Dy. Commissioner of Income Tax, Bareilly V. M/s Kisan Sahkari Chini Mills Ltd., Bareilly

ITA 764/LKW/2014

• Counselvise Citation: 76423714 RSA 2014
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHYAM LAL F
• Keywords: Opportunity of being heard
• Section: 43B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.764/LKW/2014 ASSESSMENT YEAR:2009 - 10 M/S KISAN SAHKARI CHINI MILLS LTD., SEMIKHERA, BAHERI, BAREILLY. PAN:AAAAK3453A VS DY.C.I.T., CIRCLE - 1, BAREILLY. (RESPONDENT) (APPELLANT) SHRI PUNEET KUMAR, D. R. APPELLANT BY SHRI SHYAM LAL, F.C.A. RESPONDENT BY 24/02/2015 DATE OF HEARING 31 /03/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A), BAREILLY DATED 17/07/2014 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. GROUND NO. 1 IS AS UNDER: 1. THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF EXCISE DUTY IN CLOSING STOCK MADE BY THE ASSESSING OFFICER AT RS.2,72,10,536/ - . 3. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 4. WE H AVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY LEARNED CIT(A) BY FOLLOWING A JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF CIT VS. DYNAVISION LIMITED 348 ITR 380 (SC). WE FIND THAT IN THIS CASE, THE ASSESSMENT YEAR INVOLVED WAS 87 - 88 BUT THERE IS AMENDMENT IN THE ACT BY WAY OF INSERTION OF SECTION 145A IN THE ACT WITH 2 EFFECT FROM 1999 - 2000. IN THE PRESENT CASE, THE ASSESSMENT YEAR INVOLVED IS 2009 - 10 AND THEREFORE, THIS JUDGMENT OF HON'BLE APEX COURT CANNOT BE FOLLOWED IN THE PRESENT CASE AFTER INSERTION OF SECTION 145A WITH EFFECT FROM 01/04/1999 AND THEREFORE, THE ORDER OF CIT(A) IS NOT SUSTAINABLE BUT IN THE INTEREST OF JUSTICE, WE RESTORE THIS MATTER BACK TO THE FILE OF CIT(A) FOR FRESH DECISION. ACCORDINGL Y, ON THIS ISSUE, WE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER BACK TO HIS FILE FOR FRESH DECISION AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. GROUND NO. 1 IS ALLOWED FOR STATISTICAL PURPOSES. 5. GROUND NO. 2 READS AS UNDER: 2. THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.74,56,472/ - IN THE CLOSING STOCK OF SUGAR RIGHTLY MADE BY THE ASSESSING OFFICER. 6. LEARNED D.R. OF THE REVENUE SUBMITTED THAT THE DECISION OF CIT(A) IS ON THE B ASIS THAT EXCISE DUTY IS NOT A PART OF MANUFACTURING COST AND THEREFORE, THIS ADDITION IN INCREASING THE COST OF CLOSING STOCK IS AGAINST THE LAW AND FACTS OF THE CASE. HE SUBMITTED THAT EXCISE DUTY ON FINISHED GOODS IS INCURRED ON COMPLETION OF MANUFACTU RING, ALTHOUGH THE SAME IS PAYABLE ON DISPATCH AND THEREFORE, THE EXCISE DUTY ON FINISHED GOODS STOCK HAS TO BE ADDED IN THE VALUE OF THE CLOSING STOCK ALTHOUGH DEDUCTION FOR SUCH EXCISE DUTY EXPENSES IS TO BE ALLOWED SUBJECT TO THE PROVISIONS OF SECTION 4 3B OF THE ACT. LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT (A). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT CIT(A) HAS DECIDED THE ISSUE ON THE BASIS THAT EXCISE DUTY IS NOT A PART OF MANUFACTURING COST BUT THE ORDER OF CIT(A) IS NOT CORRECT BECAUSE EXCISE DUTY, ON FINISHED GOODS, IS PAYABLE ON DISPATCH OF FINISHED GOODS AFTER SALE BUT THE LIABILITY FOR EXCISE DUTY IS INCURRED ON COMPLETION OF THE MANUFACTURING AND THEREFORE, AS PER SECTION 145A, CLOSING STOCK VALUATION 3 SHOULD BE I NCLUSIVE OF EXCISE DUTY. IT IS ALSO TRUE THAT THE EXCISE DUTY ON FINISHED GOODS HAS TO BE CONSIDERED AS EXPENSES ALSO BUT ALLOWING DEDUCTION ON THAT ACCOUNT IS ACCORDING TO THE PROVISIONS OF SECTION 43B AND IF THE ASSESSEE CAN ESTABLISH THAT THE EXCISE DU TY ON CLOSING STOCK WAS PAID BEFORE DUE DATE OF FILING OF RETURN OF INCOME, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 43B IN RESPECT OF EXCISE DUTY EXPENSES AND ULTIMATELY THERE WILL BE NO ADDITION BUT IF THE ASSESSEE IS NOT ABLE TO ESTABLISH THAT, THEN S UCH DEDUCTION IS ALLOWABLE U/S 43B AND IN THAT SITUATION, THERE WILL BE ADDITION ALTHOUGH THE ASSESSEE WILL BE ELIGIBLE FOR DEDUCTION IN THE YEAR IN WHICH THE ASSESSEE HAS MADE PAYMENT OF EXCISE DUTY AGAINST THE CLOSING STOCK OF FINISHED GOODS IN THE PRESE NT YEAR. SINCE FOR DECIDING THIS ISSUE, THESE ASPECTS ARE TO BE EXAMINED, WE FEEL IT PROPER TO SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER BACK TO HIS FILE FOR FRESH DECISION. WE ORDER ACCORDINGLY. THIS ISSUE IS ALSO RESTORED TO THE FILE OF CIT (A) AND CIT(A) SHOULD PASS NECESSARY ORDER AS PER LAW AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. GROUND NO. 2 IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS ALLOWED FOR STATISTIC AL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31 /03/2015. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR