The DCIT, Circle-1(1)(1), Ahmedabad V. M/s. Ahmedabad Packaging Industries Ltd., Ahmedabad

ITA 532/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6272 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 03-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: S N DIVATIA
• Keywords: Deemed to accrue or arise in india; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA NO. 532/AHD/2016 (ASSESSMENT YEAR: 2012- 13) DCIT, CIRCLE 1(1)(1), AHMEDABAD APPELLANT VS. M/S. AHMEDABAD PACKAGING INDUSTRIES LTD., A/2-326, PHASE II, GIDC IND. ESTATE, VATVA, AHMEDABAD 382 445 RESPONDENT PAN: AABCA6006A /BY REVENUE : SHRI V. K. SINGH, SR. D.R. /BY ASSESSEE : SHRI S. N. DIVATIA, A.R. /DATE OF HEARING : 17.01.2018 /DATE OF PRONOUNCEMENT : 18.01.2018 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 18.12.2015, IN CA SE NO. CIT(A)-1/DCIT,CIR- 1(1)(1)/656/2014-15, REVERSING ASSESSING OFFICERS ACTION INTER ALIA MAKING SECTION 41(1) ADDITION OF CESSATION OF LIABILITY AMOUNTING TO RS.2,15,000/- FOLLOWED BY DISALLOWANCE(ES) OF RS.9,40,688/- CLAIMED AS FACTOR Y REPAIRING EXPENSES AND UNUTILIZED CENVAT CREDITS OF RS.27,99,678/- U/S.145 A OF THE ACT, IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. ITA NO. 532/AHD/16 [DCIT VS. M/S. AHMEDABAD PACKAGI NG INDUSTRIES LTD.] A.Y. 2012-13 - 2 - 2. WE COME TO THE FIRST ISSUE OF CESSATION OF LIABI LITY U/S.41(1) OF THE ACT PERTAINING TO M/S. GUJARAT MACHINERY AMOUNTING TO R S.2,15,000/-. THE ASSESSEES BOOKS HAD SHOWN THE SAID PARTY TO HAVE SUPPLIED PLA NT AND MACHINERY IN FINANCIAL YEAR 2006-07. THE ASSESSING OFFICER MADE THE IMPUG NED ADDITION IN ASSESSMENT ORDER DATED 29.01.2015 AFTER INCLUDING THAT THE IMP UGNED LIABILITY HAD CEASED TO EXIST U/S.41(1) OF THE ACT SINCE THE RELEVANT TIME LIMITATION UNDER THE LIMITATION ACT, 1963 IN PART-1, DIVISION-I HAD EXPIRED MUCH EA RLIER. HE THEREFORE MADE THE ADDITION IN QUESTION. 3. THE CIT(A) REVERSES ASSESSING OFFICERS ACTION A S FOLLOWS: 4.3. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT OR DER AND SUBMISSION FILED BY APPELLANT. THE ASSESSING OFFICER HAS OBSERVED THAT APPELLANT HAS SHOWN OUTSTANDING LIABILITY IN THE NAME OF VARIOUS PARTIE S FOR A PERIOD EXCEEDING THREE YEARS AND SAME HAS NOT BEEN PAID OFF EVEN AFTER LAP SE OF THREE YEARS WHICH MEANS THAT LIABILITY HAS CEASED TO EXIST AS PER PART 1 OF DIVISION 1 OF THE LIMITATION ACT 1963. THE ASSESSING OFFICER HAS REFERRED TO PROVISI ONS OF SECTION 41(1) OF THE ACT AND CONTENDED THAT WHERE SOME BENEFIT IN RESPECT OF TRADING LIABILITY HAS BEEN