The DCIT, Circle-4(1)(2), Ahmedabad V. Transformers and Rectifiers (India) Ltd., Ahmedabad

ITA 505/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8038 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 05-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 145

Judgement Text

ITA NO. 505 / AHD/20 1 5 A.Y. 20 11 - 12 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA , ACCOUNTANT MEMBER AND SHRI S.S. GODARA , JUDICIAL MEMBER I TA NO. 505 /AHD /201 5 ASSESSMENT YEAR: 20 11 - 12 DY. COMMISSIONER OF INCOME TAX, VS. TRANSFORMERS & RECTIFIERS (INDIA) CIRCLE 4(1)(2), AHMEDABAD. LIMITED, S. NO.344/350, OPP. PWD STORE, SARKHEJ - BAVLA HIGHWAY, CHANGODAR, TA. SANAND, AHM E DABAD. [PAN A ACCT 8243 P ] (APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI P RASOO N KABRA, D.R. RESPONDENT BY : NONE DATE OF HEARING : 2 2 . 11 . 20 17 DATE OF PRONOUNCEMENT : 11 . 12 .2017 O R D E R PER N.K. BILLAIYA, A CCOUNTANT MEMBER WITH T H IS APPEAL THE REVENUE H A S CHALLENGED COR RE CTNESS OF THE ORDER OF CIT(A) - 8, AHMEDABAD DATED 08 .12.2014 PERTAINING TO ASSESSMENT YEAR 20 11 - 12 . 2. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE MADE UNDER SECTION 145A OF THE INCOME TAX A CT , 1961 ( THE ACT HEREINAFTER) . 3. THE ASSESSEE DECLARED TOTAL INCOME AT RS.52.71 CRORES BY FILING RETURN OF INCOME ON 22.09.2011. T HE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE . DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT T HE ASSESSEE HAS SHOWN THE AMOUNT RECEIVABLE ON ACCOUNT OF UN UTILISED/ CLOSING BALANCE ON ACCOUNT OF MODVAT/CENVAT CREDIT IN THE TAX AUDIT REPORT. THE ASSESSING OF F ICER NOTICED THAT THE SAME WAS NOT INCLUDED IN THE VALUE OF CLOSING STOCK. INVOKING PROVISIONS OF SECTION 145 A OF THE ACT THE ASSESSING OFFICER FORM ED THE BELIEF THAT THE VALUE OF THE CLOSING ITA NO. 505 / AHD/20 1 5 A.Y. 20 11 - 12 PAGE 2 OF 3 STOCK HAS TO BE ADJUSTED AS PER THE PROVISIONS OF SECTION 145A OF THE A CT . THE ASSESSING O FFICER ACCORDINGLY M A DE ADDITION OF RS.76,66,255/ - . 4. ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) AND EXPLAINED THAT IT IS FOLLOWING EXCLUSIVE METHOD OF ACCOUNT BY WHICH IT IS CREDITING MODVAT/CENVAT SEPARATELY AND THE SAME I S NOT CHA R GED TO PROFIT & LOSS ACCOUNT. THEREFORE, THERE IS NO REASON WHY THE SAME SHOULD BE ADJUSTED IN THE VALUE OF CLOSING STOCK. 5. AFTER CONSIDERING THE FACTS AND SUBMISSIONS, THE CIT(A) FOUND THE METHOD O F ACCOUNTING IN LINE WITH THE GUIDELINES ISSU ED BY THE ICAI AND ACCORDINGLY DIRECTED T HE AS S ES S ING O FFICER TO DELETE T HE ADDITION. 6. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED TH E FINDINGS OF THE ASSESSING OFFICER. PER CONTRA, LEARNED COUN SEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STA T ED BEFORE THE LOW E R AUTHORITIES. 7. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. WE FIND FORCE IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. THE ASSESSEE HAS BEEN CONSIST ENTLY ACCOUNTING FOR THE RAW MATERIAL AND OTHER INPUTS PURCHASED AS PER EXCLUSIVE METHOD I .E. BILLED COST MINUS AMOUNT OF INPUT TAX CREDIT S AVAILABLE /AVAILED OF. CORRESPONDINGLY, THE STOCK OF UNCONSUMED MATERIALS IS ALSO VALU ED AS PER EXCLUSIVE METHOD. IN OUR CONSIDERED VIEW, IF THE PROVISIONS OF SECTION 145A HAS TO BE FOLLOWED, THE PURCHASES WOULD HAVE TO BE ADJUSTED FOR T HE DUTY / TAX CREDIT S AND CORRESPONDINGLY UNCONSUMED STOCK OF MATERIALS WOULD ALSO BE VALUED AT BILLED COST. IN ANY CASE , PARITY HAS T O BE MAIN TAINED AND WHILE MAKING THE ADDITION ON ACCOUNT OF UNUTILISED MODVAT/CENVAT CREDIT , IT DISTURBS THE PARTY OF ACCOUNTING . WE ALSO FIND THAT TH E ASSESSEE HAS ALSO GIVEN A STATEMENT SHOWING INCLUSIVE METHOD AND EXCLUSIVE METHOD UNDER SECTION 145A OF THE ACT VIDE ANNEXURE TO FORM 3CD BY WHICH IT HAS PROVED THAT EVEN IF INCLUSIVE METHOD OF ACCOUNTING HA S BEEN FOLLOWED BY THE ASSESSEE , THERE WOULD NOT HAVE BEEN ANY IMPACT ON THE PROFIT OF THE ASSESSEE FOR THE ASSESSMENT YEAR UND ER CONSIDERATION . 8. CONS IDERING THE FACT IN TOTALITY , WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE CIT(A). ITA NO. 505 / AHD/20 1 5 A.Y. 20 11 - 12 PAGE 3 OF 3 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ( OR DER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF DECEMBER , 2017 ) SD/ - SD/ - S.S. GODARA N.K. BILLAIYA ( JUDICIAL MEMBER) ( ACCOUNTANT MEMBER) AHMEDABAD, THE 11 TH DAY OF DECEMBER , 201 7 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT (A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER E COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD