M/s. HIND FILTERS LTD., MUMBAI V. ITO Rg. - 3(1)(4), MUMBAI

ITA 7325/MUM/2007

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48712 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 21-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 07-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RK GUPTA
• Assessee Lawyers: DIVYESH I SHAH
• Keywords: Opportunity of being heard
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SMT.ASHA VIJAYARAGHAVAN , JM ITA NO.7325/MUM/2007 : ASST.YEAR 2004-2005 M/S.HIND FILTERS LIMITED 1521/1522, MAKER CHAMBER V 221 BACKBAY RECLAMATION MUMBAI 400 021. PAN : AAACH0397L. VS. THE INCOME TAX OFFICER RANGE 3(1)(4) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DIVYESH I.SHAH RESPONDENT BY : SHRI R.K.GUPTA O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 17.10.2007 IN RELATION TO ASSESSMENT YEAR 2004-2005 . 2. FIRST GROUND IS AGAINST THE CONFIRMATION OF DISA LLOWANCE OF RS.2,46,200 MADE BY THE ASSESSING OFFICER U/S.14A OF THE ACT. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOTED THAT THE QUESTION OF MAKING DIS ALLOWANCE U/S 14A IS NO MORE RES INTEGRA IN VIEW OF THE JUDGMENT OF THE HONBLE BOMBAY HI GH COURT IN GODREJ & BOYCE LTD. MFG. CO. VS. DCIT [(2010) 328 ITR 81 (BO M)] HOLDING THAT THE PROVISIONS OF SECTION 14A ARE APPLICABLE IN CIRCUMS TANCES AS ARE PREVAILING PRESENTLY AND THE DISALLOWANCE HAS TO BE WORKED OUT BY THE AO ON SOME `REASONABLE BASIS AND NOT RULE 8D. UNDER SUCH CIRC UMSTANCES, WE SET ASIDE THE ITA NO.7325/MUM/2007 M/S.HIND FILTERS LIMITED. 2 IMPUGNED ORDER AND RESTORE THE MATTER TO THE FILE O F THE AO FOR DECIDING THE QUANTUM OF DISALLOWANCE, AS PER THE AFORE-NOTED JU DGMENT, AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 4. SECOND GROUND IS AGAINST THE CONFIRMATION OF ADD ITION OF RS.68,34,385 TO THE ASSESSEES INCOME IN RESPECT OF UNUTILIZED CENVAT CREDIT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. SECTION 145A WAS INSERTED BY THE FINANCE (N O.2) ACT, 1998 WITH EFFECT FROM 1.4.1999. IT PROVIDES THAT THE VALUATION OF PU RCHASE AND SALE OF GOODS AND INVENTORY FOR THE PURPOSES OF DETERMINING THE INCOM E CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION SHALL BE IN ACCORDANCE WITH THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSE SSEE AND FURTHER ADJUSTED TO INCLUDE THE AMOUNT OF ANY TAX, DUTY, CESS ETC. PAID OR INCURRED BY THE ASSESSEE TO BRING THE GOODS TO THE PLACE OF ITS LOCATION AS ON THE DATE OF VALUATION. ACCORDING TO THE PRESCRIPTION OF THIS SECTION, WHICH IS APPLICAB LE TO THE YEAR UNDER CONSIDERATION, THE AMOUNT OF TAX, DUTY, CESS ETC. IS LIABLE TO BE INCLUDED IN THE VALUE OF PURCHASES, SALES, OPENING AND CLOSING STOCK. IT IS NOT APPROPR IATE TO INCLUDE THE CLOSING MODVAT IN THE FIGURE OF CLOSING STOCK WITHOUT MODIFYING T HE FIGURES OF PURCHASES, SALES AND OPENING STOCK. THE HONBLE JURISDICTIONAL HIGH COUR T IN CIT VS. MAHALAXMI GLASS WORKS PVT. LTD. [(2009) 318 ITR 116 (BOM.)] AND THE HONBLE DELHI HIGH COURT IN CIT VS. MAHAVIR ALLUMINIUM [(2008) 297 ITR 77 (DEL. )] HAVE HELD TO THIS EXTENT. AS THE AUTHORITIES BELOW HAVE NOT ADJUSTED OTHER FI GURES WITH THE AMOUNT OF TAX, DUTY, CESS ETC., WE SET ASIDE THE IMPUGNED ORDER AN D RESTORE THE MATTER TO THE FILE OF A.O. FOR DECIDING IT AFRESH IN ACCORDANCE WITH THE AFORE-NOTED JUDGEMENTS AND THE PROVISIONS OF SECTION 145A. ITA NO.7325/MUM/2007 M/S.HIND FILTERS LIMITED. 3 6. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED ON THIS 27 TH DAY OF APRIL, 2011 . SD/- SD/- (ASHA VIJAYARAGHAVAN) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 27 TH APRIL, 2011. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) XXVII, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.