MULTIPACK SYSTEMS P. LTD, MUMBAI V. ADDL CIT RG 2(2), MUMBAI

ITA 6517/MUM/2012

• Counselvise Citation: 651719914 RSA 2012
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 29-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: KINJAL BHUTA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI . . , . . , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI B.R.BASKARAN, ACCOUNTANT MEMBER ITA NO.6517/MUM/2012 (A.Y.2009-10) M/S.MULTIPACK SYSTEMS PVT. LTD., ROHIT CHAMBERS, JANMABHOOMI MARG, FORT, MUMBAI 400001 PAN : AAACM3013 (APPELLANT ) VS. ADDL. COMMISSIONER OF INCOME TAX, RANGE 2(2), ROOM NO.548, 5 TH FLOOR, AAYKAR BHAVAN, MK ROAD, MUMBAI 400 020 (RESPONDENT) APPELLANT BY : SHRI KINJAL BHUTA RESPONDENT BY : SHRI PR EMANAND J. DATE OF HEARING : 05/01/2015 DATE OF PRONOUNCEMENT : 05 /01/2015 ORDER PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST ORDER PASSED BY LD. CIT(A)-5, MUMBAI DATED 23.08.2012 FOR THE ASSESSMENT YEAR 2009-10. GROUNDS OF APPEAL READ AS UNDER: 1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 23,08 ,515/- ON ACCOUNT OF UNUTILIZED CENVAT CREDIT ON CLOSING STOCK AND RS.46 ,86,240/- ON ACCOUNT OF UNUTILIZED CENVAT CREDIT ON SERVICE TAX AND DIRECTI NG THE AO TO RECOMPUTE THE PROFIT AFTER MAKING ADJUSTMENTS WITH REFERENCE TO O PENING STOCK, CLOSING STOCK, PURCHASES AND SALES. YOUR APPELLANTS SUBMIT THAT TH E SAID AMOUNTS ARE NOT THE INCOME OF YOUR APPELLANTS AND THEREFORE THE SAM E OUGHT NOT TO BE ADDED TO YOUR APPELLANTS INCOME, AND THAT THE RECOMPUTATION OF PROFIT IS ALSO NOT REQUIRED TO BE DONE. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FA ILED TO APPRECIATE THAT YOUR APPELLANTS, FOR THE PURPOSE OF VALUATION OF IN VENTORIES, HAVE ADOPTED THE INCLUSIVE METHOD OF VALUATION PRESCRIBED U/S.145A O F THE INCOME-TAX ACT 1961 AND NO SUCH ADJUSTMENTS WITH REFERENCE TO OPENING S TOCK, CLOSING STOCK, PURCHASES AND SALES ARE REQUIRED. ITA NO.6517/MUM/2012 (A.Y.2009-10) 2 2. AT THE OUTSET IT WAS SUBMITTED BY LD. AR THAT TH IS ISSUE IS COVERED BY THE EARLIER ORDER OF THE TRIBUNAL RENDERED IN RESP ECT OF ASSESSMENT YEARS 2006-07 AND 2008-09. REFERENCE WAS MADE TO THE FOL LOWING ORDERS: I). ITA NO.116/MUM/2012, A.Y. 2008-09, ORDER DATED 25/07/2013 IN THE CASE OF M/S. MULTIPACK SYSTEMS PVT. LTD. (II). ITA NOS. 4453 & 4454/MUM/2010, A.Y., 2006-07 ORDER DATED 30/09/2011. 2. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY A.O AND LD. CIT(A). 3. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. IN RESPECT OF A.Y 2006-07, THE AS SESSEE HAD RAISED SIMILAR ISSUE WHICH HAS BEEN DEALT WITH BY THE TRIBUNAL AS PER THE FOLLOWING OBSERVATION. 