OBTAINED BY ASSESSES, IT SHALL BE DEEMED TO BE PROF ITS AND GAINS OF BUSINESS & PROFESSION. ON THE OTHER HAND, APPELLANT HAS ARGUED THAT AS APPELLANT HAS NOT WRITTEN BACK ABOVE LIABILITY IN ITS BOOKS OF ACCOUN T AND CONTINUED TO BE SHOWN AS LIABILITY IN BOOKS OF ACCOUNT, SUCH AMOUNT CANNOT B E TAXED U/S 41(1) OF THE ACT FOR WHICH IT HAS RELIED UPON DECISIONS OF HON'BLE GUJAR AT HIGH COURT REFERRED SUPRA. IN ITS ALTERNATE SUBMISSION, APPELLANT HAS ARGUED T HAT MAJORITY BALANCES OF SUNDRY CREDITORS ARE ALREADY WRITTEN BACK IN BOOKS OF ACCO UNT IN SUBSEQUENT YEARS AND SAME ARE ALREADY OFFERED TO TAX AND IN FEW CASES, S ETTLEMENT OF DUES ARE ALREADY MADE HENCE ADDITION MADE BY ASSESSING IS NOT PROPER . 4.4. ON CAREFUL CONSIDERATION OF OBSERVATION OF ASS ESSING OFFICER AND CONTENTION OF APPELLANT, I OBSERVE THAT APPELLANT H AS SHOWN BALANCES OF OUTSTANDING CREDITORS AS LIABILITY IN ITS BOOKS OF ACCOUNT AND EVEN NOT WRITTEN BACK IN PROFIT &!TOSS ACCOUNT HENCE APPLYING PROVISIONS OF SECTION 41(1), NO SUCH ADDITION CAN BE MADE EVEN THOUGH DEBT IS TIME BARRE D OR OUTSTANDING FOR MORE THAN THREE YEARS. ON IDENTICAL FACTS, HON'BLE GUJAR AT HIGH COURT IN THE CASE OF CIT V/S BHOGILAL RAMJIBHAI ATARA [2014] 43 TAXMANN.COM 55 HAS HELD AS UNDER: 'SECTION 41(1) OF THE INCOME-TAX ACT, 1961 - REMISS ION OR CESSATION OF TRADING LIABILITY (CESSATION OF LIABILITY) - ASSESS MENT YEAR 2007-08 - IN RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08, ASSES SES HAD SHOWN A CERTAIN AMOUNT BY WAY OF HIS DEBTS - HE SUPPLIED DE TAILS OF 27 DIFFERENT CREDITORS - ASSESSING OFFICER UNDERTOOK EXERCISE TO VERIFY RECORDS OF SO CALLED CREDITORS AND FOUND THAT CREDITORS HAD NO DE ALING WITH ASSESSEE - ASSESSING OFFICER FURTHER HAVING FOUND THAT DEBTS W ERE OUTSTANDING SINCE ITA NO. 532/AHD/16 [DCIT VS. M/S. AHMEDABAD PACKAGI NG INDUSTRIES LTD.] A.Y. 2012-13 - 3 - SEVERAL YEARS APPLIED SECTION 41(1) AND ADDED ABOVE AMOUNT IN INCOME OF ASSESSEE AS DEEMED INCOME -THERE WAS NOTHING ON REC ORD TO SUGGEST THAT THERE WAS REMISSION O&CESSATION OF LIABILITY THAT T OO DURING PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2007-08 - WHETHER IN PE CULIAR FACTS OF CASE AMOUNT IN QUESTION COULD NOT BE ADDED BACK IN INCOM E OF ASSESSEE AS DEEMED INCOME UNDER SECTION 41(1) - HELD, YES [PARA 8] [IN FAVOUR OF ASSESSEE]' FURTHER, HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V/S NITIN S GARG 208 TAXMAN 16 HAS ALSO HELD AS UNDER: 'SECTION 41(1) OF THE INCOME-TAX ACT, 1961 - REMISS ION OR CESSATION OF TRADING LIABILITY -ASSESSMENT YEARS 2001-02 TO 2003 -04 AND 2006-07 - IN COURSE OF ASSESSMENT, ASSESSING OFFICER NOTICED FRO M BALANCE SHEET THAT VARIOUS CREDITORS WERE VERY OLD AND NO INTEREST HAD BEEN PAID ON THOSE LOANS - ASSESSING OFFICER GAVE VARIOUS OPPORTUNITIE S TO ASSESSES TO FURNISH DETAILS OF SUCH CREDITORS, VIZ., CONFIRMATION AS WE LL AS CREDITWORTHINESS BUT ASSESSEE FAILED TO PRODUCE NECESSARY INFORMATION AN D DETAILS IN THAT REGARD - ASSESSING OFFICER THUS MADE AN ADDITION UNDER SEC TION 41(1) IN RESPECT OF AFORESAID LIABILITIES - ON FURTHER APPEAL, TRIBUNAL DELETED ADDITION ON GROUND THAT ASSESSEE HAD CONTINUED TO SHOW ADMITTED AMOUNTS AS LIABILITIES IN ITS BALANCE SHEET AND THUS IT COULD NOT BE TREAT ED AS A CASE OF CESSATION OF LIABILITIES - WHETHER MERELY BECAUSE LIABILITIES WERE OUTSTANDING FOR LAST MANY YEARS, IT COULD NOT BE INFERRED THAT SAID LIAB ILITIES HAD CEASED TO EXIST - HELD, YES - WHETHER EVEN OTHERWISE, SINCE ASSESSE E HAD CONTINUED TO SHOW ADMITTED AMOUNTS AS LIABILITIES IN ITS BALANCE SHEE T, TRIBUNAL WAS JUSTIFIED IN DELETING IMPUGNED ADDITION MADE BY ASSESSING OFF ICER - HELD, YES [IN FAVOUR OF ASSESSEE]' FOLLOWING THE DECISIONS OF HON'BLE GUJARAT HIGH COU RT REFERRED SUPRA, DISALLOWANCE MADE ASSESSING OFFICER U/S 41(1) FOR R S. 2,15,000/- IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. 4. WE HAVE HEARD RIVAL CONTENTIONS REITERATING BOTH PARTIES RESPECTIVE STANDS. THERE IS NOT DISPUTE THAT THE ASSESSING OFFICER HAD INVOKED SECTION 41(1) OF THE ACT ON THE GROUND THAT THE RELEVANT LIMITATION PERI OD EXPIRED MUCH EARLIER THAN THE IMPUGNED ASSESSMENT YEAR. IT HAS COME ON RECORD TH AT HONBLE JURISDICTIONAL HIGH COURTS JUDGMENT IN CASE OF BHOGILAL RAMJIBHAI ATAR A (SUPRA) HAS HELD IN IDENTICAL CIRCUMSTANCES THAT THE SAID SOLE REASON DOES NOT IP SO FACTO ATTRACT SECTION 41(1) OF THE ACT. WE THEREFORE SEE NO REASON TO CONCUR WITH LEARNED DEPARTMENTAL REPRESENTATIVES VEHEMENT CONTENTION IN SEEKING TO REVIVE THE IMPUGNED ADDITION. THE REVENUES FIRST SUBSTANTIVE GROUND FAILS ACCORD INGLY. ITA NO. 532/AHD/16 [DCIT VS. M/S. AHMEDABAD PACKAGI NG INDUSTRIES LTD.] A.Y. 2012-13 - 4 - 5. REVENUES SECOND SUBSTANTIVE GROUND PLEADS THAT THE CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING DISALLOWANCE OF RS.9,40,688/- CLAIMED AS FACTORY REPAIRING EXPENSES DESPITE THE FACT THAT THE SAME A RE CAPITAL IN NATURE. LEARNED COUNSEL REPRESENTING ASSESSEE FILES BEFORE US THIS TRIBUNALS ORDER IN REVENUES APPEAL ITSELF FOR ASSESSMENT YEAR 2010-11 WHEREIN T HE CO-ORDINATE BENCH IN ITS ORDER