Precichem Corporation, Baroda V. The ACIT.,Cent.Circle-2, Baroda

ITSSA 82/AHD/2009

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8338 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 27-06-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 05-10-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI G.D. AGARWAL, VICE-PRESIDENT (AZ) AND SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER DATE OF HEARING : 26/6/2011 DRAFTED ON: 27/6 /2011 APPEAL(S) BY SL. NO(S). IT(SS)A NO(S) ASSESSMENT YEAR(S) APPELLANT (S) RESPONDENT(S) 1. 82/AHD/2009 2000-01 PRECICHEM CORPORATION 74, SAMPATRAO COLONY ALKAPURI, BARODA PAN: AABFP 8263 D THE ASST.CIT CENTRAL CIRCLE-2 BARODA 2. 83/AHD/2009 2001-02 -DO- -DO- 3. 84/AHD/2009 2002-03 -DO- -DO- 4. 85/AHD/2009 2006-07 -DO- -DO- ASSESSEE BY : SHRI MUKUND BAKSHI REVENUE BY : SHRI G.S. SOURYAVANSHI, SR.D.R. O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THESE FOUR APPEALS HAVE EMANATED FROM THE ORDERS O F THE CIT(A)-IV, AHMEDABAD ALL IDENTICALLY DATED 02/03/2 009. ALL THE GROUNDS ARE IDENTICAL AS REPRODUCED HEREINBELOW FR OM THE LEAD ASSESSMENT YEAR 2000-01 AND THESE APPEALS ARE CON SOLIDATED AND HEREBY DECIDED BY THIS SINGLE ORDER. 1 THE LD. A.O. HAS ERRED IN LAW AND IN FACTS IN M AKING ADDITION OF ITEMS REFLECTED / DISCLOSED IN THE RETURN OF INCOME FILED U/S.139. IN THE SEARCH PROCEEDINGS, NO INCRIMINATING MATERIA L WAS FOUND AND, THEREFORE, THE ASSESSMENT OF THE IMPUGNED YEAR COULD NOT HAVE BEEN DISTURBED BY RESORTING TO THE PROCEEDINGS U/S.153A / ITA NOS.82 TO 85/AHD /2009 PRECICHEM CORPORTION VS. ACIT AYS-2000-01, 01-02, 02-03 & 06-07 (RESPECTIVELY) - 2 - 153C. THE ADDITIONS THUS MADE BEING CONTRARY TO LAW AND FACTS IS PRAYED TO BE DELETED. 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-IV, AHMEDABAD HAS ERRED IN FACTS AND IN LAW IN CONFIRMING THE ACT ION OF THE LD. A.O. IN MAKING AN ADDITION OF RS.71,520/- (FOR A.Y. 2000-01), RS.69,054/- (FOR A.Y. 2001-02), RS.72,127/-(FOR A. Y. 2002-03), RS.72,528/- (FOR A.Y. 2006-07) ON ACCOUNT OF COMPO NENT OF EXCISE DUTY INCLUDED IN THE INVENTORY OF CLOSING ST OCK OF FINISHED GOODS. THE ADDITION OF RS.71,520/- (FOR A.Y. 2000- 01), RS.69,504/- (FOR A.Y. 2001-02), RS.72,127/-(FOR A. Y. 2002-03), RS.72,528/- (FOR A.Y. 2006-07) BEING ERRONEOUS IN F ACTS AND IN LAW IS PRAYED TO BE DIRECTED TO BE DELETED. 2. AS FAR AS GROUND NO.1 IS CONCERNED, THE SAME IS NOT PRESSED, HENCE DISMISSED FOR AYS 2000-01, 2001-02 & 2002-03 . 