MIRC ELECTRONICS LTD., MUMBAI V. D.C.I.T.CENTRAL CIRCLE.-37, MUMBAI

ITA 6788/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92611 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 14-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 07-10-2011
• Court: TRIBUNAL
• Keywords: Depreciation; Rule of consistency; Earning of tax free income; Reason to believe
• Section: 43B; 143(3); 14A; 263

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ./I.T.A. NO.6788/M/2011 ( AY: 2008 - 2009 ) M/S. MIRC ELECTRONICS LTD., G - 1, ONIDA HOUSE, MAHAKALI CAVES ROAD, ANDHERI (E), MUMBAI 400 093. / VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 37, MUMBAI. ./ PAN : AAACM8055A ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VIJAY MEHTA / RESPONDENT BY : SHRI YOGESH KUMAR / DATE OF HEARING : 14.5 .2015 / DATE OF PRONOUNCEMENT : 29 .5.2015 / O R D E R PER G.S. PANNU, AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A) - 41, MUMBAI DATED 5.8.2011 FOR THE ASSESSMENT YEAR 2008 - 2009 IN THE MATTER OF ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT), DATED 31.12.2010. 2. IN THIS APP EAL, ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT (A), MUMBAI ERRED IN CONFIRMING THE DISALLOWANCE AMOUNTING TO RS. 13,71,468/ - U/S 14 R.W.S RULE 8D ATTRIBUTED BY TH E ASSESSING OFFICER TOWARDS THE DIVIDEND INCOME. THE APPELLANT PRAYS THAT THE DISALLOWANCE OF RS. 13,71,468/ - U/S 14A OF THE ACT MAY KINDLY BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT (A) ERRED IN CONFIRMIN G THE ACTION OF THE ASSESSING OFFICER BY DENYING THE DEPRECIATION ON MOULDS (PLASTICS) AT THE RATE OF 30% CLAIMED BY THE APPELLANT AND RESTRICTING THE CLAIM TO THE REDUCED RATE OF 15% AND THUS ADDING A SUM OF RS. 1,55,48,775/ - TO THE TOTAL INCOME OF THE AP PELLANT. THE APPELLANT PRAYS THAT THE DEPRECIATION ON MOULDS (PLASTICS) MAY KINDLY BE ALLOWED @ 30%. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT (A) ERRED IN DIRECTING THE AO TO MAKE ADJUSTMENT IN RESPECT OF UNUTILIZED MODVAT CREDIT U/S 145A. THE HONBLE CIT (A) FAILED TO TAKE COGNIZANCE OF THE FACT THAT ADJUSTMENTS U/S 145A WAS ALREADY MADE BY THE APPELLANT AND THEREFORE, CIT (A) OUGHT TO HAVE ALLOWED THE CLAIM OF THE APPELLANT AND DELETE THE ADJUSTMENTS MADE BY THE L EARNED AO. 2 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF TV SETS, WASHING MACHINES AND AIR - CONDITIONS. ASSESSEE FILED THE RETURN OF INCOME ON 29.9. 2008 DECLARING THE TOTAL INCOME OF RS. 23,14,21,647/ - . ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT THE ASSESSED INCOME WAS DETERMINED AT RS. 25,24,95,191/ - . IN THE ASSESSMENT, ASSESSING OFFICER MADE CERTAIN DISALLOWANCES I.E., (I) DISALLO WANCE U/S 14A AMOUNTING TO RS. 13,71,468/ - ; (II) DISALLOWANCE OF RS. 1,55,48,775/ - ON ACCOUNT OF EXCESS DEPRECIATION CLAIMED; (III) DISALLOWANCE OF RS. 1,4,37,563/ - ON ACCOUNT OF MARKET RESEARCH EXPENDITURE AND (IV) DISALLOWANCE OF RS. 27,15,738/ - U/S 145A ON ACCOUNT OF MODVAT ADJUSTMENT. AGGRIEVED WITH THE AFORESAID DISALLOWANCES MADE BY THE AO, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A) . 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY , AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, CIT (A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE DISALLOWANCE OF RS. 14,37,563/ - MADE BY THE ASSESSI N G OFFICER ON ACCOUNT OF MARKET RESE ARCH EXPENSES. AGGRIEVED AND DISSATISFIED WITH THE DECISION OF THE CIT (A), ASSESSEE IS IN FURTHER APPEAL BEFORE US BY RAISING THE AFOREMENTIONED GROUNDS OF APPEAL. 5. DURING THE PROCEEDINGS BEFORE US, AT THE OUTSET, LD REPRESENTATIVE FOR THE ASSESSEE FILED A CHART, SHOWING THE DETAILS OF THE COVERED NATURE OF THE GROUNDS RAISED BY THE AS SESSEE IN ITS APP EAL. CONSIDERING THE SAME, GROUND WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORDER. 6. GROUND NO.1 RELATES TO THE DISALLOWANCE OF RS. 1 3,17,468/ - U/S 14A OF THE ACT. BRIEFLY STATED RELEVANT FACTS IN THIS REGARD ARE TH AT IN THE RETURN, ASSESSEE CLAIMED DIVIDEND INCOME OF RS. 6.82 LAKHS AS EXEMPT U/S 10(34) OF THE ACT AND MADE DISALLOWANCE OF RS. 14,858/ - VOLUNTARILY U/S 14A OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED AS TO SHOW CAUSE WHY THE DISALLOWANCE U/S 14A SHOULD NOT BE MADE AS PER THE PROVISIONS OF SECTION 14A R.W. RULE 8D OF INCOME TAX RULES, 1962. IN THIS REGARD, NOT BEING SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE, ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 1 4A R.W. RULE 8D OF THE IT RULES, 1962 AS WELL AS FOLLOWED THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GODREJ BOYCE MFG. CO. LTD (328 ITR 81) AND WORKED OUT THE DISALLOWANCE OF RS.13,71,468/ - AND ADDED BACK TO THE RETURNED 3 INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A). 7. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) UPHELD THE DECISION OF THE ASSESSING OFFICER AND DISMISSED THE ASSESSEES APPEAL ON THIS GROUND. THUS, AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN FURTHER APPEAL BEFORE US. 8. DURING THE PROCEEDINGS BEFORE US, IT WAS BROUGHT OUT BY MAKING A REFERENCE TO THE BALANCE SHEET THAT MAJOR INVESTMENTS ARE ONLY IN SUBSIDIARY COMPANIES, AND FURTHER THAT IN THE CURRENT ASSESSMENT YEAR NO FRESH INVESTMENT HAVE BEEN MADE. IT WAS ALSO SUBMITTED, ON THE BASIS OF THE BALANCE SHEET PLACED IN THE PAPER BOOK, THAT THE AGGREGATE OF SHARE CAPITAL, RESER VES AND SURPLUS AND OTHER NON - INTEREST BEARING FUNDS WAS MORE THAN THE VALUE OF INVESTMENTS IN SHARES, AND THER EFORE, NO INTEREST EXPENDITURE C OULD BE ATTRIBUTABLE TO THE INVESTMENTS , FOLLOWING THE RATIO OF THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES [2009] 313 ITR 340 (BOM.). 9. IT HAS ALSO BEEN SUBMITTED THAT IN SO FAR AS THE INVESTMENT IN SUBSIDIARY COMPANIES IS CONCERNED, THE SAME IS INTENDED FOR HOLDING CONTROLLING STAKE IN THE GROUP CONCERN S AND NOT FOR EARNI NG ANY INCOME OUT OF INVESTMENT, AND THEREFORE, THE SAME IS OUTSIDE THE PURVIEW OF SECTION 14A OF THE ACT. THE AFORESAID PROPOSITION IS IN LINE WITH THE DECISION OF THE TRIBUNAL IN THE CASE OF GARWARE WALL ROPES LTD VS. ADDL. CIT IN ITA NO.5408/MUM/2 012 DATED 15.1.2014. PARA 2.4 OF THE SAID ORDER OF THE TRIBUNAL IS RELEVANT IN THIS REGARD , AND THE RELEVANT PORTION IS EXTRACTED AS UNDER: 2.4...........WE FIND MERIT AND SUBSTANCE IN THE CONTENTION OF THE ASSESSEE ON THIS POINT BECAUSE THE INVESTMENT HA S BEEN MADE BY THE ASSESSEE IN THE GROUP CONCERN AND NOT IN THE SHARES OF ANY UN - RELATED PARTY. THEREFORE, THE PRIMARY OBJECT OF INVESTMENT IS HOLDING CONTROLLING STAKE IN THE GROUP CONCERN AND NOT EARNING ANY INCOME OUT OF INVESTMENT. FURTHER, THE INVES TMENT WERE MADE LONG BACK AND NOT IN THE YEAR UNDER CONSIDERATION. THEREFORE, IN VIEW OF THE FACT THAT THE INVESTMENT ARE IN THE GROUP CONCERN WE DO NOT FIND ANY REASON TO BELIEVE THAT THE