Jupiter Engineering Co., Ahmedabad V. The ACIT.,Circle-6, Ahmedabad

ITA 88/AHD/2011

• Counselvise Citation: 8820514 RSA 2011
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 13-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: S N DIVETIA A R
• Keywords: Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMADABAD , , , , BEFORE SHRI G.C.GUPTA , VICE PRESIDENT AND .., ! '# '# '# '# SHRI T.R. MEENA, ACCOUNTANT MEMBER $%.. , &' ( & ! ) & ! ) & ! ) & ! ) ITA NO. 88/AHD/2011 ASSESSMENT YEAR :2004-05 JUPITER ENGINEERING CO. PLOT NO.510, PHASE-IV, GIDC ESTATE, VATVA, AHMADABAD-382445 V/S . THE DCIT, CIRCLE-6, AHMEDABAD. PAN NO. A A B F J6572H (APPELLANT) .. (RESPONDENT) *+ , - & / BY APPELLANT SHRI S. N. DIVETIA, A.R. ./*+ , - & /BY RESPONDENT SHRI J. P. JHANGID, SR. D.R. 0 , 1%' /DATE OF HEARING 11.02.2014 234 , 1%' /DATE OF PRONOUNCEMENT 21.02.2014 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE CIT(A)-XVI, AHMEDABAD, ORDER DATED DECEMBER 08.11.2010 FOR A.Y. 2004-05. ALL THE GROUNDS OF APPEAL EXCEPT GROUND NO.4.1, WHICH HAS N OT BEEN PRESSED BY THE LD. COUNSEL, ARE AGAINST NOT MAKING ADJUSTMENT U/S. 145A OF THE IT ACT ON ACCOUNT OF EXCISE DUTY IN CLOSING STOCK. 2. THE A.O. OBSERVED THAT THE ASSESSEE HAS SHOWN CL OSING STOCK OF FINISHED GOODS SPARE PARTS AT RS.94,52,211/-. THE CLOSING STOCK WAS VALUED BY THE ASSESSEE AT COST BY THE PARTNER BUT WITHOUT INCLUDING THE EXCISE DUTY ITA NO. 88/AHD/2011 A.Y. 04-05 PAGE 2 PAYABLE ON IT. THE LD. A.O. RELIED UPON THE HONBL E SUPREME COURT DECISION IN CASE OF BRITISH PAINTS (INDIA) LTD. 188 ITR 44 (1990). THE EXCISE DUTY WAS PAYABLE ON CLOSING STOCK @ 16%. HE HELD THAT THE I NCOME OF THE ASSESSEE HAS BEEN UNDER ASSESSED BY RS.15,08,033/- U/S.145A OF THE IT ACT. THUS, HE MADE ADDITION OF RS.15,08,033/-. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD CONFIRMED THE ADDI TION BY OBSERVING AS UNDER: 4.1 I HAVE CONSIDERED THE SUBMISSION MADE BY THE A PPELLANT AND OBSERVATION OF THE AO. IT WAS POINTED OUT TO THE A PPELLANT THAT AS PER THE PROVISIONS OF SECTION 145A, THE APPELLANT IS REQUIR ED TO FOLLOW INCLUSIVE METHOD OF ACCOUNTING, BY INCLUDING ALL TYPES OF TAX ES NAMELY EXCISE DUTY, CESS, DUTIES, FEES, ETC. IF THE APPELLANT IS FOLLO WING EXCLUSIVE METHOD OF ACCOUNTING, THEN IN THE TAX AUDIT REPORT, THE ASSES SEE IS REQUIRED TO PREPARE AN ADJUSTMENT SHEET WHEREBY THE EFFECT OF I NDUCING EXCISE DUTY AND OTHER TAXES ETC., ARE INCLUDED FOR CALCULATING THE VALUATION OF STOCK. THE APPELLANT WAS REQUIRED TO FILE THE COPY OF TAX AUDIT REPORT FOR T HE LAST YEAR AS WELL AS CURRENT YEAR TO SEE IF SUCH ADJUSTMENT S HEET WAS PREPARED. IT IS SEEN FROM THE TAX AUDIT REPORT THAT NO SUCH ADJUSTM ENT SHEET WAS PREPARED EITHER IN THE LAST YEAR OR IN THE CURRENT YEAR. IN FACT, AS PER COLUMN NUMBER 12 (B) THE TAX AUDITOR HAS STATED THAT THERE IS NO DEV IATION FROM THE METHOD OF VALUATION PRESCRIBED UNDER SECTION 145A. WHEREAS DU RING THE APPELLATE PROCEEDING, AS IN ASSESSMENT PROCEEDING THE APPELLA NT HAS ADMITTED THAT THE EXCISE DUTY HAS NOT BEEN INCLUDED IN DIE VALUATION PROCESS. THE APPELLANT HAS THEREFORE MADE A WRONG STATEMENT IN THE TAX AUDIT R EPORT THAT THERE IS NO DEVIATION FROM THE PROVISIONS OF SECTION 145A. HAVI NG SAID THAT, IT IS DEAR THAT THE ASSESSEE IS REQUIRED TO INCLUDE ALL TAXES, DUTY , AND FEE, ETC. IN THE VALUATION OF DOSING STOCK OF RAW MATERIAL, SEMI FIN ISHED GOODS, AS WELL AS FINISHED GOODS. IF THERE ARE NO FINISHED GOODS, IT REALLY DOES NOT MATTER BECAUSE THE ADJUSTMENT SHEET WOULD HAVE TAKEN CARE OF THAT. IN THE ABSENCE ITA NO. 88/AHD/2011 A.Y. 04-05 PAGE 3 OF SUCH AN ADJUSTMENT SHEET AND IN VIEW OF THE WRON G STATEMENT MADE IN THE TAX AUDIT REPORT, AS STATED ABOVE, THE CONTENTION O F THE APPELLANT CANNOT BE VERIFIED. IN MANY CASES, THE SUBASSEMBLIES MADE BY THE ASSESSEE ARE ALSO SODL TO THE USER WAS OF TEXTILE MACHINERY AND HENCE THESE SUB ASSEMBLIES ARE ALSO LIABLE TO EXCISE DUTY. THEREFORE, WHILE PREPAR ING THE ADJUSTMENT SHEET CERTAIN DUTIES WOULD HAVE HAD TO BE INCLUDED FOR TH E PURPOSE OF VALUATION. SINCE THESE SUB ASSEMBLIES AND SPARE PARTS FOR THE MACHINERIES ARE SALE ABLE. HENCE THE ADDITION MADE BY THE AO IS CONFIRME D. 4. NOW THE ASSESSEE IS BEFORE US. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE CONSISTENTLY FOLLOWED THE E XCLUSIVE METHOD OF VALUATION OF CLOSING STOCK. HE ALSO ARGUED THAT TH ERE IS NO TAX EFFECT, IF THE SAME TREATMENT WOULD BE GIVEN ON OPENING AS WELL AS CLOSING STOCK. HE FURTHER RELIED UPON HONBLE ITAT DECISION IN CASE O F INCOME TAX OFFICER VAPI, WARD-4 VS. M/S. GALA POLY PLAST, [2012] 6 TAXCORP ( A.T.) 27892 (AHMADABAD), WHEREIN HONBLE BENCH ALLOWED THE ADJUSTMENT MADE B Y THE ASSESSEE U/S.145A OF THE IT ACT. AT THE OUTSET, LD . SR. D.R. SUPPORTED THE ORDER OF THE CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE CASE LAW CITED BY THE ASSESSEE IS NOT SQUARELY APPLICABLE AS THE ASSESSEE WAS FOLLOWING INCLUSIVE METHOD OF EXCISE D UTY AND MAKING ADJUSTMENT U/S.145A OF THE IT ACT. THE ASSESSEE HA S BEEN CONSISTENTLY FOLLOWING EXCLUSIVE METHOD OF EXCISE DUTY FOR CLOSI NG STOCK. AS HONBLE SUPREME COURT IN CASE OF CIT VS. DYNAVISION LTD. [2012] 348 ITR 380 (SC), HAS HELD THAT ASSESSEE CONSISTENTLY FOLLOWS EXCLUSI VE METHOD FOR EXCISE DUTY ITA NO. 88/AHD/2011 A.Y. 04-05 PAGE 4 FOR CLOSING STOCK, IS TO BE ALLOWED BY THE REVENUE. THEREFORE, WE REVERSE THE ORDER OF THE CIT(A) AND ALLOW THE APPEAL OF THE ASS ESSEE. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 21.02.2014 SD/- SD/- (G.C.GUPTA) (T.R. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY S.K.SINHA &5 &5 &5 &5 , ,, , .16 .16 .16 .16 7&641 7&641 7&641 7&641 / COPY OF ORDER FORWARDED TO:- 1. *+ / APPELLANT 2. ./*+ / RESPONDENT 3. ## 1 ; / CONCERNED CIT 4. ;- / CIT (A) 5. 6? .1 , , / DR, ITAT, AHMEDABAD 6. A BC / GUARD FILE. BY ORDER/ &5 &, / # , )