The DCIT, Circle-1(1)(1), Ahmedabad V. M/s. Asian Tubes Ltd., Ahmedabad

ITA 3460/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6258 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 10-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GAURAV NAHATA
• Keywords: Depreciation; Opportunity of being heard
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE, SHRI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER ITA NO. 3460/AHD/2015 (ASSESSMENT YEAR: 2012-13) DCIT, CIRCLE 1(1)(1), AHMEDABAD APPELLANT VS. M/S. ASIAN TUBES LTD., 101, SAKAR III, OPP. HIGH COURT, AHMEDABAD 380 014 RES PONDENT PAN: AABCA2797E /BY REVENUE : SHRI MUDIT NAGPAL, SR. D.R /BY ASSESSEE : SHRI GAURAV NAHATA, A.R. /DATE OF HEARING : 10.01.2018 /DATE OF PRONOUNCEMENT : 11.01.2018 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 A RISES AGAINST THE CIT(A)-1, AHMEDABADS ORDER DATED 24.09.2015 IN CAS E NO. CIT(A)-VI/DCIT CIR- 1(1)(2)/636/2014-15, REVERSING ASSESSING OFFICERS ACTION INTER ALIA DISALLOWING/ADDING ADDITION OF RS.3,27,92,167/- ON ACCOUNT OF UNUTILIZED CENVAT CREDITS AS WELL AS DEPRECIATION OF RS.62,550 /- CLAIMED @100% QUA STORAGE TANK; RESPECTIVELY, IN PROCEEDINGS U/S.143( 3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. ITA NO. 3460/AHD/15 [DCIT VS. M/S. ASIAN TUBES LTD .] A.Y. 2012-13 - 2 - HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. WE NOTICE AT THE OUTSET THAT THE ABOVE TWO ISSUE S OF UNUTILIZED CENVAT CREDITS AS WELL AS DEPRECIATION IN RELATION TO STOR AGE TANK HAD COME UP FOR TRIBUNALS ADJUDICATION IN PRECEDING ASSESSMENT YEA R(S) 2003-04, 2005-06, 2008- 09 & 2009-10 AS WELL. A CO-ORDINATE BENCH IN REVEN UES LATTER TWO APPEALS UPHOLDS THE CIT(A)S ORDER REGARDING THE IMPUGNED I DENTICAL UNUTILIZED CENVAT CREDIT AS FOLLOWS: 13. GROUND NO.1 OF REVENUES APPEALS IN A.Y. 05-06 & 09-10 ARE AGAINST DELETING THE ADDITION MADE ON ACCOUNT OF UNUTILIZED CENVAT C REDIT NOT INCLUDED IN THE CLOSING STOCK. THE A.O. IN A.Y. 05-06 FOUND THAT THE ASSES SEE HAD NOT MADE ADJUSTMENT U/S. 145A OF THE IT ACT. HE RELIED UPON CIT VS. BRITISH PAIN TS INDIA LTD. (1991) 188 ITR 44 (SC), WHEREIN IT WAS HELD THAT CLOSING STOCK OF GOODS-IN- PROCESS OR FINISHED GOODS, ALL OVERHEAD EXPENSES, BESIDES THE COST OF RAW MATERIAL , HAD TO BE ADDED IN THE CLOSING STOCK FOR DETERMINING THE CORRECT INCOME. AS PER SECTION 145A OF THE IT ACT, THIS SHOULD BE ADDED IN THE CLOSING STOCK. THUS, HE MADE ADDITION OF RS.33,83,950/- IN THE INCOME OF THE ASSESSEE IN A.Y. 05-06. SIMILARLY, ADDITION OF RS. 2,08,94,571/- WAS MADE IN A.Y. 09-10. 14. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT( A) WHO HAD ALLOWED THE APPEAL BY OBSERVING AS UNDER: 4.3 I HAVE CONSIDERED THE FACTS OF THE CASE; ASSES SMENT ORDER AND APPELLANTS SUBMISSION. IT IS NOT IN DISPUTE THAT AS PER THE PROVISIONS OF SECTION 145A, THE EXCISE DUTY HAS TO BE INCLUDED IN THE VALUE OF CLOSING STOCK. ASSESSING OFFICERS ACTION OF INCLUDING EXCISE DUTY IN THE VALUE OF CLOSING STOCK IS THEREFORE CONFIRMED. HOWEVER APPELLANT SUBMITTED THAT APPELLANT PAID EX CISE DUTY ON CLOSING STOCK AT THE TIME OF REMOVAL FROM THE FACTO RY BEFORE DUE DATE OF FILING RETURN AND ACCORDINGLY SUCH EXCISE DUTY IS ALLOWABL E AS DEDUCTION UNDER SECTION 43B. APPELLANT RELIED UPON SEVERAL DECISIO NS ON THIS ISSUE. APPELLANT SUBMITTED DETAILS OF PAYMENTS INCLUDING C OPY OF CHALLAN OF EXCISE DUTY ON CLOSING STOCK AND CLAIMED THAT IF THE ADDIT ION OF EXCISE DUTY IS MADE, THE SAME SHOULD BE ALLOWED UNDER SECTION 43B ON PAY MENT BASIS. RESPECTFULLY FOLLOWING THE DECISIONS OF VARIOUS COU RTS RELIED UPON BY THE APPELLANT, ASSESSING OFFICER IS DIRECTED TO VERIFY WHETHER EXCISE DUTY ADDED BY HIM TO THE VALUE OF CLOSING STOCK IS PAID BEFORE DUE DATE OF FILING RETURN OR NOT. IF ENTIRE EXCISE DUTY ADDED IS PAID BEFORE DU E DATE OF FILING RETURN, THE ADDITION WILL NOT SURVIVE SINCE THE SAME IS ALLOWAB LE UNDER SECTION 43B. IN NUTSHELL, ASSESSING OFFICER IS DIRECTED TO ALLOW CL AIM OF EXCISE DUTY ADDED BY HIM IF THE SAME IS PAID BEFORE DUE DATE OF FILING R ETURN. SIMILAR FINDING WAS GIVEN IN A.Y. 09-10 AND ALLOWED THE APPEAL IN FAVOUR OF THE ASSESSEE. 15. NOW THE REVENUE IS BEFORE US. IT IS CONTENDED THAT SECTION 145A HAS BEEN AMENDED AND IT IS ESSENTIAL ON PART OF THE ASSESSEE TO ADD THE CENVAT CREDIT IN THE CLOSING STOCK TO ADDUCE THE CORRECT INCOME OF THE Y EAR. THUS, THE A.O. WAS RIGHTLY MADE ADJUSTMENT IN THE CLOSING STOCK. HOWEVER, LD. COUN SEL FOR THE APPELLANT RELIED UPON THE ORDER OF THE CIT(A) AND ARGUED THAT IN ASSESSEES O WN CASE IN A.Y. 03-04 IN ITA NO. 1358/AHD/2009 HAD DECIDED THIS ISSUE IN FAVOUR OF T HE ASSESSEE. HE FURTHER RELIED UPON ITA NO. 3460/AHD/15 [DCIT VS. M/S. ASIAN TUBES LTD .] A.Y. 2012-13 - 3 - RECENT DECISION OF THE HONBLE SUPREME COURT IN CAS E OF ACIT VS. TORRENT CABLES LTD., CIVIL APPEAL NO. 6927 OF 2012, WHEREIN IT WAS HELD THAT ASSESSEE HAD BEEN FOLLOWING THE NET METHOD OF VALUING THE CLOSING STOCK. IT ACCOUN TS FOR THE EXCISE DUTY AT THE TIME OF REMOVAL OF GOODS. THEREFORE, SAME IS NOT INCLUDIBL E FOR VALUATION OF CLOSING STOCK. THEREFORE, HE REQUESTED TO CONFIRM THE ORDER OF THE CIT(A). 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE LD. CIT D.R. HAD NOT CONTROVERTED THE FINDING GIVEN BY THE CIT(A) IN HIS ORDER AND ALSO THE ASSESSEE HAD PAID EXCISE DUTY ON CLOSING STOCK AT T HE TIME OF REMOVAL OF GOODS FROM THE FACTORY BEFORE DUE DATE OF FILING OF RETURN. ACCOR DINGLY, SUCH EXCISE DUTY IS ALLOWABLE AS DEDUCTION U/S. 43B OF THE IT ACT. THUS, WE DISMISS THE APPEAL OF THE REVENUE IN BOTH YEARS AND CONFIRM THE ORDER OF THE CIT(A). 3. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO PI NPOINT ANY DISTINCTION ON FACTS OR LAW QUA THE INSTANT ISSUE ARISING IN THE SAID PR ECEDING AS WELL AS THE IMPUGNED ASSESSMENT YEAR. WE THEREFORE ADOPT JUDICIAL CONSI STENCY TO AFFIRM THE CIT(A)S FINDINGS UNDER CHALLENGE DELETING THE ADDITION IN Q UESTION ON UNUTILIZED CENVAT CREDIT. THIS FORMER SUBSTANTIVE GROUND FAILS. 4. THIS LEAVES US WITH THE LATTER ISSUE OF DEPRECI ATION ON STORAGE TANK @ 100% AMOUNTING TO RS.62,550/-. THE ABOVE CO-ORDINATE BE NCH DECIDES THE SAME AGAINST THE REVENUE AS UNDER: 12. GROUND NO. 3 FOR A.Y. 09-10 IS AGAINST CONFIRMI NG DISALLOWANCE OF RS.6,77,828/- ON ACCOUNT OF EXCESS DEPRECIATION ON STORAGE TANK. THE A.O. OBSERVED THAT THE ASSESSEE HAD CLAIMED DEPRECIATION OF RS.7,53,142/- @ 100% AS POLLUTION PLANT. THE ASSESSEE ALSO CLAIMED DEPRECIATION ON STORAGE TANK @ 100% WHICH I S RATE APPLICABLE TO POLLUTION PLANT. IT WAS HELD BY THE A.O. THAT STORAGE TANKS ARE BASICALLY OF THE NATURE OF STRUCTURE AND AT THE BEST ELIGIBLE FOR DEPRECIATION AS BUILDI NG WHICH IS AVAILABLE @ 10%. THE A.O. GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE. THE APPELLANT FILED ONLY COPY OF BILL BUT HAD NOT PROVED THAT CHEMICAL STORAGE TA NK MEANT FOR POLLUTION PLANT. THUS, HE DISALLOWED THE DEPRECIATION OF RS.6,77,828/- AND ON LY ALLOWED DEPRECIATION @ 10%. THE CIT(A) CONFIRMED THE ADDITION BY OBSERVING THE OBSE RVATION OF THE A.O. REMAINED UNCONTROVERTED AT THE APPELLANT STAGE. THUS, HE HA D NOT INTERFERED IN THE ORDER OF THE A.O. THE A.R. OF THE APPELLANT CONTENDED THAT THIS IS A PART OF THE POLLUTION PLANT . THE POLLUTION PLANT CANNOT BE USED INDEPENDENTLY. THER EFORE, 100% DEPRECIATION IS ALLOWABLE ON IT. LD. CIT D.R. VEHEMENTLY RELIED UP ON THE ORDER OF THE CIT(A) AND REQUESTED TO CONFIRM THE ADDITION. AFTER CONSIDERI NG THE FACTS OF THE CASE AND NATURE OF THE ASSETS, IT IS FOUND THAT WITHOUT STORAGE TANK, THE POLLUTION PLANT CANNOT BE RUN. IT IS PART AND PARCEL OF THE POLLUTION PLANT. THE AUDITO R HAD CERTIFIED THESE ASSETS AS ALLOWABLE DEPRECIATION @ 100%. FURTHER, LD. A.O. A LLOWED THE 100% DEPRECIATION ON REMAINING POLLUTION PLANT. THUS, WE REVERSE THE OR DER OF THE CIT(A) AND ALLOW THE ASSESSEES APPEAL. ITA NO. 3460/AHD/15 [DCIT VS. M/S. ASIAN TUBES LTD .] A.Y. 2012-13 - 4 - WE THEREFORE ADOPT THE VERY REASONING AS EXTRACTED HEREINABOVE TO REJECT REVENUES LATTER INSTANT GROUND AS WELL SEEKING TO REVIVE THE IMPUGNED DEPRECIATION DISALLOWANCE OF STORAGE TANK. 4. THIS REVENUES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 11 TH DAY OF JANUARY, 2018.] ( PRAMOD KUMAR ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER AHMEDABAD: DATED 11/01/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0