ADDL CIT (ASSTT) SR-1 BARODA vs. GUJARAT NARMADA VALLEY FERTILIZERS CO LTD

TAXAP/313/2010HC GujaratGJHC24026362201031 August 2012Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE THE CHIEF JUSTICE MS. JUSTICE SONIA GOKANI4 pages
AI SummaryDismissed

What were the facts?

The Revenue, represented by the Additional CIT (Asstt.) Sr-1, Baroda, has appealed against an order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad, dated September 30, 2008. The appeal concerns the assessment years not explicitly stated but implied to be prior to the ITAT order. The dispute revolves around the disallowance of depreciation of Rs. 44,96,434/- claimed by the assessee, Gujarat Narmada Valley Fertilizers Co. Ltd., on an addition to plant and machinery amounting to Rs. 3,59,71,469/- due to exchange rate differences. The Assessing Officer disallowed the claim, stating depreciation was allowable only upon actual payment of the liability. The CIT(Appeals) had allowed the depreciation, following precedents for the assessee in earlier assessment years. The ITAT upheld the CIT(Appeals)'s decision.

What did the High Court hold?

The Tribunal held that the disallowance of depreciation of Rs. 44,96,434/- on account of exchange rate differences was not justified. It relied on the decision of the Gujarat High Court in the case of New India Industries Ltd. Vs. Commissioner of Income Tax (203 ITR 933 (Guj)), noting that the facts were identical and the issue was covered by earlier decisions for the same assessee. The Tribunal found no merit in the Revenue's challenge. Regarding the second issue, the Tribunal held that the exclusion of excise duty from the valuation of closing stock was concluded against the Revenue by virtue of the Gujarat High Court's decision in Assistant Commissioner of Income Tax Vs. Narmada Chematur Petrochemicals Ltd. ([2010] 327 ITR 369 (Guj)). Consequently, the Tribunal found no substantial question of law arising and dismissed the appeal. The operative direction was to allow the depreciation claim and the exclusion of excise duty from closing stock valuation.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in directing to allow depreciation on the provision made for exchange rate difference of Rs. 44,96,434/-? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law to exclude excise duty at the time of valuing closing stock at the end of the accounting period? Assessee's contentions are not recorded. The Revenue's contention for issue 1 was that depreciation was claimed on an exchange rate difference that was not actually paid at the end of the accounting year and was allowable only when the liability was actually paid. For issue 2, the Revenue's contention is not explicitly stated, but the question implies it challenged the exclusion of excise duty from closing stock valuation. The Tribunal relied on the Gujarat High Court decision in New India Industries Ltd. Vs. Commissioner of Income Tax (203 ITR 933 (Guj)) for issue 1 and the Gujarat High Court decision in Assistant Commissioner of Income Tax Vs. Narmada Chematur Petrochemicals Ltd. ([2010] 327 ITR 369 (Guj)) for issue 2.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

TAXAP/313/2010 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 313 of 2010 For Approval and Signature: HONOURABLE MR.JUSTICE AKIL KURESHI HONOURABLE MS JUSTICE SONIA GOKANI ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= ADDL CIT (ASSTT) SR-1 BARODA - Appellant(s) Versus GUJARAT NARMADA VALLEY FERTILIZERS CO LTD - Opponent(s) ========================================================= Appearance : MR KM PARIKH,ld.advocate for Appellant(s) : 1, None for Opponent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI Date : 31/08/2012 CAV JUDGMENT (Per : HONOURABLE MS JUSTICE SONIA GOKANI)

1.

The appellant-R

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