3. AS FAR AS GROUND NO.2 IS CONCERNED, FACTS IN BRI EF AS EMERGED FROM THE CORRESPONDING ASSESSMENT T ORDER PASSED U/ S.153C R.W.S.153A(B), R.W.S.143(3) OF THE ACT DATED 31/12/ 2007 FOR ALL THE YEARS THAT THE ASSESSEE-FIRM IS IN THE BUSINESS OF MANUFACTURING OF CHEMICALS. A SEARCH U/S.132 OF THE ACT WAS CARRIED OUT ON 30/08/2005. IN RESPECT OF THIS GROUND, THE OBSERV ATION OF THE AO WAS THAT THE ASSESSEE HAD SHOWN AN INVENTORY OF CLO SING STOCK OF FINISHED GOODS AND DECLARED THE VALUE RS.4,47,000/- FOR AY2000-01, RS.4,31,585/- FOR AY 2001-02, RS.4,50,791/- FOR AY 2002-03& RS.4,53,299/- FOR AY 2006-07. IT WAS NOTED BY THE AO THAT THE SAID VALUE OF THE STOCK DID NOT INCLUDE THE ELEMENT OF E XCISE DUTY. AS PER AO, EXCISE DUTY WAS CHARGEABLE @ 16% ON THE ART ICLE MANUFACTURED BY THE ASSESSEE. AS PER AO, THE PROV ISIONS OF SECTION 145A OF THE ACT WERE NOT COMPLIED WITH. EXPLANATIO N OF THE ITA NOS.82 TO 85/AHD /2009 PRECICHEM CORPORTION VS. ACIT AYS-2000-01, 01-02, 02-03 & 06-07 (RESPECTIVELY) - 3 - ASSESSEE WAS THAT THE FINISHED GOODS AS DECLARED ON 31/03/2000 AT THE CLOSE OF THE EACH ACCOUNTING PERIOD HAVE IN FAC T BEEN SOLD IN THE NEXT F.Y.; YEAR WISE IN THE MONTH OF APRIL. THEREF ORE, THE EXCISE DUTY THEREON WAS PAID BEFORE THE FILING OF THE RET URN. NO AMOUNT OF EXCISE DUTY REMAINED UNPAID WHEN THE RETURN WAS FURNISHED. IT WAS ALSO BEEN CONTESTED THAT THE PAYMENT OF DUTY WA S NOT SUBJECT TO DISALLOWANCE U/S.43B OF THE I.T.ACT. HOWEVER, TH E AO WAS NOT CONVINCED AND TAXED THE AMOUNT OF EXCISE DUTY FOR T HE YEARS NOW UNDER APPEAL AS PER THE FOLLOWING OBSERVATION; REPR ODUCED FROM AY 2000-01 AS FOLLOWS:- 5.1. AS PER CENTRAL EXCISE LAW, EXCISE DUTY ACCR UES AT THE TIME OF MANUFACTURING OF GOODS AND AS A PROCEDURE, THE PAYMENT IS MADE AT THE TIME OF CLEARANCE OF GOODS F ROM THE FACTORY PREMISES. THE LIABILITY OF EXCISE DUTY REL ATING TO CLOSING STOCK OF FINISHED GOODS HAS THUS ACCRUED AN D THE SAME SHOULD HAVE BEEN SHOWN AS PART OF CLOSING STOCK SIN CE THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNT. THE EXCISE DUTY IS PART AND PARCEL OF THE COST OF GOODS PRODUCED. FURTHERMORE, THE ASSESSEE HAS ALSO NOT COMPLIED PRO VISIONS OF SECTION 145A OF THE AT BY EXCLUDING THE ELEMENT OF EXCISE DUTY IN VALUATION OF FINISHED GOODS. THE OUTSTANDING LI ABILITY OF EXCISE DUTY AS ON 31.03.2000 ALSO DOES NOT INCLUDE THE AMOUNT OF EXCISE DUTY PAYABLE ON CLOSING STOCK OF FINISHED GOODS. THE ASSESSEE COMPANY SHOULD HAVE INCLUDED