Harsh Filaments Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(2), Surat

ITA 369/AHD/2009

• Counselvise Citation: 36920514 RSA 2009
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 23-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 04-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Set aside
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH, AHMEDABAD BEFORE: SHRI D.K.TYAGI, JUDICIAL MEMBER SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO. 369/AHD/2009 ASSESSMENT YEAR 2005-06 HARSH FILAMENTS PVT. LTD. 3033, JASH TEXTILE MARKET, RING ROAD, SURAT. PAN NO. AABCH 1278F VS. INCOME TAX OFFICER, WARD 1(2), SURAT. APPELLANT RESPONDENT DATE OF HEARING 23-04-2012 DATE OF PRONOUNCEMENT 18-05-2012 / ORDER PER : A.K. GARODIA, ACCOUNTANT MEMBER THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF LD. C.I.T. (A)-I, SURAT, DATED 28.11.2008 FOR ASSESSMENT YEAR 2005-06 . 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: APPELLANT BY SHRI HARDIK VORA , A.R. RESPONDENT BY SHRI B.L.YADAV, SR.D.R. ITA NO.369/AHD/2009 , A. Y. 2005-06 2 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE LEARNED CIT (A) HAS ERRED IN CONFIRMIN G THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS. 12,994/ - ON ACCOUNT OF EXPENSES OF POWER AND FUEL PERTAINING TO EARLIER YE ARS. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT (APPEALS) HAS ERRED IN CON FIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS. 4,84,91 2/- ON ACCOUNT OF EXCISE DUTY ON CLOSING STOCK. 3. IT IS THEREFORE PRAYED THAT THE ABOVE ADDITIONS MADE BY ASSESSING OFFICER AND CONFIRMED BY CIT (A) MAY PLEASE BE DELE TED. 4. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE A NY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE APPEAL. 3. IT IS SUBMITTED BY LD. A.R. OF THE ASSESSEE THAT AS PER THE M.A. ORDER OF THE TRIBUNAL IN M.A. NO. 206/AHD/2009 DATED 21.10.2011, ONLY GROUND NO.2 HAS TO BE ARGUED. HE PLACED RELIANCE ON THE JUDGMENT OF H ONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME TAX VS. NARMADA CHEMATUR PETROCHEMICALS LTD. AS REPORTED IN 327 ITR 369. HE FURTHER SUBMITTED THAT PURCHASES ARE DEBITED TO THE P&L ACC OUNT NET OF EXCISE DUTY AND THEREFORE, EVEN IF THE EXCISE DUTY HAS TO BE ADDED IN THE VALUE OF THE CLOSING STOCK, DEDUCTION HAS TO BE ALLOWED BY WAY OF INCREA SE IN THE PURCHASE AMOUNT DEBITED TO THE P&L ACCOUNT AND THEREFORE, NO EFFECT IVE ADDITION CAN BE MADE. HE ALSO SUBMITTED THAT ON PAGE NO. 40 OF THE PAPER BOO K IS THE P&L ACCOUNT AS PER SECTION 145A I.E. INCLUSIVE METHOD AND THE PROFIT A S PER THIS METHOD IS ALSO SAME AND THEREFORE, THE ADDITION MADE BY THE LD. A.O. SH OULD BE DELETED. ITA NO.369/AHD/2009 , A. Y. 2005-06 3 4. LD. D.R. OF THE REVENUE HAS SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDER OF THE AUTHORITIE S BELOW. WE FIND THAT AS PER DETAILS GIVEN ON PAGE NO. 40 OF THE PAPER BOOK, THE CLOSING STOCK INCLUDES FINISH GOODS STOCK OF RS. 507442/- PLUS EXCISE DUTY RS. 82 166/- AND RAW MATERIALS STOCK IS OF RS. 3249,451/- PLUS EXCISE DUTY RS. 435 247/-. BUT, WE ALSO FIND THAT PURCHASES ARE DEBITED NET OF EXCISE DUTY AND THE EX CISE DUTY AMOUNT OF PURCHASE IS RS. 4,27,76,014/-. IF THE EXCISE DUTY IS TO BE ADDED IN THE CLOSING STOCK OF RAW MATERIAL THEN FOR CORRESPONDING PURCHASE OF RAW MATERIAL ALSO, DEDUCTION HAS TO BE ALLOWED FOR THE EXPENDITURE OF EXCISE DUTY EL EMENT OF PURCHASES AND THIS WILL RESULT TO NO EFFECTIVE ADDITION. IN RESPECT O F FINISH STOCK OF RS. 507442/-, FOR EXCISE DUTY ELEMENT, THE ADDITION MADE BY LD. A.O. IS RS. 82,166.- IF THE ADDITION IS MADE IN RESPECT OF EXCISE DUTY PAYABLE ON CLOSING STOCK, THEN THE SAME IS ALLOWABLE AS EXPENDITURE ON EXCISE DUTY PAY ABLE FOR CLOSING STOCK AND IF THE SAME IS ACTUALLY PAID BEFORE THE DUE DATE OF FI LING THE RETURN OF INCOME, NO DISALLOWANCE UNDER SECTION 43B IS CALLED FOR IN RES PECT OF EXCISE DUTY PAYABLE IN RESPECT OF CLOSING STOCK AND THEREFORE, NO ADDITION IS CALLED FOR IN THE PRESENT YEAR. 6. WE, THEREFORE, DECIDE THE ISSUE REGARDING EXCISE DUTY ON RAW MATERIAL IN FAVOUR OF THE ASSESSEE AND FOR THE REMAINING PART O F THE EXCISE DUTY ON STOCK OF FINISHED GOODS, WE SET ASIDE THE ORDER OF LD. CIT ( A) AND RESTORE THE MATTER BACK WITH THE FILE OF LD. A.O. FOR A FRESH DECISION. IF THE ASSESSEE IS ABLE TO ESTABLISH THAT IN THE NEXT YEAR BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME, EXCISE DUTY IS ACTUALLY PAID BY THE ASSESSEE IN RESPECT OF THE SALES OF THE NEXT YEAR OUT OF THE ITA NO.369/AHD/2009 , A. Y. 2005-06 4 OPENING STOCK, THEN NO ADDITION IS CALLED FOR IN TH E PRESENT YEAR IN RESPECT OF EXCISE DUTY ON CLOSING STOCK OF FINISHED GOODS BECA USE IN THAT SITUATION DEDUCTION UNDER SECTION 43B IS ALLOWABLE IN THE PRESENT YEAR ITSELF. THIS ISSUE SHOULD BE DECIDED BY THE A.O., AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. REGARDING THE JUDGMENT CITED BY LD. A.R. OF THE ASSESSEE RENDERED IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME TAX VS. NARMADA CH EMATUR PETROCHEMICALS LTD (SUPRA), WE FIND THAT IN THAT CASE, THE ASSESSMENT YEAR INVOLVED WAS A.Y. 1997-98 WHEREAS THE PROVISIONS OF SECTION 145A OF THE I.T.ACT, WERE INSERTED BY THE FINANCE ACT, 1998 W.E.F. 01.04 .1999 AND THEREFORE, THIS SECTION WAS NOT INVOLVED IN THAT CASE. IN THE PRES ENT CASE, THE ASSESSMENT YEAR INVOLVED IS AFTER THE INSERTION OF SECTION 145A IN THE STATUTE BOOK AND HENCE, THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE. 8. IN THE RESULT, THE APPEAL OF ASSESSEE STANDS PAR TLY ALLOWED IN THE TERMS INDICATED ABOVE BECAUSE AS PER ORIGINAL ITAT ORDER DATED 17.04.2009, OTHER GROUND WAS REJECTED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- ( D.K.TYAGI ) ( A.K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ITA NO.369/AHD/2009 , A. Y. 2005-06 5 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A) 5. ! , ' , #$ / DR, ITAT, AHMEDABAD 6. %& '( / GUARD FILE. BY ORDER/ , ) / # * ' , #$ +