DCIT 3(2), MUMBAI V. LAFARGE INIDA P.LTD, MUMBAI

ITA 4928/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88700 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-03-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 31-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Section: 145

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A BENCH , , BEFORE S/SH. I P BANSAL,JUDICIAL ME MBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.4928/MUM/2012, ! ! ! ! ' ' ' ' / ASSESSMENT YEAR-2000-01 DCIT 3(2), R.NO.674, 6TH FLOOR, AAYKAR BHAVAN, M K ROAD, MUMBAI-400020 VS M/S LAFARGE INDIA LTD., 14TH FLOOR, BAKHWAR, NARIMAN POINT, MUMBAI-21 PAN:AAACL4159L ( #$ / ASSESSEE) ( %&#$ / RESPONDENT) ' ( / REVENUE BY :SHRI NEIL PHILIP !)* !)* !)* !)* ( ( ( ( /ASSESSEE BY :SHRI DHANESH BAFNA & MS. HIRALI DESAI ! ! ! ! ' '' ' *+ *+ *+ *+ / DATE OF HEARING :30 - 03 -2015 ,-' ' *+ / DATE OF PRONOUNCEMENT :30 -03-2015 ! ! ! ! , 1961 1961 1961 1961 ' ' ' ' 254 254 254 254( (( (1 11 1) )) ) *6* 7 *6* 7 *6* 7 *6* 7 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) ! ! ! ! PER RAJENDRA, AM - CHALLENGING THE ORDER DT.21.05.2012OF THE CIT(A)-4, MUMBAI,ASSESSING OFFICER(AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ID. CIT(A) HAS ERRED IN ALLOWING THE ADDITION MADE BY THE AO OF RS.79,42,75 6/- IN RESPECT OF MODVAT ELEMENT TO THE CLOSING STOCK'. 2.'THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3.'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY'. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF MANUFAC TURING OF CEMENT.IN THIS CASE ASSESSMENT WAS COMPLETED U/S.143(3)R.W.S.147 OF THE ACT ON19.0 9.2005,DETERMINING THE INCOME OF THE ASSESSEE AT RS.(-)68.65 CRORES.DURING THE ASSESSMEN T PROCEEDINGS,THE AO ADDED BACK AN AMOUNT OF RS.79.42 LAKHS ON ACCOUNT OF UNUTILIZED MODVAT C REDIT TO THE TOTAL INCOME OF THE ASSESSEE.IN THE APPELLATE PROCEEDINGS,THE FIRST APPELLATE AUTHO RITY(FAA),UPHELD THE ACTION OF THE AO.THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL.VI DE ITS ORDER DATED 09.12.2009,THE TRIBUNAL RESTORED BACK THE MATTER TO THE FILE OF THE AO TO C ONSIDER REWORKING OF DEDUCTION U/S.145A OF THE ACT KEEPING IN VIEW THE DECISION OF L&T DEMAG PLAST IC MACHINERY P LTD. AND THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF MAHALAKSHM I GLASS WORKS P LTD..ACCORDINGLY,THE AO DIRECTED THE ASSESSEE TO FILE SUBMISSION IN THAT REGARD.THE ASSESSEE STATED THAT ANNEXTURE H OF THE TAX AUDIT REPORT,THAT FROM THE REPORT IT WAS CL EAR THAT IMPACT OF SECTION 145 A WAS NIL.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,THE AO HELD THAT THE ASSESSEE WAS A NEW COMPANY,THAT IT WAS NOT HAVING ANY OPENING BALANCE, THAT ADJUSTMENT IN RELATION TO PURCHASE,SALES AND CLOSING STOCK AS PER SECTION 145A WERE MADE,THA T THE ANNEXTURE OF THE AUDIT REPORT WAS CONVENIENT REPRESENTATION AS THE CLOSING STOCK IN T HAT REPORT HAD NO FINISHED GOODS.AS PER THE AO THE ASSESSEE DID NOT GIVE COMPLETE BREAK UP OF CLOS ING STOCK AND ELEMENT OF EXCISE DUTY OR ANY OTHER CESS.AS A RESULT,THE AO DID NOT GIVE ANY RELI EF TO THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).BEFORE HIM IT WAS CONTENTED THAT TH E AO HAD MADE ADDITION OF RS.79.42 LAKHS, ITA/4928/MUM/2012,AY.2000-01,LIPL 2 THAT SAME REPRESENTED RS.9.71 LAKHS UNUTILIZED MODV AT CREDIT ON CAPITAL GOODS AND RS.69.70 LAKHS UNUTILIZED MODVAT CREDIT ON OTHER GOODS,THAT REPORTING IN CLAUSE 12(B)OF THE FORM 3CD WAS REQUIRED ONLY IN RESPECT OF SUCH PURCHASES SALES O R INVENTORY WHICH WERE NOT VALUED AS PER SECTION 145A OF THE ACT,THAT THE ASSESSEE HAD VALUE D THE CLOSING STOCK INCLUDING DUTY,THAT IT DID NOT DEVIATE FROM THE METHOD PRESCRIBED U/S.145A OF THE ACT,THAT AS PER CLAUSE 12(A)OF FORM 3CD THERE WAS NO REQUIREMENT TO REPORT CLOSING STOCK OF FINISHED GOODS IN ANNEXTURE TO CLAUSE 12(B)OF FORM 3CD,THAT THE OBSERVATION OF THE AO WERE INCORR ECT,THAT THE AO HAD NOT CALLED FOR ANY INFORMATION,THAT BY VALUING THE CLOSING STOCK FINIS HED GOODS INCLUSIVE OF THE EXCISE DUTY ELEMENT THE ASSESSEE HAD FULLY COMPLIED WITH THE PROVISIONS OF SECTION 145A OF THE ACT,THAT NO FURTHER ADJUSTMENT WAS WARRANTED. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND THE ASSESSMENT ORDER,HE HELD THAT THE NET EFFECT OF DEBIT AND CREDIT ON ACCOUNT OF SALES TAX AND MODVAT WAS NIL IF INCLUSIVE SYSTEM OF ACCOUNTING WAS FOLLOWED FOR ACCOUNTING OF SALES TAX AND MODVAT.HE PREPARED BELOW MENTIONED CHART WITH REGARD TO MODVAT ADJUSTMENT: 'PURCHASES- INCREASE BY RS. 10,78,27,230 SALES TAX PAID RS. 20,84,15,973 TOTAL DEBIT(A) RS. 31,62,43,203 SALES-INCREASE BY RS.20,84,15,973 CLOSING STOCK-INCREASE BY RS. 42,40,470 CONSUMPTION OF RAW MATERIAL AND STORES -INCREASE BY RS. 10,35,86,760 TOTAL CREDIT (B) RS. 31,62,43,203 NET IMPACT ON TAXABLE INCOME (A)-(B) RS. NIL' THE FAA FURTHER STATED THAT FROM THE AUDIT REPORT P REPARED U/S.44AB OF THE ACT IT WAS CLEAR THAT ON ACCOUNT OF SALES TAX AND MODVAT THERE WAS NO NEE D TO MAKE FURTHER ADDITION U/S.145A OF THE ACT.HE REPRODUCED THE ANNEXTURE II OF THE REPORT PR EPARED U/S.44AB OF ACT.FINALLY,HE HELD THAT NO ADDITION WAS REQUIRED TO BE MADE ON ACCOUNT OF S ALES TAX AND MODVAT,THAT ADDITION MADE BY THE AO WAS TO BE DELETED. 4. BEFORE US,DEPARTMENTAL REPRESENTATIVE(DR)SUPPORTED THE ORDER OF THE AO.AUTHORISED REPRESENTATIVE(AR) STATED THAT NO ADDITION WAS REQU IRED TO BE MADE ON ACCOUNT OF SALES TAX OR MODVAT.HE RELIED UPON THE CASES OF DELIVERED BY THE HONBLE BOMBAY HIGH COURT. SUPPORTED THE ORDER OF THE FAA AND RELIED UPON THE CASE OF MAHAL AKSHMI GLASS WORKS P LTD.(318ITR116). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE AO HAD MADE THE ADDITION,AS SHE WAS OF THE OPINION THA T AUDIT REPORT WAS CONVENIENT REPRESENTATION OF THE ACCOUNTS OF THE ASSESSEE.IT IS FOUND THAT THE F AA HAD ANALYSED THE INCLUSIVE METHOD OF ACCOUNTING FOR ARRIVING AT THE NET EFFECT OF CREDIT AND DEBIT OF SALES TAX AND MODVAT. AFTER CONSIDER THE SAME,HE HAD ARRIVED AT THE CONCLUSION THAT THERE WAS NO NEED TO MAKE ANY FURTHER ADDITION.HE HAD ALSO TAKEN NOTE OF ANNEX II OF THE AUDIT REPORT.IN OUR OPINION,WHEN THE NET EFFECT WAS NIL AFTER CONSIDERING THE DEBIT AND CREDIT SIDE S OF SALES-TAX AND MODVAT THEN THERE IS NO NEED TO INTERFERE WITH THE ORDER OF THE FAA.SO,CONFIRMIN G HIS ORDER,WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEAL FILED B Y THE AO STANDS DISMISSED. 9*: !)* + ; < ' 6 != ' * >?. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH ,MARCH,2015. 7 ' ,-' A B! 30 C,2015 - ' 6 F ITA/4928/MUM/2012,AY.2000-01,LIPL 3 SD/- SD/- ( /I P BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, B! /DATE:30.03.2015 SK 7 77 7 ' '' ' %*G %*G %*G %*G HG'* HG'* HG'* HG'* / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / #$ 2. RESPONDENT / %&#$ 3. THE CONCERNED CIT(A)/ I J , 4. THE CONCERNED CIT / I J 5. DR A BENCH, ITAT, MUMBAI / GK6 %*! , , . . . 6. GUARD FILE/ 6 9 &G* %* //TRUE COPY// 7! / BY ORDER, L / > DY./ASST. REGISTRAR , /ITAT, MUMBAI.