODS NOT CLEARED FROM FACTORY AT RS. 4 7.38 LACS AND CUSTOM DUTY ON STOCK LYING AT PORT AT 46.51 LACS AGGREGATI NG TO RS. 93,89,000/- AND ADDED IT TO THE VALUE OF INVENTORY. AGGRIEVED B Y THE ACTION OF THE ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFO RE CIT(A). CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND RELYING ON THE DECISION OF AHMEDABAD TRIBUNAL IN THE CASE OF ITA 1 358/AHD/2009 ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING AS UN DER:- THE APPELLANT ALSO POINTED OUT THAT HON'BLE IT AT, AHMEDABAD VIDE ITA NO. 1358/AHD/2009 HAS ALSO CONCURRED WITH A V IEW THAT EXCISE DUTY ITA NO 328/AHD/2013 . A.Y. 2006- 07 3 AND/OR CUSTOMS DUTY SHOULD NOT BE INCLUDED IN THE C LOSING STOCK. THE OPERATIVE PART INDICATING OBSERVATION OF THE HON'BL E ITAT IS REPRODUCED HEREIN AS UNDER: 'AT THE TIME OF HEARING, BOTH THE PARTIES AGREED TH AT THE ISSUE IS NOW SQUARELY COVERED BY THE DECISION OF HON'BLE JURISDI CTIONAL HIGH COURT IN THE CASE OF ACIT VS. NARMADA CHEMATUR PETROCHEMICALS LT D. 327 ITR 369 (GUJ.), WHEREIN FOLLOWING WAS HELD: 'HELD, DISMISSING THE APPEAL, THAT TRIBUNAL WAS JUS TIFIED IN EXCLUDING THE EXCISE DUTY AT THE TIME OF VALUATION OF THE CLO SING STOCK OF FINISHED GOODS AT THE END OF THE ACCOUNTING PERIOD BECAUSE: (A) NO DEDUCT ION FOR THE LIABILITY HAD BEEN CLAIME D BY THE ASSESSEE. THE EXCISE DUTY PAYABLE ON THE FINISHED GOODS LYING IN THE CLOSING STOCK AT THE END OF THE RELEVANT ACCOUNTING PERIOD HAD BEEN PAID IN THE SUBSEQUENT YEAR BEFORE_THE DUE DATE OF FILING OF THE RETURN OF INCOME AND THAT WAS HOW THE AMOUNT WAS AVAILABLE CONSIDERING THE FACT THAT THE ASSESSMENT HAD BEEN FRAMED AND THE SHOW-CAUSE NOTICE WAS ISSUED MU CH AFTER THE CLOSE OF THE ACCOUNTING YEAR; (B) THE ASSESSING OFFICE HAD NOT HAD RECOURSE TO SU B-SECTION (3) OF SECTION 145 OF THE ACT. THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYST EM OF ACCOUNTING BUT IT WAS NOT THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSING OFFICER WAS NOT IN A POSITION TO DEDUCE T RUE PROFITS OF THE YEAR UNDER CONSIDERATION. SUCH DUTY OF CENTRAL EXCISE IF ADDED TO ENHANCE THE VALUE OF CLOSING STOCK WOULD RESULT IN ENHANCED OPE NING STOCK ON THE FIRST DAY OF THE NEXT ACCOUNTING PERIOD, NAMELY, APRIL 1, 1997. SO THE NEXT YEAR'S PROFITS WOULD GET DEPRESSED ACCORDINGLY, OVER A PE RIOD OF TIME THE WHOLE EXERCISE WOULD EVEN OUT, IN OTHER WORDS, BE REVENUE NATURAL. AT THE SAME TIME WHILE DISTURBING THE VALUE OF THE CLOSING STOC K THE ASSESSING AUTHORITY COULD NOT CHANGE THE METHOD OF ACCOUNTING REGULARL Y EMPLOYED. [C] THE ASSESSMENT YEAR BEING 1997-98 THE PROVISIO NS OF SECTION 145A OF THE ACT INSERTED BY THE FINANCE (NO. 2) ACT, 1998 W ITH EFFECT FROM APRIL 1, 1999 COULD NOT BE INVOKED. [4.4] I HAVE PERUSED THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSIONS MADE IN THIS REGARD. SINCE THE ISSUE IS SQUARELY CO VERED BY THE JURISDICTIONAL 1TAT, I AM OF THE VIEW THAT NO ADDIT ION SHOULD BE MADE ON ACCOUNT OF EXCISE AND CUSTOMS DUTY IN THE VALUATION OF CLOSING STOCK. THE ADDITION MADE BY THE AO IS THUS DIRECTED TO BE DELE TED. THE GROUNDS RAISED BY THE APPELLANT ARE THUS ALLOWED. ITA NO 328/AHD/2013 . A.Y. 2006- 07 4 5. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER REVENUE IS NOW IN APPEAL BEFORE US. 6. BEFORE US, LEARNED D.R. RELIED ON THE ORDER OF T HE ASSESSING OFFICER. 7. WE HAVE HEARD THE LEARNED D.R. AND PERUSED THE M ATERIAL ON RECORD. CIT(A) WHILE DELETING THE ADDITION HAS HELD THAT TH E ISSUE IS SQUARELY COVERED BY THE DECISION OF JURISDICTIONAL TRIBUNAL AND ACCORDINGLY RELYING ON THE AFORESAID DECISION DELETED THE ADDITION. NO THING HAS BEEN BROUGHT ON RECORD TO CONTROVERT THE FINDINGS OF CIT (A) AND THUS WE FIND NO REASON TO INTERFERE IN HIS ORDER AND THIS THE AP PEAL OF REVENUE IS DISMISSED. 8. THUS THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 24 - 05 - 2013. SD/- SD/- (MUKUL KR. SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY 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, AHMEDABAD