DATED 01.05.2017 HAS CONCLUDED THAT ASSESSEES IDEN TICAL RENOVATION INVOLVING RE- PLASTERING, RE-FLOORING, REPLACEMENT OF DOORS, RE-P LUMBING ETC. COULD NOT BE TAKEN AS CAPITAL EXPENDITURE. WE FIND THAT THE ASSESSING OF FICER HAD INVOKED SECTION 30 EXPLANATION TO DISALLOW THE IMPUGNED EXPENDITURE AF TER CONCLUDING THAT THE RELEVANT REPAIRS INVOLVING PLASTERING, FLOORING, STRUCTURING ETC. AMOUNTED TO CAPITAL EXPENDITURE. LEARNED DEPARTMENTAL REPRESENTATIVE F AILS TO DISPUTE THAT THE CIT(A) HAS FOLLOWED HIS IDENTICAL FINDING IN SAID EARLIER ASSESSMENT YEAR CONCLUDING THAT THE IMPUGNED EXPENDITURE IS IN THE NATURE OF ROUTIN E WEAR AND TEAR ASSOCIATED WITH USE OF OLD FACTORY BUILDING. WE THEREFORE ADOPT CO NSISTENCY IN THE IMPUGNED ASSESSMENT YEAR AS WELL TO CONFIRM THE CIT(A)S FIN DINGS UNDER CHALLENGE QUA THIS SECOND ISSUE. 6. THIS LEAVES US WITH REVENUES THIRD SUBSTANTIVE GROUND SEEKING TO REVIVE UNUTILIZED CENVAT CREDIT ADDITION OF RS.27,99,678/- MADE BY THE ASSESSING OFFICER AFTER INVOKING SECTION 145A OF THE ACT AS R EVERSED DURING THE LOWER APPELLATE PROCEEDINGS. WE NOTICE THAT THE CIT(A)S FINDINGS UNDER CHALLENGE QUA THE INSTANT ISSUE ELABORATELY DISCUSS THE RELEVANT FACTS AS WELL AS ASSESSING OFFICERS CONCLUSION AS FOLLOWS: 6.3. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT O RDER AND SUBMISSION FILED BY THE APPELLANT. I HAVE GONE THROUGH THE FACTS AND TH E SUBMISSION OF THE APPELLANT CAREFULLY. IN THE ASSESSMENT ORDER A.O HAS OBSERVED THAT THE APPELLANT HAS NOT TAKEN INTO CONSIDERATION THE CREDIT OF VAT OF RS. 2 7,99,678/- IN VALUING THE CLOSING STOCK. THE PROVISIONS OF SECTION 145A(A)(II) OF THE ACT STIPULATES THAT THE VALUATION OF PURCHASE AND SALE OF GOODS AND INVENTORY FOR THE PURPOSE OF DETERMINING THE INCOME CHARGEABLE UNDER THE HEAD PROFIT & GAINS OF BUSINESS OR PROFESSION SHALL BE FURTHER ADJUSTED TO INCLUDE THE AMOUNT OF ANY TA X, DUTY, CESS OR FEE ACTUALLY PAID OR INCURRED BY THE ASSESSEE TO BRING THE GOODS TO T HE PLACE OF ITS LOCATION AND CONDITION AS ON DATE OF VALUATION. THE ASSESSEE HAS NOT VALUED THE CLOSING STOCK AS PER INCLUSIVE METHOD AS REQUIRED U/S. 145A OF THE A CT, THE AMOUNT OF RS. 27,99,678/- IS ADDED TO THE TOTAL INCOME OF THE ASS ESSEE. ITA NO. 532/AHD/16 [DCIT VS. M/S. AHMEDABAD PACKAGI NG INDUSTRIES LTD.] A.Y. 2012-13 - 5 - THE APPELLANT HAS SUBMITTED THAT SUCH DUTY OF VAT IF ADDED TO ENHANCE THE VALUE OF CLOSING STOCK WOULD RESULT IN ENHANCED OPE NING STOCK ON THE FIRST DAY OF THE NEXT ACCOUNTING PERIOD. SO THE NEXT YEAR'S PROF ITS WOULD GET DEPRESSED ACCORDINGLY, OVER A PERIOD OF TIME THE WHOLE EXERCI SE WOULD EVEN OUT, IN OTHER WORDS, BE REVENUE NATURAL. AT THE SAME TIME WHILE D ISTURBING THE VALUE OF THE CLOSING STOCK THE ASSESSING AUTHORITY COULD NOT CHA NGE THE METHOD OF ACCOUNTING REGULARLY EMPLOYED. THE APPELLANT HAS FURTHER SUBMI TTED WHEN THE STATUES AND THE GUIDELINES WHICH ARE MANDATORY FOR THE APPELLANT TO MAINTAIN THE BOOKS OF ACCOUNT HAVE SPECIFICALLY PRESCRIBED THE TREATMENT OF THE C ENVAT CREDIT WHICH IS UNUTILIZED AT THE END OF THE YEAR WHY WOULD THE APP ELLANT DO THE IMPRUDENT ACT OF CONTRADICTING THEM. THE APPELLANT HAS BEEN CORRECT, RIGHTEOUS AND JUDICIOUS IN SHOWING THE UNUTILIZED CENVAT CREDIT UNDER THE HEAD OF SHORT TERM ADVANCES ON THE ASSET SIDE OF THE BALANCE SHEET AND THE AO WAS ERRONEOUS IN MAKING THE ADDITION OF THE SAID CENVAT CREDIT, TREATING THE SA ME AS PART AND PARCEL OF THE CLOSING STOCK OF THE APPELLANT. THE APPELLANT HAS A LSO CITED THE VARIOUS DECISIONS OF ITAT, AHMEDABAD AND GUJARAT HIGH COURT (SUPRA). WE WOULD ALSO DRAW YOUR KIND ATTENTION THAT CIT (A) HAS DELETED THE ADDITION MAD E U/S 145A FOR UNUTILIZED BALANCE OF MODVAT FOR A.Y.2010-11. 6.4. AFTER GOING THROUGH THE FACTS OF THE CASE AND LEGAL POSITION, HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NARMADA CH EMATUR PETROCHEMICALS 327 ITR 369 (GUJ.) HAS HELD THAT UNLESS AND UNTIL THE A MOUNT OF THE DUTY IS NOT ENTERED ON ONE SIDE AS AN ITEM OF COST, IT CANNOT BE TAKEN AS A COMPONENT OF THE VALUE OF THE CLOSING STOCK ON THE EITHER SIDE. THE TRUE PURPOSE OF CREDITING THE VALUE OF UNSOLD STOCK IS TO BALANCE THE COST OF THOSE GOODS ENTERED INTO OTHER SIDE OF ACCOUNT. THERE IS AN ANOTHER DECISION OF AN HON'BLE GUJARAT HIGH C OURT PRONOUNCED IN THE CASE OF CIT VS. UNIQUE INDUSTRIES 307 ITR 350 (GUJ.),WHEREI N IT IS HELD THAT THE EXCISE DUTY, SALES TAX AND OTHER DUTIES FORM PART OF THE C LOSING STOCK WHEN THE SAME ARE INCURRED. IN THAT CASE, IT WAS NOTED THAT THE ASSES SEE HAD NOT DEBITED ANY EXCISE DUTY OR SALES-TAX TO THE PURCHASE ACCOUNT OR P&L AC COUNT. THE COURT HAS HELD THAT THE QUESTION OF INCLUDING THE EXCISE DUTY IN THE VA LUE OF STOCK ARISES ONLY IF THE PURCHASES DEBITED TO P&L ACCOUNT ARE INCLUSIVE OF E XCISE DUTY. RATHER, THE COURT HAS CLARIFIED THAT THE EXPENDITURE INCURRED ON EXCI SE DUTY BUT IF PURCHASES DEBITED ARE EXCLUSIVE OF EXCISE DUTY, THEN THE QUESTION OF INCLUDING THE SAME IN THE CLOSING STOCK ACCOUNT DOES NOT ARISE SINCE THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE BY DEBITING TO P&L ACCOUNT. SIMILARLY, IN THE PRESE NT CASE TOO, IT IS NOTED THAT THE ASSESSEE HAD NOT DEBITED ANY EXCISE DUTY OR SALES-T AX TO THE PURCHASE ACCOUNT OR P&L ACCOUNT AND THUS THE QUESTION OF INCLUDING THE EXCISE DUTY IN THE VALUE OF STOCK DOES NOT ARISES AT ALL. FURTHER, AS PER PROVISION OF SECTION 145A, ADJUSTM ENT OF DUTY TAX CESS ETC. IS NOT REQUIRED TO BE MADE ONLY IN CLOSING STOCK BU T ALSO IN OPENING STOCK PURCHASES AND SALES ALSO WHICH THE AO HAS NOT DONE. THEREFORE, HIS OWN ACTION IS NOT IN CONFORMITY WITH PROVISION OF SECTION 145A ON WHICH HE HAS RELIED. FURTHER, DURING THE COURSE OF HEARING, THE AR ALSO MADE AN A LTERNATE ARGUMENT THAT THE CLOSING STOCK WOULD BE OPENING STOCK IN THE SUCCEED ING YEAR WHICH WOULD AGAIN REDUCE THE PROFIT IN A Y 2013-14. THEREFORE, THERE WOULD BE NO LOSS TO REVENUE AS SUCH EVEN IF SUCH AMOUNT IS ADDED IN CLOSING STOCK FOR AY 2012-13. THE ENTIRE ITA NO. 532/AHD/16 [DCIT VS. M/S. AHMEDABAD PACKAGI NG INDUSTRIES LTD.] A.Y. 2012-13 - 6 - EXERCISE OF SECTION 145A WOULD BE TAX NEUTRAL; SAME HAS BEEN DULY SHOWN AND CERTIFIED BY THE TAX AUDITOR IN THE RECONCILIATION CHART IN THE TAX AUDIT REPORT. 6.5. I FIND THAT THE APPELLANT HAS SUBMITTED BEFORE THE AO THAT WHILE THE ENTIRE AMOUNT OF VAT REALIZED ON SALES WAS INCLUDED IN THE SALE AMOUNT BUT OUT OF ENTIRE AMOUNT OF EXCISE DUTY PAID ON PURCHASES, ONLY THAT PORTION OF SUCH VAT PAID WHICH WAS UTILIZED BY WAY OF MODVAT, HAD BEEN INCLUDED IN THE VALUE OF PURCHASES AND THE BALANCE AMOUNT OF MODVAT CREDIT WHICH COULD NOT BE UTILIZED IN THE PRESENT YEAR WAS SHOWN IN THE BALANCE SHEET AS AN AMOUNT RE CEIVABLE AND THIS PORTION OF RS. 27,99,678/- WAS NOT INCLUDED IN THE VALUE OF PU RCHASES. THE AO COULD NOT CONTROVERT THESE SUBMISSIONS OF THE ASSESSEE MADE B Y THE ASSESSEE. ONCE IT IS FOUND THAT THESE SUBMISSIONS OF THE ASSESSEE ARE CORRECT, IT MEANS THAT VAT PAID BUT NOT INCLUDED IN THE PURCHASES WAS SHOWN IN THE BALANCE SHEET AS VAT RECEIVABLE AND THEREFORE, THERE CANNOT BE A REASON TO MAKE ANY ADD ITION IN THE INCOME OF THE ASSESSEE BECAUSE EVEN IF WE INCLUDE SUCH VAT RECEIV ABLE IN THE VALUE OF CLOSING STOCK, THE SAME IS ALSO REQUIRED TO BE INCLUDED IN THE VALUE OF PURCHASES AND IT WILL HAVE NO IMPACTS ON THE PROFITS OF THE ASSESSEE. THE ITAT HON'BLE AHMEDABAD ITAT IN THE CASE OF ITO V/S GUJARAT PARAFINS PVT. LIMITE D (ITA NO. 2335/AHD/2011) DATED 20 TH MARCH, 2015 HAD FOLLOWED THE RATIOS OF THE GUJARAT HIGH COURT REFERRED TO ABOVE AND HAS CATEGORICALLY HELD THAT UNUTILIZED CENVAT CREDIT CANNOT BE SUBJECT MATTER OF ADDITION UNDER SECTION 145A OF TH E ACT BEING TAX NEUTRAL. CONSIDERING THE FACTS DISCUSSED HEREIN ABOVE AND RE LYING UPON DECISIONS REFERRED, SUPRA AND FOLLOWING THE DECISION OF MY PREDECESSOR, THE ADDITION OF RS.27,99,678/- MADE BY ASSESSING OFFICER IS DELETED. THE GROUND O F THE APPELLANT IS ALLOWED. 