ASST. COMMISSIONER OF INCOME TAX. CIRCLE 4. vs. M/S. PAUSHAK LIMITED.

Facts

The Assistant Commissioner of Income Tax, Circle 4, is the appellant, and M/s. Paushak Limited is the opponent (assessee). The appeal challenges the order dated 08.08.2006 passed by the Income-tax Appellate Tribunal (ITAT), Ahmedabad Bench (Camp at Baroda), for the assessment year 1996-97. The High Court admitted the appeal on 28.09.2007 and framed a substantial question of law. The Court noted that the amount involved and the revenue effect were less than Rs. 1 lakh, referencing CBDT Instructions No. 1979 dated 27th March, 2000 and 02 of 2005, which advise against appeals in such cases.

Held

The High Court did not decide the substantial question of law on its merits. Instead, the Court dismissed the appeal on the ground of the smallness of the amount involved and the revenue effect, which was less than Rs. 1 lakh. The Court cited CBDT Instructions No. 1979 dated 27th March, 2000 and 02 of 2005 as the basis for not entertaining the appeal. The questions were answered in favour of the assessee and against the revenue. No specific finding was given on the exclusion of excise duty from the valuation of closing stock. Liberty was granted to revive the appeal in case of difficulty.

Key Issues

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law to exclude the excise duty at the time of valuation of closing stock of finished goods at the end of the accounting period? The assessee's contention is not recorded. The revenue's contention, as implied by the framing of the question, is that excise duty should be included in the valuation of closing stock. The High Court did not record specific arguments from either side regarding this issue.