THE EXCISE DU TY WHILE VALUING THE CLOSING STOCK OF FINISHED GOODS AND THE N PROVIDED THE SAME IN BOOKS. THE ASSESSEE HAS FAILED TO DO SO . HENCE, THE SAME IS ALSO NOT ALLOWABLE U/S.43B OF THE ACT, ON PAYMENT BASIS. IN VIEW OF THIS, THE ELEMENT OF EXCISE DUTY OF RS.71,520/- (16% OF RS.4,47,000/-) IS ADDED TO THE INCOME COMPUTED BY THE ASSESSEE COMPANY. ITA NOS.82 TO 85/AHD /2009 PRECICHEM CORPORTION VS. ACIT AYS-2000-01, 01-02, 02-03 & 06-07 (RESPECTIVELY) - 4 - 4. WE HAVE BOTH THE SIDES. WE HAVE PERUSED THE ORD ERS OF THE AUTHORITIES BELOW. FROM THE SIDE OF THE REVENUE, L D.CIT-DR MR.G.S. SOURYAVANSHI HAS PLACED RELIANCE ON THE DEC ISION OF WEST COAST PAPER MILLS LTGD. VS. ACIT (ITA NO.3187/MUM. /2003). ON THE OTHER HAND, FROM THE SIDE OF THE ASSESSEE, LD.A R MR. MUKUND BAKSHI HAS PLACED RELIANCE ON THE DECISION OF HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF ACIT VS. NARMADA CHEMATUR PETROCHEMICALS LTD. REPORTED AT [2010] 327 ITR 369 (GUJ.). 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT HAS CONSIDERED THE IDENTI CAL ISSUE IN THE CASE OF NARMADA CHEMATUR PETROCHEMICALS LTD. (SUPRA ) AND HELD AS UNDER: ONE READS S. 3(1) OF THE EXCISE ACT IN ISOLATION, IT AP PEARS TO INDICATE THAT THE CHARGE IS LEVIED IN S 3 AND THE LIABILITY STAND S INCURRED UPON MANUFACTURE OF EXCISABLE GOODS AT THE RATES SET OUT IN FIRST SCHEDULE TO THE CENTRAL EXCISE TARIFF ACT, 1985. HOWEVER, THOUG H THE OPENING PORTION OF SUBS. (1) STATES THAT THERE SHALL BE LEVIED AND COLLECTED, THERE IS NO OTHER PROVISION FOR COLLECTION IN THE SAID SECTION AND TH E MANNER OF COLLECTION AS WELL AS LEVY ARE FOUND IN THE RULES AS PRESCRIBE D. IT MAY INDICATE THAT S. 4 WOULD BE A STANDALONE PROVISION, BUT WHEN ONE READS THE SAID PROVISION IT BECOMES CLEAR THAT THE LEVY IS INCOMPL ETE, IN AS MUCH AS THE ASSESSEE UNDER THE EXCISE ACT IS NOT REQUIRED TO DI SCHARGE THE LIABILITY TO PAY DUTY LEVIED UPON THE MANUFACTURE OF EXCISABLE G OODS, TILL SUCH GOODS ARE REMOVED FROM THE FACTORY PREMISES, OR A BONDED WAREHOUSE. THE TEST TO DETERMINE AS TO WHETHER THE LIABILITY HAD BEEN I NCURRED OR NOT WOULD BE AS TO WHETHER A CORRESPONDING RIGHT IS AVAILABLE WITH THE EXCISE AUTHORITY TO ENFORCE SUCH A LIABILITY. MERE PRODUCTION OR MANUFA CTURE BY ITSELF WOULD NOT BE SUFFICIENT. THOUGH THERE MIGHT BE LEVY UNDER S. 3 OF THE EXCISE ACT, YET NEITHER THE RATE NOR THE VALUE WOULD BE DETERMI NABLE TILL THE POINT OF TIME OF REMOVAL OF THE EXCISABLE GOODS FROM THE FACTORY PREMISES AND HENCE THE SCHEME ITSELF INDICATES THAT SO FAR AS AN ASSESSEE IS CONCERNED, HE ITA NOS.82 TO 85/AHD /2009 PRECICHEM CORPORTION VS. ACIT AYS-2000-01, 01-02, 02-03 & 06-07 (RESPECTIVELY) - 5 - INCURS LIABILITY TO PAY EXCISE DUTY ONLY UPON BOTH THE EVENTS TAKING PLACE, NAMELY MANUFACTURE OF EXCISABLE GOODS AND REMOVAL O F EXCISABLE GOODS. THIS POSITION HAS TO BE NECESSARILY ADOPTED CONSIDERING THAT THE DUTY OF CENTRAL EXCISE IS LEVIED AND COLLECTED ON AN AD VALOREM BAS IS. IN OTHER WORDS, UNLESS AND UNTIL THE VALUE IS KNOWN, THE LEVY AND T HE COLLECTION WOULD NOT BE CORRECT AND VALID. THE DUTY IS LEVIABLE AND IS ACTUALLY IMPOSED ON THE TRANSACTION VALUE DEFINED IN SUB-S. (3)(D) OF S . 4 OF THE EXCISE ACT. IN THESE CIRCUMSTANCES, IT IS NOT POSSIBLE TO STATE TH AT UNDER THE EXCISE ACT, THE DUTY HAS BECOME DUE AND PAYABLE ONLY BY OPERATI ON OF S. 3 SIMPLICITER. IF S. 3 OF EXCISE ACT IS CONSIDERED TO BE THE ONLY CHARGING SECTION AND S. 4 OF THE EXCISE ACT IS CONSIDERED AS ONLY A PROVISION FOR ASSESSMENT, THE CHARGE LEVIED BY S. 3 OF THE EXCISE ACT CANNOT BE B ROUGHT HOME. SECS. 3 AND 4 HAVE TO BE READ TOGETHER TO BRING THE CHARGE HOME. THE CHARGE IS PARTIALLY EMBEDDED IN BOTH THE PROVISIONS. IT IS IN THIS CONTEXT THAT ONE FINDS VARIOUS JUDGMENTS IN RELATION TO DISPUTES RAI SED ON THE BASIS OF A PARTICULAR CUT-OFF DATE SAY, 28TH FEBRUARY OR 1ST M ARCH QUA THE GOODS ALREADY MANUFACTURED AND LYING IN STOCK UPTO 28TH F EBRUARY WHICH BECOME AMENABLE TO DUTY OF CENTRAL EXCISE ONLY UPON THE PO INT OF TIME OF REMOVAL, NAMELY, AFTER 1ST MARCH. THEREFORE, TO REA D PROVISIONS OF S. 3 OF THE EXCISE ACT TO BE A COMPLETE PROVISION FOR TH E PURPOSES OF CHARGING DUTY OF CENTRAL EXCISE WOULD NOT BE A FULL Y CORRECT PROPOSITION OF LAW. UNDER A TAXING STATUTE WHEN A CHARGE IS FASTEN ED, THE PURPOSE IS TO COLLECT TAX. A LEVY IS FOR THE PURPOSES OF IMPOSING A TAX OR A DUTY, BY WHATEVER NAME CALLED, AND FOR THE PURPOSES OF COLLE CTION OF SUCH IMPOST. A STATE CANNOT BE INTERESTED IN A LEVY WHICH DOES N OT RESULT IN INFLOW OF REVENUE TO THE EXCHEQUER. THE POSITION IN LAW IS, T HEREFORE, THAT FOR THE PURPOSES OF LEVY AND COLLECTION OF DUTY OF CENTRAL EXCISE, THE PROVISIONS OF EXCISE ACT READ WITH RULES THEREUNDER EVOLVE A SELF-CONTAINED SCHEME UPON A CONJOINT READING OF SS. 3 AND 4 OF TH E EXCISE ACT WITH RR. 9 AND 9A OF THE CENTRAL EXCISE RULES. THEN, FOR THE PURPO SES OF THE ACT, NAMELY, IT ACT, THE POSITION IN LAW CANNOT BE DIFFERENT. AN IN TERPRETATION OF A PARTICULAR STATUTE SHOULD NOT ORDINARILY BE IN CONF LICT WITH ANOTHER STATUTE UNLESS AND UNTIL SPECIFICALLY PROVIDED SO B Y THE OTHER STATUTE. THE ACT DOES NOT PROVIDE FOR ANY CONTRARY INTERPRETATION, I.E., WHAT IS CONTRARY TO THE POSITION PREVAILING U NDER THE EXCISE LAW. THE POINT OF TIME OF REMOVAL OF EXCISABLE GOODS IS THE POINT OF TIME WHEN THE LIABILITY TO PAY CENTRAL EXCISE DUTY IS INCURRED RE SULTING IN CORRESPONDING RIGHT UNDER LAW IN THE EXCISE DEPARTMENT TO TAKE ST EPS TO EFFECT RECOVERY IF THE LIABILITY IS NOT DISCHARGED. TILL THAT POINT OF TIME LIABILITY TO PAY DUTY OF CENTRAL EXCISE CANNOT BE STATED TO HAVE BEE N INCURRED IN LAW AS THE SAME IS NOT DUE AND PAYABLE. ON BEHALF OF THE REVENUE RELIANCE HAS ALSO BEEN PLA CED ON PROVISIONS OF S. 145A WHICH HAS BEEN INSERTED BY FINANCE (NO. 2) ACT , 1998, W.E.F. 1ST APRIL, 1999. THE ASSESSMENT YEAR BEING 1997-98 THE SAID PROVISION CANNOT BE INVOKED. THOUGH THE BILL PROPOSED RETROSPECTIVE INSERTION ULTIMATELY THE SECTION HAS COME ON THE STATUTE BOOK ONLY FROM 1ST APRIL, 1999. WHAT IS ITA NOS.82 TO 85/AHD /2009 PRECICHEM CORPORTION VS. ACIT AYS-2000-01, 01-02, 02-03 & 06-07 (RESPECTIVELY) - 6 - MORE MATERIAL IS THAT THE SAME RELATES TO INCLUSION IN THE VALUE OF INVENTORY THE AMOUNT OF ANY TAX, DUTY ETC. PAID OR LIABILITY INCURRED FOR THE SAME UNDER ANY LAW IN FORCE. MEANING THEREBY SUCH TAX, DUTY, E TC. SHOULD HAVE BEEN ACTUALLY PAID OR SHOULD BE ACTUALLY DUE AND PAYABLE UNDER THE LAW APPLICABLE TO SUCH TAX, DUTY, ETC. IN FORCE. OTHERW ISE EVEN S. 145A WILL ALSO NOT CARRY CASE OF REVENUE ANY FURTHER. THE TRIBUNAL WAS THEREFORE JUSTIFIED IN LAW IN EXCLUDING THE EXCISE DUTY AT THE TIME OF VALUATION OF THE CLOSING STOCK OF FINISHED GOODS AT THE END OF THE ACCOUNTIN G PERIOD. FROM THE ABOVE, IT IS EVIDENT THAT THEIR LORDSHIPS HAVE EXAMINED THE LIABILITY OF THE ASSESSEE TO THE EXCIS E DUTY AND HAVE ARRIVED AT THE CONCLUSION THAT THE LIABILITY OF EXC ISE DUTY IS INCURRED ONLY WHEN TWO EVENTS TAKES PLACE, VIZ. MANUFACTURER OF EXCISABLE GOODS AND ALSO REMOVAL OF EXCISABLE GOODS. THEIR LO RDSHIPS HAVE ALSO EXAMINED THE SECTION 145A AND HAVE HELD THAT T HE SECTION 145A WILL BE APPLICABLE FROM A.Y.1999-2000 AND HAS ALSO EXAMINED UNDER WHAT CIRCUMSTANCES SECTION 145A WOULD BE APPL ICABLE. THEIR LORDSHIPS HELD THAT THE SECTION 145A WOULD BE APPLI CABLE WHEN THE LIABILITY OF THE TAX, DUTY IS ACTUALLY PAID OR ACTU ALLY DUE AND PAYABLE AS PER THE LAW. HOWEVER, SINCE THE LIABILITY OF EX CISE DUTY IS TO BE PAYABLE ONLY UPON THE REMOVAL OF THE EXCISABLE GOOD S, MERELY BECAUSE THE GOODS WERE MANUFACTURED DURING THE YEAR UNDER CONSIDERATION, NO LIABILITY IS INCURRED BY THE ASSE SSEE. SINCE NO LIABILITY IS INCURRED BY THE ASSESSEE, THE SAME CAN NOT BE INCLUDED IN THE VALUATION OF THE CLOSING STOCK EVEN AFTER THE A PPLICABILITY OF SECTION 145A. ITA NOS.82 TO 85/AHD /2009 PRECICHEM CORPORTION VS. ACIT AYS-2000-01, 01-02, 02-03 & 06-07 (RESPECTIVELY) - 7 - 6. THE LEARNED DR HAS RELIED UPON THE ORDER OF THE ITAT, MUMBAI BENCH IN THE CASE OF WEST COAST PAPER MILLS LTD. (SUPRA) WHEREIN THE ITAT HELD AS UNDER: THE PROVISION OF S.145A IN A WAY SEEKS TO RECOGNIZ E AND MAKE IT COMPULSORY TO VALUE THE STOCK IN AN INCLUSIVE METHO D AS AGAINST THE PREVAILING PRACTICE OF VALUING THE SAME BY EXCLUSIV E METHOD. AS A RESULT OF THIS AMENDMENT, THE PURCHASES AND SALES A S WELL AS INVENTORY SHALL ALWAYS INCLUDE THE ELEMENT OF TAX, DUTY, CESS OR FEE PAID. THEREFORE, IN THE YEAR WHEN THE PROVISIONS ARE IMPL EMENTED FOR THE FIRST TIME, THERE IS BOUND TO BE AN IMPACT IN THAT YEAR, WHEREAS IN THE SUBSEQUENT YEAR WHATEVER VALUATION IS PUT TO THE CLOSING STOCK WILL SURFACE AS OPENING STOCK AND THEREBY A DEBIT TO THAT YEARS P&L A/C. IN OTHER WORDS, THE CHANGED METHOD WILL HAVE NEUTRAL TAX EFFECT OVER THE YEARS. ONLY THE METHOD OF VALUATION OF THE CLOSING STOCK GETS SWITCHED OVER F ROM EXCLUSIVE METHOD TO INCLUSIVE METHOD. IF THE ASSESSEE IS ALLOWED TO AD JUST THE OPENING STOCK OF THE YEAR IN QUESTION THEN IT WOULD AMOUNT TO DISTORTION OF THE VALUE OF THE CLOSING STOCK OF THE EARLIER YEAR. UNLESS SUCH ADDITION IS MADE IN THE EARLIER YEAR, THE DEBIT TO THIS YEARS P&L A/C. BY MEANS OF ADDITION TO THE OPENING STOCK WILL REDUCE THE TAXABLE INCOME AND WILL ONLY RESULT IN N OT APPLYING THE PROVISIONS OF S. 145A IN THE YEAR IN QUESTION. THE PROVISIONS, A S INTRODUCED WILL HAVE ONLY TO TAKE INTO CONSIDERATION THE ELEMENT OF THE TAX, DUT Y, CESS OR FEE PAID IN THE SALES, PURCHASES AND INVENTORY. IT WILL NOT HAVE I MPACT ON THE CLOSING STOCK CARRIED FORWARD BECAUSE WHAT CAN BE DEBITED TO THIS YEAR'S P&L A/C IS THE CLOSING STOCK OF THE EARLIER YEAR. THERE CAN BE NO EXCEPTION TO THE RULE THAT THE CLOSING STOCK OF THE EARLIER YEAR WILL HAVE TO BE N ECESSARILY THE OPENING STOCK OF THIS YEAR. NOTWITHSTANDING WHAT S CONTAINED IN S . 145, THE PROVISIONS OF S. 145A SHALL PREVAIL. THE SUM AND SUBSTANCE OF THAT I NTENT CAN ONLY BE ACHIEVED BY MAKING AN ADDITION TO THE VALUE OF THE CLOSING S TOCK BY ITS ELEMENT OF TAX, DUTY, CESS OR FEE, ETC., AND NOT BY ALTERING THE OP ENING STOCK. WHENEVER THE ASSESSEES CHANGED THEIR METHOD OF ACCOUNTING FROM O NE RECOGNIZED METHOD TO ANOTHER RECOGNIZED METHOD, THERE IS BOUND TO BE TAX EFFECT IN THE YEAR OF CHANGE. BUT, OVER THE YEAR IT IS TAX NEUTRAL. ON TH E SAME ANALOGY, WHEN THE LEGISLATURE HAS IMPOSED A NEW SYSTEM OF VALUING THE CLOSING STOCK IT IS BOUND TO HAVE AN IMPACT IN THAT YEAR, BUT BECOMES NEUTRAL IN NATURE IN THE SUBSEQUENT YEAR. HOWEVER, FROM THE PERUSAL OF THE ABOVE DECISION, IT IS EVIDENT THAT IN THE ABOVE CASE, THERE WAS NO DISPUTE WITH R EGARD TO THE ADDITION TO THE CLOSING STOCK BUT THE DISPUTE BEFOR E THE ITAT IS WHETHER THE CORRESPONDING CHANGE IS TO BE MADE IN T HE VALUATION OF ITA NOS.82 TO 85/AHD /2009 PRECICHEM CORPORTION VS. ACIT AYS-2000-01, 01-02, 02-03 & 06-07 (RESPECTIVELY) - 8 - THE OPENING STOCK WHICH THE LEARNED MEMBERS OF THE ITAT REFUSED AND HELD THAT THE OPENING STOCK IS NOT REQUIRED TO BE REVALUED. THEREFORE, THE ABOVE DECISION OF THE ITAT WOULD NOT BE APPLICABLE TO THE CASE UNDER APPEAL BEFORE US. IN ANY CASE, T HE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE DECISION O F THE HONBLE JURISDICTIONAL HIGH COURT WHICH IS BINDING UPON US. WE THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF NARMADA CHEMATUR PETROCHE MICALS LTD. (SUPRA) ALLOW GROUND NO.2 OF THE ASSESSEES APPEAL IN ALL THE YEARS. 7. RESPECTFULLY FOLLOWING THE DECISION OF THE HONB LE GUJARAT HIGH COURT BEING JURISDICTIONAL HIGH COURT THIS GRO UND IS HEREBY ALLOWED. 8. IN THE RESULT, APPEALS FOR AYS 2000-01, 2001-02 , 2002-03 ARE PARTLY ALLOWED AND APPEAL FOR ASSESSMENT YEAR 2006-07 IS ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 30 TH JUNE, 2011. SD/- SD/- ( G.D. AGARWAL ) ( MUKUL KR. SHRAWAT ) VICE PRESIDENT (AZ) JUDICIAL ME MBER AHMEDABAD; DATED 30/ 6 /2011 T.C. NAIR, SR. PS ITA NOS.82 TO 85/AHD /2009 PRECICHEM CORPORTION VS. ACIT AYS-2000-01, 01-02, 02-03 & 06-07 (RESPECTIVELY) - 9 - COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-IV, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD 1. DATE OF DICTATION.. 27/06/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 28/06/2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S30.6.11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.6.11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER