M/s. Vardhman Fabrics Pvt. Ltd., Surat V. The ACIT., Circle-4, Surat

ITA 794/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6328 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-05-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 03-03-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R N VEPARI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABAD CAMP AT SURAT (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGRAWAL, A.M.) I.T.A. NO. 794/AHD./2008 ASSESSMENT YEAR : 2004-2005 VARDHMAN FABRICS PVT. LTD., SURAT -VS.- AS SISTANT COMMISSIONER OF INCOME TAX, (PAN : AAACV 7893 B) CIRCLE-4, SURAT (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.N. VEPARI RESPONDENT BY : SHRI SANJEEV KASHYAP , SR. D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 07.12.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-1, SURAT CONFIR MING THE ADDITION OF CLOSING WORK-IN- PROGRESS OF RS.9,03,871/- FOR THE ASSESSMENT YEAR 2004-05. 2. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF A SSESSEE SHRI R.N. VEPARI, LD. COUNSEL APPEARED AND CONTENDED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DYEING AND PRINTING OF FABRICS ON JOB WORK BASIS. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER MADE THE ADDITION ON ACCOUNT OF WORK-IN-PROGRESS AS MENTIONED IN PARA 3. 3 OF THE ASSESSMENT ORDER. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT(A) UPHELD THE ACTION OF ASSESSING OFFICER. THE LD. COUNSEL OF THE ASSESSEE PRODUCED THE COPY OF THE DECISION DATED 24 .03.2010 OF ITAT, D BENCH, AHMEDABAD (CAMP AT SURAT) IN ITA NO. 1061 & 1358/AHD/2007 FOR THE ASSESSMENT YEAR 2003-04 IN ASSESSEES OWN CASE, WHEREIN THE TRIBUNAL HAS HELD THAT SINCE THE ASSESSEE IS NOT ENGAGED IN ANY MANUFACTURING ACTIVITIES OF ITS OWN, THE ADDITION O N ACCOUNT OF WORK-IN-PROGRESS CANNOT BE MADE. HE ACCORDINGLY SUBMITTED THAT THE ADDITION OF RS.9, 03,871/- SUSTAINED BY THE LD. CIT(A) IN RESPECT OF CLOSING WORK-IN-PROGRESS BE DELETED. 2 ITA NO. 794/AHD/2008 3. ON THE OTHER HAND, ON BEHALF OF REVENUE SHRI SAN JEEV KASHYAP APPEARED AND COULD NOT CONTROVERT THE AFORESAID SUBMISSIONS MADE BY THE LD . COUNSEL OF THE ASSESSEE. 4. AFTER HEARING BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AS WELL AS THE DECISION DATED 24.03.2010 OF I TAT, D BENCH, AHMEDABAD (CAMP AT SURAT) IN ITA NO. 1061 & 1358/AHD/2007 FOR THE ASSE SSMENT YEAR 2003-04 RELIED BY THE LD. COUNSEL OF THE ASSESSEE. IN THAT DECISION, THE TRIB UNAL IN PARA 16 HELD AS UNDER :_ 16. .WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT T HE ASSESSEE IS DOING JOB WORK OF PROCESSING GREY CLOTH. THE ASSESSEE IS NOT ENGAGED IN ANY MANUFACTURING ACTIVITIES OF ITS OWN. THE CLOTH PROCESSED BY THE A SSESSEE BELONGS TO THE CUSTOMERS. THEREFORE, THERE WAS NO QUESTION OF SHOWING WORK IN CLOSING STOCK OF THE CONCERNED CUSTOMERS. THE CLOSING STOCK OF MATERIAL USED ON PROCESSING OF CLOTH, I.E. CHEMICALS HAVE BEEN DULY ACCOUNTED BY THE ASSE SSEE IN ACCORDANCE WITH AS-2 METHOD OF ACCOUNTING PRINCIPLES. AS PER THE PRINCIP LES OF ACCOUNTING LAID DOWN BY ICAI UNDER THE SCOPE OF VALUATION OF INVENTORIES TH E WORK IN PROGRESS ARISING IN ORDINARY COURSE OF BUSINESS OF SERVICE PROVIDERS HA S BEEN SCOPED WITHIN SUCH STATEMENT. WE FIND THAT ASSESSEE HAS BEEN FOLLOWING REGULAR SYSTEM OF ACCOUNTINGS SINCE LAST SO MANY YEARS AND SUCH METHOD WAS BASED ON ACCEPTED PRINCIPLES OF ACCOUNTING, THEREFORE, THERE WAS NO JUSTIFICATION F OR REJECTING SUCH METHOD FOR VALUATION OF THE STOCK. THEREFORE, WE ARE OF THE VI EW THAT CIT(A) IS JUSTIFIED IN HIS ACTION AND OUR INTERFERENCE IS NOT REQUIRED. 5. ADMITTEDLY, THE LD. COUNSEL OF THE ASSESSEE STAT ED BEFORE US AT THE TIME OF HEARING THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DYEING AND P RINTING OF FABRICS ON JOB WORK BASIS. THEREFORE, BY RESPECTFULLY FOLLOWING THE DECISION D ATED 24.03.2010 OF ITAT, D BENCH, AHMEDABAD (CAMP AT SURAT) IN ITA NO. 1061 & 1358/AH D/2007 FOR THE ASSESSMENT YEAR 2003- 04 (SUPRA), WE DELETE THE ADDITION OF RS.9,03,871/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CLOSING WORK-IN-PROGRESS. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 28.05.2010 . SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28/ 05 /2010 3 ITA NO. 794/AHD/2008 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.