THE HAWKINS COOKERS LTD., Mumbai V. M/S. ITO 3(1)(1), MUMBAI

ITA 7195/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2200 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 19-04-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 22-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H P MAHAJANI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI R.S.PADVEKAR, JM & SHRI RAJENDRA SINGH, AM. I.T.A.NO.7195/MUM/2008 A.Y 2004-05 HAWKINS COOKERS LTD., F 101, MAKER TOWER, CUFFE PARADE, MUMBAI 400 005. PAN NO.AAACH 1784 M VS. INCOME TAX OFFICER 3(1)(1), MUMBAI AND I.T.A.NO.7070/MUM/2008 A.Y 2004-05 INCOME TAX OFFICER 3(1)(1), MUMBAI VS. HAWKINS COOKERS LTD., MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI H.P.MAHAJANI. REVENUE BY : SHRI SOMOGYAN PAL. O R D E R PER RAJENDRA SINGH, AM: THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 4/9/2008 OF THE CIT[A] FOR THE ASSESSMENT YEAR 200 4-05. THE DISPUTE RAISED IN THE CROSS APPEALS IS IN RELATION TO ADDIT ION ON ACCOUNT OF UNUTILIZED MODVAT CREDIT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E AO DURING THE ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE WAS HAVING UNUTILIZED MODVAT CREDIT BALANCE OF RS.11,12,044/- OF WHICH A SUM OF RS.1,10,145/- RELATED TO CAPITAL GOODS AND THE BALA NCE OF RS.10,01,899/- RELATED TO THE RAW MATERIAL. AO ALSO NOTED THAT UNUTILIZED MODVAT CREDIT ON ACCOUNT OF EXCISE DUTY PAID ON RAW MATERIAL HAD NOT BEEN INCLUDED IN THE CLOSING STOCK OF RAW M ATERIAL WHICH WAS 2 REQUIRED TO BE DONE IN TERMS OF PROVISIONS OF SEC.1 45A, AS PER WHICH VALUATION OF PURCHASE AND SALE OF GOODS AND INVENTE RIES FOR THE PURPOSE OF DETERMINING INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION SHALL BE IN ACCORD ANCE WITH THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE AN D FURTHER ADJUSTED TO INCLUDE THE AMOUNT OF ANY TAX DUE, CESS OR FEES ACTUALLY PAID OR INCURRED BY THE ASSESSEE TO BRING THE GOODS TO THE PLACE OF ITS LOCATION AND CONDITIONS AS ON THE DATE OF VALUATION. AO, THE REFORE, ADDED THE SUM OF RS.11,01,899/-. THE ARGUMENT OF THE ASSESSEE THAT IT WAS FOLLOWING EXCLUSIVE METHOD AND THAT NO ADDITION WAS REQUIRED TO BE MADE, WAS NOT ACCEPTED. IN APPEAL, CIT[A] CONFIRME D THE DECISION OF THE AO SUBJECT TO MODIFICATION THAT ADJUSTMENT ON A CCOUNT OF UNUTILIZED MODVAT WAS ALSO REQUIRED TO BE MADE IN THE OPENING STOCK. AGGRIEVED BY THE DECISION OF THE CIT[A] , BOTH THE PARTIES AR E IN APPEAL BEFORE THE TRIBUNAL. WHEREAS THE DEPARTMENT HAS CHALLENGED THE DELETION OF ADDITION OF RS.10,01,899/- BY THE CIT[A] , THE ASSE SSEE HAS DISPUTED THE DECISION OF CIT[A] AND SUBMITTED THAT NO ADJUS TMENT WAS REQUIRED TO BE MADE U/S.145A WITH REFERENCE TO THE UNUTILIZE D MODVAT CREDIT. 4. BEFORE US THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE AT THE VERY OUT SET POINTED OUT THAT THE ISSUE RAISED IN THESE APPEALS WAS COVERED BY THE DECISION OF THE TRIBUNAL IN THE ASSE SSEES OWN CASE FOR THE A.Y 1999-2000 IN I.T.A.NO.505/M/04 IN WHICH THE TRIBUNAL HAD RESTORED THE ISSUE TO THE FILE OF THE AO. THE LD. D R, ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF THE AO. 3 5. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE M ATTER CAREFULLY. THE DISPUTE IS REGARDING ADDITION ON ACC OUNT OF UNUTILIZED MODVAT CREDIT RELATING TO THE RAW MATERIAL IN THE C LOSING STOCK. WE FIND THAT SIMILAR DISPUTE HAD BEEN RAISED IN THE ASSESSE ES OWN CASE FOR THE A.Y 1999-2000 IN I.T.A.NO.505/M/04 IN WHICH THE TRI BUNAL HELD THAT ADJUSTMENT ON ACCOUNT OF UNUTILIZED MODVAT CREDIT W AS REQUIRED TO BE MADE BOTH IN THE OPENING STOCK AND IN CLOSING STOCK IN VIEW OF JUDGMENT OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. MAHAVIR ALUMINIUM LTD. [168 TAXMAN 27]. THE TRIBUNAL ALSO O BSERVED THAT AFTER ADDITION ON ACCOUNT OF UNUTILIZED MODVAT CREDIT TO THE CLOSING STOCK FURTHER ADDITION HAD TO BE MADE ON ACCOUNT OF EXCIS E DUTY ACTUALLY PAID AFTER THE YEAR BUT BEFORE THE DUE DATE OF FILING TH E RETURN OF INCOME U/S.43B. THE TRIBUNAL ALSO OBSERVED THAT IN VIEW OF THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DY. CI T VS. GLAXO SMITHKLINE CONSUMER HEALTHCARE LTD. [107 ITD 43] [C HD], MODVAT BALANCE AS SUCH DID NOT AMOUNT TO PAYMENT. THE BALA NCE BECOMES EQUIVALENT TO THE PAYMENT ONLY AT THE POINT OF TIME THE ASSESSEE EXERCISED HIS OPTION TO SET OFF THE BALANCE AGAINST THE CENTRAL EXCISE LIABILITY AND NOT BEFORE. THE TRIBUNAL ACCORDINGLY RESTORED THE ISSUE TO THE FILE OF THE AO FOR PASSING A FRESH ORDER AFTER NECESSARY EXAMINATION IN THE LIGHT OF OBSERVATIONS MADE ABOVE AND WITH A DIRECTION TO ENSURE THAT THERE WAS NO DOUBLE DEDUCTION FIRSTLY, AT THE TIME OF GIVING EFFECT TO SEC.145A AND SECONDLY AT THE TIME OF FINAL EXERC ISE OF OPTION FOR ADJUSTMENT OF MODVAT ACCOUNT. THE SITUATION THIS YE AR IS IDENTICAL AND NO DISTINGUISHING FEATURES WERE BROUGHT TO OUR NOTI CE BY THE LD. DR. 4 WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT[A] A ND RESTORE THE MATTER TO THE FILE OF THE AO TO PASS A FRESH ORDER AFTER NECESSARY EXAMINATION IN THE LIGHT OF DECISION OF TRIBUNAL FO R A.Y 1999-2000 [SUPRA] AND AFTER ALLOWING AN OPPORTUNITY OF HEARIN G TO THE ASSESSEE. 6. IN THE RESULT, BOTH APPEALS ARE ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 22 ND DAY OF APRIL, 2010. SD/- SD/- (R.S.PADVEKAR) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 22 ND APRIL, 2010. P/-*