2. IN THIS APPEAL, THE ASESSSEE RAISED THE FOLLOWI NG GROUND OF APPEAL: 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDI TION MADE BY THE AO OF RS. 19,89,893/- ON ACCOUNT OF UNUTILIZED CENVAT CREDIT AND RS.17,09,547/- ON ACCOUNT OF UNUTILIZED CENVAT CREDIT ON SERVICE TAX AND DIRECTING THE AO TO RECOMPUTE THE P ROFIT AFTER MAKING ADJUSTMENTS WITH REFERENCE TO OPENING STOCK, CLOSING STOCK, PURCHASES AND SALES. YOUR APPELLANTS SUBMIT THAT THE SAID AMOUNTS ARE NOT THE INCOME OF YOUR APPELLANTS AND T HEREFORE THE SAME OUGHT NOT TO BE ADDED TO YOUR APPELLANTS INC OME, AND THAT THE RECOMPUTATION OF PROFIT IS ALSO NOT REQUIRED TO BE DONE. THE LEARNED CITA) FAILED TO APPRECIATE THAT YOUR AP PELLANTS, FOR THE PURPOSE OF VALUATION OF INVENTORIES, HAVE ADOPT ED THE INCLUSIVE OF VALUATION PRESCRIBED U/S 145A OF THE A CT AND NO SUCH ADJUSTMENTS WITH REFERENCE TO OPENING STOCK, C LOSING STOCK, PURCHASES ARID SALES ARE REQUIRED. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E AO NOTICED THAT THE ASSESSEE HAD UNUTILIZED CENVAT CREDIT OF RS. 31,71,944/- ON ACCOUNT OF RAW MATERIAL ITA NO.6517/MUM/2012 (A.Y.2009-10) 3 AND RS. 28,41,773/- ON ACCOUNT OF SERVICE TAX, WHIC H HAS NOT BEEN OFFERED FOR TAXATION. BEFORE THE AO THE ASSESSEE EXPLAINED THAT IT WAS FOLLOWING INCLUSIVE METHOD OF VALUATION OF STOCK AND HAD VALUED THE STO CK INCLUSIVE OF EXCISE DUTY SALES TAX AND, THEREFORE, THERE WAS NO NEED TO INCL UDE MODVAT, EXCISE DUTY AND SALES TAX TO THE VALUE OF CLOSING STOCK. HOWEVER, THE AO REJECTED THE CONTENTIONS OF THE ASSESSEE BY HOLDING THAT CENVAT CREDIT WAS IN THE NATURE OF INCOME, WHICH BECOMES DUE TO THE ASSESSEE ON THE DA TE WHEN INPUT WAS ENTERED IN THE FACTORY PREMISES. THE ONUS FOR WORKI NG OUT THE CENVAT CREDIT WAS ALSO CAST ON THE ASSESSEE WHICH CLEARLY INDICAT ED THAT WHATEVER THE CREDIT DETERMINED BY THE ASSESSEE AS PER THE EXCISE RULES AND ENTERED IN THE EXCISE RECORDS, THE CREDIT BECAME FINAL AND THE INCOME IN THE FORM OF CREDIT IS ACCRUED TO THE ASSESSEE ON THE DATE OF RECEIPT OF THE INPUT SERVICES OR PRODUCT. ACCORDINGLY, THE AO MADE ADDITION OF RS.19,89,893/- ON ACCOUNT OF UNUTILIZED CENVAT CREDIT AND RS. 17,09,547/- ON ACCOUNT OF UNU TILIZED CENVAT CREDIT ON SERVICE TAX. AGGRIEVED, THE ASSESSEE CARRIED THE MA TTER IN APPEAL BEFORE THE CIT(A). 3. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND RELYING ON THE DECISIONS OF THE ITAT INCLUDING THE DECISION OF JB CHEMICALS AND PHARMACEUTICALS LTD. [2006] 10 SOT 362 (MUM) DIRECT ED THE AO TO RECOMPUTE THE PROFITS AFTER MAKING ADJUSTMENTS WITH REFERENCE TO OPENING STOCK, CLOSING STOCK, PURCHASES AND SALES. STILL, AGGRIEVED, THE A SSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4 BEFORE US, THE LEARNED REPRESENTATIVES OF THE PAR TIES AGREED THAT THIS ISSUE IS COVERED BY THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MAHAVIR ALLUMINIUM LTD. (2008) 297 ITR 77 (DEL) AND CIT VS. MAHALAXMI