7. HEARD RIVAL CONTENTIONS. IT HAS COME ON RECORD THAT THE CIT(A) HAS FOLLOWED HIS FINDINGS IN ASSESSMENT YEAR 2010-11 DELETING AN IDENTICAL ADDITION ON THE GROUND THAT IT IS MAINLY REVENUE NEUTRAL CASE. WE FIND FROM TRIBUNALS ORDER (SUPRA) PARA 5.3 THAT THE REVENUE HAS LOST HIS IDENTICAL SU BSTANTIVE GROUND THEREIN AS WELL. THE SAID CO-ORDINATE BENCH DECIDES THE ISSUE IN ASS ESSEES FAVOUR AS UNDER: 5.3. ON PERUSAL OF THE ORDERS OF THE AUTHORITIES B ELOW AND ON CONSIDERATION OF RIVAL SUBMISSIONS ON THE ISSUE, WE FIND NO REASON T O INTERFERE WITH THE ORDER OF THE CIT(A). THE CIT(A) HAS FOUND THE ENTIRE EXERCISE TO BE REVENUE NEUTRAL. SECONDLY, TO GIVE EFFECT TO SECTION 145A, BOTH THE OPENING ST OCK AND CLOSING STOCK ARE REQUIRED TO BE SIMULTANEOUSLY BROUGHT IN PARITY AS A MATTER OF LEGITIMATE EXPECTATION. WE ALSO TAKE NOTE OF THE DECISION OF T HE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DY.CIT VS. BALVANT LALLUBHA I ROTLIWALA IN ITA NO.1885/AHD/2011 DATED 01/02/2016 RELIED UPON BY TH E ASSESSEE WHERE ON SIMILAR FACTS, ADDITION MADE UNDER S.145A WAS DELETED BY TH E ITAT. THE GUIDANCE NOTE ISSUED BY THE ICAI ALSO SUPPORTS THE CASE OF THE AS SESSEE FOR THE PROPOSITION THAT THERE IS NO IMPACT ON ULTIMATE PROFIT BY RESORTING TO EXCLUSIVE METHOD OF ACCOUNTING FOR THE PURPOSE OF VALUATION OF STOCK AS ADOPTED BY THE ASSESSEE. THE REVENUE HAS NOT BROUGHT ON RECORD ANYTHING CONTRARY TO THE ASSERTIONS MADE BY THE CIT(A) IN FAVOUR OF ASSESSEE. IN CONSEQUENCE, W E DECLINE TO INTERFERE WITH THE ORDER OF THE CIT(A). ITA NO. 532/AHD/16 [DCIT VS. M/S. AHMEDABAD PACKAGI NG INDUSTRIES LTD.] A.Y. 2012-13 - 7 - LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO REBUT THE CRUCIAL FACT THAT THERE IS NO ULTIMATE IMPACT ON ASSESSEES PROFITS AS PER ITS EXCLUSIVE METHOD OF ACCOUNTING ADOPTED FOR THE PURPOSE OF VALUATION OF STOCK. THE REVENUES INSTANT SUBSTANTIVE GROUND IS ALSO DECLINED ACCORDINGLY. 8. THIS REVENUES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 18 TH DAY OF JANUARY, 2018.] SD/- SD/- ( PRADIP KUMAR KEDIA ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 18/01/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--, , /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / , // , /0