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Income Tax Appellate Tribunal, DELHI BENCH : D : NEW DELHI
Before: SHRI R.K. PANDA & SHRI KUL BHARAT
ORDER
PER R.K. PANDA, AM:
The above two appeals filed by the assessee are directed against the separate orders of the CIT(A), Moradabad, relating to Assessment Years 2010-11 and 2012-13.
Since identical issues have been taken by the assessee in these appeals, therefore, these were heard together and are being disposed of by this common order for the sake of convenience. & 1105/Del/2 (A.Y. 2010-11)
Grounds of appeal
No. 1 and 2 raised by the assessee are as under:- “1. That the learned Commissioner of Income Tax (Appeals) Moradabad has erred on facts and in law in confirming the action of A.O. in making addition Rs.981560.00 as per details below on account of under valuation of free sugar, levy sugar and molasses for non inclusion of education cess and higher education cess on excise duty. i) Under valuation of free sugar - 577154.00 ii) Under valuation of levy sugar - 96140.00 iii) Under valuation of molasses - 308266.00
2. That the learned CIT (Appeals)Moradabad has also erred on facts and in law in confirming the action of A.O. in not allowing the benefit of education cess and higher education cess on free and levy sugar of Rs.364741.00 and Rs.183111.00 on molasses respectively paid before the due date of filing the return. Without prejudice to the above the learned A.O. has also erred on facts and in not allowing the benefit of education cess and higher education cess amounting to Rs.379243.00 for which the addition was made last year.”
Facts of the case, in brief, are that the assessee derives income from the business of manufacturing and trade of sugar and its by-products. It filed its return of income on 22nd September, 2010 declaring the total income at Rs.17,63,25,510/-. During the course of assessment proceedings, the AO noted that as per the provisions of section 145A, for making valuation of purchase and sale of goods and inventory, the amount of any tax due, cess or fee (by whatever name called) actually paid or incurred by the assessee shall be taken into account. She noticed that though the assessee has partially followed the provisions of section 145A by including the amount of basic excise duty and cess on free and levy sugar and basic excise duty on molasses, however, the amount of education & 1105/Del/2017 cess and higher education cess has not been included in the valuation of the closing stock of aforesaid products. He noted that the prevailing rate of excise duty on free sale sugar during the year under consideration is Rs. 97.85 per quintal. This comprises of basic excise duty: Rs. 71/-, cess: Rs. 24/-, education cess: Rs. 1.90 and higher education cess: Rs. 0.95, totalling to Rs. 97.85 per quintal. However, the assessee has valued the closing stock of free sale sugar by including only basic excise duty and cess thereon by adopting a rate of Rs. 95/- per quintal. Therefore, the valuation of closing stock of free sale sugar as on 31/03/2010 has been understated by Rs. 2.85 per quintal (97.85 - 95). The closing stock of free sale sugar as on 31/03/2010 was 2,02,510 quintals. Thus, the valuation of closing stock of free sale sugar as on 31/03/2010 has been understated by Rs. 5,77,154/- (202510 x 2.85) and is liable to be added to the total income.
Similarly, he noted that the prevailing rate of excise duty on levy sale sugar during the year under consideration is Rs. 63.86 per quintal. This comprises of excise duty: Rs. 62/-, education cess: Rs. 1.24 and higher education cess: Rs. 0.62, totalling to Rs. 63.86 per quintal. However, the assessee has valued the closing stock of levy sugar by including only excise duty by adopting a rate of Rs. 62/- per quintal. Therefore, the valuation of closing stock of levy sugar as on 31/03/2010 has been understated by Rs. 1.86 per quintal (63.86 - 62). The closing stock of levy sugar as on 31/03/2010 was 51,688 quintals. Thus, the valuation of & 1105/Del/2017 closing stock of levy sugar as on 31/03/2010 has been understated by Rs.96,140/- and is liable to be added to the total income.
The AO also noted that the prevailing rate of excise duty on molasses during the year under consideration is Rs. 77.25 per quintal. This comprises of excise duty: Rs. 75/-, education cess: Rs. 1.50 and higher education cess: Rs. 0.75, totalling to Rs. 77.25 per quintal. However, the assessee has valued the closing stock of molasses by including only excise duty by adopting a rate of Rs. 75/- per quintal. Therefore, the valuation of closing stock of molasses as on 31/03/2010 has been understated by Rs. 2.25 per quintal (77.25 - 75). The closing stock of molasses as on 31/03/2010 was 1,37,007.10 quintals. Thus, the valuation of closing stock of molasses as on 31/03/2010 has been understated by Rs. 3,08,266/- and is liable to be added to the total income. Accordingly, the AO made addition of Rs.9,81,560/- to the total income of the assessee.
In appeal, the ld.CIT(A) upheld the action of the AO by observing that in AY 2008-09 the Department valued the closing stock by adding the education cess and excise duty on closing stock of sugar. The predecessor CIT(A) also has decided the issue in AY 2011-12. