MAHINDRA SONA LTD, MUMBAI V. DCIT CIR 2(2)(OSD), MUMBAI

ITA 3543/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3263 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 18-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2013
• Court: TRIBUNAL
• Assessee Lawyers: PRASAD BAPAT

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI MAHAVIR SINGH , JM ./ ITA NO. 35 43 / MUM/20 1 3 ( / ASSESSMENT YEAR : 20 0 9 - 20 10 ) MAHIND RA SONA LIMITED, GATEWAY BUILDING, APOLLO BUNDER, MUMBAI - 400001 VS. JCIT, CIRCLE - 2(2)(OSD), MUMBAI ./ ./ PAN/GIR NO. : A A ACM 3524 A ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI PRASA D BAPAT /REVENUE BY : SHRI SANJEEV JAIN / DATE OF HEARING : 29 /0 3 /2016 / DATE OF PRONOUNCEMENT 08/06 /201 6 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE ASSESSEE A GAINST THE ORDER OF CIT(A) - MUMBAI, FOR THE ASSESSMENT YEAR 20 0 9 - 2010 . 2. IN THIS APPEAL THE ASSESSEE IS AGGRIEVED BY THE ACTION OF CIT(A) IN CONFIRMING ADDITION MADE ON ACCOUNT OF CENVAT CREDIT AND VAT SET OFF TO THE TUNE OF RS.2,36,71,295/ - TO THE CLOSING INVENTORY. 3 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. DURING THE COURSE OF ASSESSMENT THE AO INCREASED THE PROFITS BY ADDING CENVAT CREDIT AND VAT SET OFF TO THE TUNE OF RS.2,36,71,295/ - TO THE CLOSING INVENTORY ON THE CONTENTION THAT THERE IS A DEVIATION FROM THE METHOD OF VALUATION PRESCRIBED U/S.145A. HOWEVER, T HE AO DID NOT ALLOW SIMILAR ITA NO. 3 5 43 /13 2 ADJUSTMENTS TO CENVAT CREDIT CARD AND VAT SET OFF OF RS.3,82,53,243/ - TO THE VALUE OF OPENING INVENTORY. 4. BY THE IMPUGNED ORDER THE CIT(A) UPHELD THE ADDITION MADE BY THE AO WITHOUT DIRECTING THE AO TO GIVE SIMILAR CREDIT IN RESPECT OF OPENING INVENTORY. AGAINST THIS ORDER OF CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. LD. AR INVITED OUR ATTENTION TO THE ORDER OF CIT(A) FOR THE ASSESSMENT YE AR 2005 - 06 AND 2006 - 07, WHEREIN CIT(A) HAS RESTORED THE MATTER BACK TO THE FILE OF AO FOR GIVING DUE ADJUSTMENT OF CENVAT CREDIT IN THE VALUE OF OPENING STOCK. 6. SIMIL AR ISSUE HAS BEEN DECIDED BY COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF HAWKINS C OOKERS LTD. , ITA NO.505/MUM/2004, ORDER DATED 11 - 8 - 2008 [2008 - (ID2) - GJX - 0272 - TBOM ], WHEREIN THE TRIBUNAL HELD AS UNDER : - ON CONSIDERATION OF SECTION 145A, ABOVE MEMORANDUM AND CBDT CIRCULAR EXPLAINING THE PROVISIONS SECTION 145A AND ABOVE JUDGMENT OF THE DELHI HIGH COURT WE NOTED THAT WHEN THE ADJUSTMENTS ARE MADE IN THE VALUATION OF INVENTORIES, THIS WILL AFFECT BOTH THE OPENING AS WELL AS CLOSING STOCK. WHATEVER ADJUSTMENT IS MADE IN THE VALUATION OF CLOSING STOCK, THE SAME WILL BE REFLECTED IN THE OPENI NG STOCK ALSO IRRESPECTIVE OF ANY CONSEQUENCES ON THE COMPUTATION OF INCOME FOR TAX PURPOSES. WE FURTHER NOTICED THAT SECTION 145A STARTS WITH THE NON - OBSTANTE CLAUSE 'NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION 145'. THEREFORE, TO GIVE E FFECT TO SECTION 145A, THE OPENING STOCK AS ON 1.4.98 WILL HAVE TO BE INCREASED BY ANY TAX, DUTY, CESS OR FEE ACTUALLY PAID OR INCURRED WITH REFERENCE TO SUCH STOCK IF THE SAME HAS NOT BEEN ADDED FOR THE PURPOSE OF VALUATION IN THE ACCOUNTS. THE AO IS DIRE CTED TO GIVE THE EFFECT OF SECTION 145A AS PER ABOVE DISCUSSION. 7. SIMILAR VIEW HAS BEEN TAKEN BY HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S THE MAHALAXMI GLASS WORKS PVT. LTD., 2009 - (IT1) - GJX - 0104 - BOM, VIDE ORDER DATED 1 - 4 - 2009. ITA NO. 3 5 43 /13 3 8 . AS PER OUR CONSIDER ED VIEW WHEN THE DUE ADDITION IS MADE BY AO BY DISTURBING THE CLOSING STOCK, NECESSARY ADJUSTMENT IS ALSO REQUIRED TO BE MADE IN THE OPENING STOCK IN RESPECT OF MODVAT CREDIT. ACCORDINGLY, WE RESTORE THIS MATTER BACK TO THE FILE OF AO FOR MAKING NECESSARY ADJUSTMENT OF CENVAT CREDIT AND VAT IN THE VALUE OF OPENING INVENTORY. WE DIRECT ACCORDINGLY. 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 08/06 / 201 6 . S D/ - ( MAH AVIR SINGH ) S D/ - ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 08/06 /201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APP ELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//