GLASS WORKS P. LTD., [2009) 318 ITR 116 (BORN.). SECTION 145A OF THE ACT MANDATES THAT ADJUSTMENTS ON ACCOUNT OF TAX, CESS OR FEE FOR THE PURPOSE OF VALUATION HAS TO BE DONE ON PURCHASE AND SALE OF GOODS AND INVENT ORY. THE HONBIE DELHI HIGH COURT IN CIT VS. MAHAVIR ALLUMINIUM LTD. (2008 ) 297 1TR 77 (DEL.) HELD AS UNDER:-. HELD WHENEVER ANY ADJUSTMENT IS MADE IN THE VALUAT ION OF INVENTORY, THIS WILL AFFECT BOTH THE OPENING AS WELL AS THE C LOSING STOCK. IF ANY ADJUSTMENT WAS REQUIRED TO BE MADE BY A STATUTE, E FFECT SHOULD HE GIVEN TO IT IRRESPECTIVE OF ANY CONSEQUENCES ON THE COMPUTATION OF INCOME FOR TAX PURPOSES... RESPECTFULLY FOLLOWING THE ABOVEMENTIONED DECISION, WE SET ASIDE THE ORDER OF THE CIT(APPEALS) ON THIS ISSUE AND REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE ISSUE UNDER CONSIDE RATION FOLLOWING THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF MAHAVIR ALUMINIUM LTD. (SUPRA). 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.6517/MUM/2012 (A.Y.2009-10) 4 3.1 IN RESPECT OF ASSESSMENT YEAR 2008-09 THE TRIBU NAL HAS FOLLOWED THE AFOREMENTIONED DECISION WITH THE FOLLOWING OBSERVAT IONS: 8.WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THE ISSUE RAISED IN THIS APPEAL STANDS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA). RESPECTFULLY FOLLOWING THE ABOV E ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER BACK THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE ISSUE UNDER CONSIDERATION FOLLOWING THE JUDGMENT OF THE HONBLE HIGH COURT IN THE CASE OF CIT VS. MAHAVIR ALLUMINIUM LTD. (2008) 297 ITR 77 (DEL) AND ALSO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MAHALAXMI GLASS WORKS P. LTD. (2009) 318 ITR 116(BOM). 3.2 IN THIS VIEW OF THE SITUATION RESPECTFULLY FOLL OWING THE AFOREMENTIONED ORDERS OF THE TRIBUNAL RENDERED IN ASSESSEES OWN C ASE WE ALSO SET ASIDE THE ORDER PASSED BY LD. CIT(A) AND RESTORE THE MATTER T O THE FILE OF AO WITH A DIRECTION TO DECIDE THE ISSUE RAISED IN THE PRESEN T APPEAL AS PER DIRECTIONS GIVEN BY THE TRIBUNAL IN RESPECT OF A.Y 2006-07 AND 2008-09. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS CONSIDERED TO BE ALLOWED FOR STATISTICAL PURPOSE IN THE MANNER AFORE SAID. ORDER PRONOUNCED IN THE OPEN COURT ON 05/01/2015 ! '#$ % &' 05/01/2014 # ! ( SD/- SD/- ( . . /B.R.BASKARAN ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; & DATED 05/01/2015 ITA NO.6517/MUM/2012 (A.Y.2009-10) 5 ! !! ! )*+ )*+ )*+ )*+ ,+$* ,+$* ,+$* ,+$* / COPY OF THE ORDER FORWARDED TO : 1. -. / THE APPELLANT 2. )/-. / THE RESPONDENT. 3. 0 ( ) / THE CIT(A)- 4. 0 / CIT 5. +( )* , , / DR, ITAT, MUMBAI 6. (1 2 / GUARD FILE. / BY ORDER, /+* )* //TRUE COPY// 3 33 3 / 4 4 4 4 5 5 5 5 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . ./ VM , SR. PS