ASSESSEE WOULD HAVE INCURRED ANY ADMINISTRATIVE EXPENSES IN HOLDIN G THESE INVESTMENTS. THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT THE ASSESSEE HAS INCURRED ANY EXPENDITURE IN RELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME...... 10. LD REPRESENTATIVE FOR THE ASSESSEE FURTHER SUBMI TTED THAT ASSESSING OFFICER HAS NOT RECORDED HIS SATISFACTION BEFORE INVOKING THE PROVISIONS OF SECTION 14A R.W. RULE 8D OF THE ACT. IN THIS REGARD, LD REPRESENTATIVE BROUGHT OUR A TTENTION TO 4 VARIOUS ORDERS OF THE ITAT AS WELL AS THE JUDGMENTS OF THE HIGH COURTS, COPIES OF WHICH ARE PLACED ON PAGES 63 TO 106 OF THE PAPER BOOK. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO THE DECISION OF THE TRIBUNAL IN THE CASE OF 3DPLM SOFTWARE SOLUTIONS LTD VS. ITO IN ITA NO.5736/MUM/12 (AY 2008 - 2009). IN THE AF ORESAID CASE, WHILE ADJUDICATING A SIMILAR ISSUE IN PARA 16, THE TRIBUNAL HAS APPLIED THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF MAXOPP INVESTMENT LTD VS. CIT (347 ITR 272) WHICH IS RELEVANT FOR THE PROPOSITION THAT THE ASSESSING OFFICER F IRST HAS TO REJECT THE CLAIM OF THE ASSESSEE WITH REGARD TO THE EXTENT OF EXPENDITURE BY HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE AND SUCH REJECTION MUST BE FOR DISCLOSED COGENT REASONS. IT IS THE PRAYER OF THE LD REPRES E NTATIVE THAT CONSIDERING THE AFORESAID PROPOSITIONS, THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE CIT (A) U/S 14A R.W. RULE 8D OF THE IT RULES, 1962 BE DELETED. 11. ON THE OTHER HAND, LD DR APPEARING FOR THE REVENUE RELIED ON THE ORDERS OF THE REVENUE AUTHORITEIS. 12. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE RELEVANT RECORD AND THE PROPOSITIONS LAID DOWN IN THE PRECEDENTS, WE ARE OF THE OPINION, WHEN THE ASSESSEE HAS BROUGHT OUT A CASE THAT NO EXPENDITURE OTHER THAN THAT DISCLOSED IN THE RETURN, HAS BEEN INCURRED FOR EARNING THE INCOME WHICH DOES NOT PART OF THE TOTAL INCOME, AND IN THE ABSENCE OF FINDING BY THE ASSESSING OFFICER THAT EXPENDITURE HAS BEEN INCURRED FOR EARNING THE EXEMPT INCOME THE PROVISIONS OF SECTION 14A COULD NOT BE INVOKED TO MAKE AN ADDITIONAL DISALLOWANCE UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE . ACCORDINGLY, ON GROUND NO.1 ASSESSEE SUCCEEDS. 13. GROUND NO.2 RELATES TO THE ALLOWANCE OF DEPRECIATION ON MOULDS (PLASTICS) AT THE REDUCED RATE OF 15% AS AGAINST 30% C LAIMED BY THE ASSESSEE AND THUS, DISALLOWING EXCESS DEPRECIATION OF RS. 1,55,48,775/ - . IN THIS REGARD, AT THE TIME OF HEARING, LD REPRESENTATIVE SUBMITTED THAT AN IDENTICAL ISSUE CAME UP FOR ADJUDICATION BEFORE THE ITAT IN ASSESSEES OWN CASE FOR THE ASS ESSMENT YEARS 2005 - 06; 2006 - 07 AND 2007 - 08 AND THE TR IBUNAL HAS CONSISTENTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE , COPIES OF WHICH ARE PLACED IN THE PAPER BOOK . IN SUPPORT OF HIS SUBMISSION, LD REPRESENTATIVE READ OUT THE RELEVANT PORTIONS FROM THE SAID ORDERS OF THE ITAT, MUMBAI AND PRAYED FOR DECIDING THE ISSUE IN SAME MANNER AS THAT OF THE EARLIER ORDER S OF THE TRIBUNAL. 5 14. ON THE OTHER HAND, LD DR APPEARING FOR THE REVENUE MERELY RELIED ON THE ORDERS OF THE LOWER AUTHORITIES, WITHOUT CONTROVERT ING THE AFORESAID FACTUAL MATRIX. 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT MATERIAL PLACED BEFORE US AS WELL AS THE DECISIONS OF THE TRIBUNAL CITED BY THE LD REPRESENTATIVE FOR THE ASSESSEE. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE SAID ORDERS OF THE TRIBUNAL, WE FIND THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE VIDE THE TRIBUNALS ORDERS FOR THE ASSESSMENT YEARS 2005 - 06; 2006 - 07 AND 2007 - 08. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, WE EXTRACT THE RELEVANT PARA 18 OF THE T RIBUNALS ORDER DATED 13.3.2013 IN ITA NO.849/M/2010 (AY 2006 - 2007) AND THE SAME READS AS UNDER: 18. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. IT IS A QUESTION OF ALLOWANCE OF DEPRECIATION @ 30% VIS - A - VIS 25%. THE CONTENTION OF THE ASSESSEE IS THAT IN THE PAST SUCH DEPRECIATION HAS BEEN GRANTED @ 30%. LD CIT (A) HAD INVOKED SECTION 263 AND ORDER OF THE LEARNED CIT WAS QUASHED BY THE TRIBUNAL. THEREFORE, IN VIEW OF THE CONSISTENCY, WE ARE OF THE OP INION THAT THE CLAIM OF THE ASSESSEE SHOULD HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER AS NEW FACTS HAVE BEEN BROUGHT ON RECORD TO JUSTIFY FOR DIFFERENT STAND TAKEN DURING THE YEAR UNDER CONSIDERATION AND SUCH VIEW IS SUPPORTED BY HONBLE SUPREME COURT IN THE CASE OF RADHOSOAMI SATSANG VS. CIT (193 ITR 321). ACCORDINGLY, THE GROUND OF THE ASSESSEE IS ALLOWED. 16. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE COORDINATE BENCH OF THE ITAT AS WELL AS FOLLOWING THE PRINCIPLE OF CONSISTENCY, IN OUR CONSIDERED OPINION, THE ISSUE UNDER CONSIDERATION SHOULD BE ALLOWED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, GROUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED. 17. GROUND NO.3 RELATES TO THE D ISALLOWANCE U/S 145A OF THE ACT IN RESPECT OF UNUTILIZED MODVAT CRE DIT U/S 145A OF THE ACT. BRIEF FACTS IN THIS REGARD ARE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER NOTICED THAT THE ASSESSEE CHANGED ITS ACCOUNTING METHOD FROM INCLUSIVE METHOD TO EXCLUSIVE METHOD AND CLAIMED THAT NO MODVAT ADJUSTMENT WAS REQUIRED TO BE CARRIED OUT UNDER THE PROVISIONS OF SECTION 145A OF THE ACT. NOT ACCEPTED WITH THE CLAIM AND CONTENTION OF THE ASSESSEE, ASSESSING OFFICER WORKED OUT THE ADJUSTMENT UNDER THE PROVISIONS OF SECTION 145A OF THE ACT AND ADDED AN AMOUNT O F RS. 27,15,738/ - TO THE RETURNED INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A). 18. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING O FFICER. FURTHER, IT WAS 6 SUBMITTED BEFORE THE CIT (A) THAT EVEN THOUGH THE ASSESSEE CHOSE TO FOLLOW THE EXCLUSIVE METHOD OF ACCOUNTING, NO ADJUSTMENT IS REQUIRED TO BE MADE U/S 145A DURING THE YEAR IN VIEW OF THE GUIDANCE NOTE ON THE TAX AUDIT U/S 44AB OF THE ACT ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (ICAI). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) FOLLOWED THE DECISION OF HIS PREDECESSOR FOR THE EARLIER YEARS AND DIRECTED THE ASSESSING OFFICER TO MAKE ADJUSTMENT AS PE R THE DIRECTION GIVEN THEREOF FOR THE ASSESSMENT YEAR 2006 - 2007. AGGRIEVED AND DIS - SATISFIED WITH THE DECISION OF THE CIT (A), ASSESSEE IS IN FURTHER APPEAL BEFORE US BY RAISING THE AFOREMENTIONED GROUND NO.3. 19. DURING THE PROCEEDINGS BEFORE US, LD REPR ESENTATIVE FOR THE ASSESSEE SUBMITTED THAT AN IDENTICAL ISSUE CAME UP FOR ADJUDICATION BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE AND THE TRIBUNAL FOR THE ASSESSMENT YEARS 2005 - 06; 2006 - 07 AND 2007 - 08, WHEREIN THE TRIBUNAL RESTORED THE MATTER BACK TO THE F ILE OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS TO ADJUDICATE THE ISSUE AFRESH. AT THE TIME OF HEARING, LD REPRESENTATIVE FOR THE ASSESSEE PRAYED THAT THIS ISSUE MAY BE SET - ASIDE WITH SIMILAR DIRECTIONS TO THE ASSESSING OFFICER AS DECIDED BY THE TRIB UNAL IN THE EARLIER YEARS. 20. ON THE OTHER HAND, LD DR APPEARING FOR THE REVENUE RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT (A). 21. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE DECISIONS OF THE TRIBUNAL CITED BY THE LD REPRESENTATIVE IN ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEARS. ON PERUSAL OF THE SAID ORDERS OF THE TRIBUNAL, WE FIND PARA 8 OF THE TRIBUNALS ORDER (SUPRA), DATED 13.3.2013 IS RELEVANT IN THIS REGARD. CONSIDERING THE SIGNIFICANCE OF THE SAID PARA 8 OF THE TRIBUNALS ORDER AND FOR THE SAKE OF COMPLETENESS OF THIS ORDER, THE SAME IS EXTRACTED AS UNDER: 8. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENTIONS HAVE CAREFULLY CONSIDERED. LEARNED AR HAS NOT OBJECTED TO THE APPLICABILITY OF SECTION 145A. HE HAS ALSO NOT OBJECTED TO THE INCLUSIVE METHOD WHICH WAS EARLIER FOLLOWED BY THE ASSESSEE. THE OBJECTION OF THE LD AR WAS LIMITED ONLY TO THE AFOREMENTIONED TWO ASPECTS. FIRST IS RELATED TO EXCLUSION OF EXCISE DUTY ON INVENTORY VALUE ON STOCKS WHICH ARE NOT CLEARED FROM THE FACTORY PREMISES OF THE ASSESSEE AND SUCH CONTENTION IS SUPPORTED BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. LOKNETE BALASAHEB DESAI S.S.K. LTD (SUPRA). SECOND AD JUSTMENT SOUGHT BY THE ASSESSEE IS IN ACCORDANCE WITH PROVISIONS OF SECTION 43B OF THE ACT, WHICH STATES THAT IF THE PAYMENT OF ANY TAXES MADE BEFORE THE DUE DATE OF FILING OF RETURN, THE SAME IS DEDUCTIBLE U/S 43B. WE FIND SUBSTANCE IN SUCH CLAIM OF THE ASSESSEE. WE THEREOF, HOLD THAT SECTION 145A IS 7 APPLICABLE, THE ASSESSING OFFICER WILL CALCULATE THE VALUE OF THE SALE AND PURCHASE AND INVENTORY BY INCLUDING EXCISE DUTY. IT WAS THE CONTENTION OF LEARNED AR THAT THE ASSESSING OFFICER HAD ALREADY INCLUDE D EXCISE DUTY IN THE EARLIER YEAR IN THE VALUE OF INVENTORY AND THEREFORE THE OPENING STOCK FOR AY 2005 - 06 ALREADY INCLUDE THE VALUE OF EXCISE DUTY. THIS CONTENTION OF THE ASSESSEE SHALL BE VERIFIED BY THE ASSESSING OFFICER AND APPROPRIATE ADJUSTMENT FOR THE SAME IS DIRECTED TO BE GIVEN. THE ASSESSING OFFICER IS ALSO DIRECTED TO GIVE ADJUSTMENT TO THE ASSESSEE OF THE EXCISE DUTY PORTION OF THE INVENTORY LYING WITH THE ASSESSEE, WHICH HAS NOT MOVED FROM THE PREMISES OF THE ASSESSEE. THE ASSESSING OFFICER IS ALSO DIRECTED TO GIVE DEDUCTION U/S 43B ON THE COMPONENT OF THE EXCISE DUTY WHICH IS PAID BY THE ASSESSEE BEFORE THE DUE DATE OF FILING THE RETURN IN RESPECT OF BOTH THE YEARS. WITH THESE OBSERVATIONS, WE CONSIDER ALL THESE GROUNDS PARTLY ALLOWED IN THE MANNER AFORESAID. 22. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE ISSUE BEING THE CONSISTENCY TO BE FOLLOWED IN THE CALCULATION OF CLOSING STOCKS IN INCLUSIVE METHOD AS PRESCRIBED BY THE ICAI AS WELL AS RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE COORDINATE BENCH , ITAT THE MATTER NEEDS TO BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER WITH SIMILAR DIRECTIONS AS GIVEN IN THE EARLIER YEARS. ACCORDINGLY, GROUND NO.3 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 23 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED THE OPEN COURT ON 29 TH MAY, 2015. SD/ - SD/ - ( AMIT SHUKLA ) ( G.S. PANNU ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 29 .5 .2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI