METRO ALLYS P. LTD, MUMBAI V. ITO 10(2)(4), MUMBAI

ITA 819/MUM/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3570 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-07-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 03-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: IS DIRECTED AG AINST DATED
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B , MUMBAI BEFORE SHRI T.R. SOOD, AM AND SHRI R.S. PADVEKAR, J M I.T.A. NO.819/MUM/2010 ASSESSMENT YEAR : 2004-05 M/S. METRO ALLYS PVT. LTD. 202, GAYATRIDHAM COMMERCIAL COMPLEX, M.G. ROAD, GHATKOPAR (E), MUMBAI PAN NO : AABCM9413F INCOME TAX OFFICER 10(2)(4) 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI (APPELLANT) VS. (RESPONDENT) & I.T.A. NO.125/MUM/2010 ASSESSMENT YEAR : 2006-07 M/S. METRO ALLYS PVT. LTD. 202, GAYATRIDHAM COMMERCIAL COMPLEX, M.G. ROAD, GHATKOPAR (E), MUMBAI PAN NO : AABCM9413F DEPUTY COMMISSIONER OF INCOME 10(2) 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI (APPELLANT) VS. (RESPONDENT) ORDER PER T.R. SOOD (AM) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER DATED 20.01.2009 AND 22.12.2008 OF COMMISSIONER OF INCOME TAX (APPEALS)- 22, MUMBAI AND RELATES TO THE ASSESSMENT YEAR 2004-05 A ND 2006-07. APPELLANT BY : SHRI SHAILESH N. DOSHI RESPONDENT BY : SHRI HARI GOVIND SINGH 2 2. IN BOTH THESE APPEALS ASSESSEE HAS RAISED THE I DENTICAL GROUNDS WHICH ARE AS UNDER:- I.T.A. NO : 819/MUM/2010 1. ON THE FACT AND CIRCUMSTANCES AND IN LAW THE LE ARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY THE A.O. TO THE VALUE OF CLOSING STOCK OF RS.19,32,830/- BEING BALA NCE IN CENVAT ACCOUNT AND THERE BY REDUCING THE BUSINESS LOSS BY RS.19,32,830/- ON THE GROUND THAT VALUATION OF CLOSING STOCK IS NO T AS PER PROVISION OF SECTION 145A IN SPITE OF THE FACT THAT APPLICABLE DUTIES AND TAXES WERE ADDED TO THE BASIC VALUE OF CLOSING STOCK. 2. THE APPELLANT PRAYS THAT ADDITION MADE TO THE VALUE OF CLOSING STOCK BE DELETED. 3. THE APPELLANT PRAYS TO AMEND OR ALTER ANY GROUND OR ADD NEW GROUNDS OF APPEAL. I.T.A. NO.125/MUM/2010 1. ON THE FACT AND CIRCUMSTANCES AND IN LAW THE LEARNE D CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY THE A.O. TO THE VALUE OF CLOSING STOCK OF RS.2,11,658/- BEING BALAN CE IN CENVAT ACCOUNT AND THERE BY REDUCING THE BUSINESS LOSS BY RS.2,11,658/- ON THE GROUND THAT VALUATION OF CLOSING STOCK IS NO T AS PER PROVISION OF SECTION 145A IN SPITE OF THE FACT THAT APPLICABLE DUTIES AND TAXES WERE ADDED TO THE BASIC VALUE OF CLOSING STOCK. 2. THE APPELLANT PRAYS THAT ADDITION MADE TO THE VALUE OF CLOSING STOCK BE DELETED. 3. THE APPELLANT PRAYS TO AMEND OR ALTER ANY GROUND OR ADD NEW GROUNDS OF APPEAL. 3. AFTER HEARING BOTH THE PARTIES, WE FIND THAT DU RING THE ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY AO THAT THERE WAS UN UTILISED CENVAT CREDIT AVAILABLE WHICH HAS NOT BEEN INCLUDED IN THE CLOSIN G STOCK AND, THEREFORE, SAME WAS TO BE INCLUDED IN THE VALUE OF CLOSING STOCK AN D ACCORDINGLY SAME WAS ADDED TO THE CLOSING STOCK. 3 4. ON APPEAL, THE ACTION OF THE AO WAS CONFIRMED BY LEARNED CIT (APPEALS). 5. BEFORE US THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT EXCISE DUTY WAS BASICALLY PAID IN ADVANCE AND, THEREFORE, STRICTLY SPEAKING THE SAME CANNOT BE CALLED UNUTILISED CENVAT CREDIT. IN ANY C ASE, THE ASSESSEE HAS ALREADY INCLUDED THE EXCISE DUTY IN THE CLOSING STO CK OF FINISHED GOODS AS WELL AS RAW MATERIALS. IN THIS CONNECTION, HE REFERRED TO T HE PAGE 7 & 8 OF THE PAPER BOOK IN ASSESSMENT YEAR 2004-05, WHEREIN 8% EXCISE DUTY WAS ADDED IN FINISHED STOCK WHICH IS AMOUNTING TO RS.17,37,063/- AND EXCISE DUTY AMOUNTING TO RS.1,27,133/- HAS BEEN ADDED TO THE CLOSING STOC K OF RAW MATERIALS. THEREFORE, IF THE ADVANCE SHOWN IN THE BALANCE SHEET IS ALSO C ONSIDERED AS UNUTILISED CREDIT THEN IT WOULD AMOUNT TO DOUBLE THE TAXATION OF THE SAME AMOUNT. 6. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THA T THERE IS NO CONCEPT OF ADVANCE EXCISE DUTY AND, THEREFORE, WHAT EVER EXCISE DUTY HAS BEEN PAID HAS TO BE ADDED TO THE CLOSING STOCK IN TERMS OF SECTION 145 A BECAUSE NORMALLY EXCISE DUTY IS PAID ONLY WHEN GOODS ARE CL EARED. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSION CAREFUL LY, THOUGH WE PRINCIPALLY AGREE WITH THE SUBMISSION OF THE LEARNE D DR THAT WHATEVER EXCISE DUTY IS PAID IS ONLY PAID AFTER CLEARING OF THE GOO DS AND, THEREFORE, SAME WAS REQUIRED TO BE ADDED TO THE VALUE OF CLOSING STOCK IN TERMS OF SECTION 145 A. HOWEVER, AT THE SAME TIME FROM THE DETAILS FURNISHE D IT IS SEEM THAT ASSESSEE HAS ALREADY ADDED 8% EXCISE DUTY TO THE CLOSING STOCK O F FINISHED GOODS AND SOME EXCISE DUTY HAS BEEN ADDED TO RAW MATERIAL ALSO. TH EREFORE, IF THE DEBIT BALANCE IN EXCISE DUTY IS FURTHER ADDED THEN IT WOULD AMOUN T TO DOUBLE TAXATION. THEREFORE, WE SET ASIDE THE ORDER OF LEARNED CIT (A PPEALS) AND REMIT THE MATTER BACK TO THE FILE OF AO WITH THE DIRECTION THAT WHAT EVER EXCISE DUTY IS ALREADY BEEN INCLUDED BY THE ASSESSEE IN THE CLOSING STOCK OF FINISHED GOODS AND RAW 4 MATERIAL SHOULD BE AFTER VERIFICATION REDUCED FROM THE EXCISE DUTY PAID AND ONLY THE BALANCE AMOUNT SHOULD BE ADDED TO THE CLOSING S TOCK. 8. IN THE RESULT, THE ASSESSEES APPEALS ARE ALLOW ED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THIS 29TH DAY OF DECEMBER, 2010 . SD/- SD/- (R. S. PADVEKAR) (T. R . SOOD) JUDICIAL MEMBER ACCOUNTANT MEMB ER MUMBAI, DT: 29/12/2010 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, B- BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES,MUMBAI ROSHANI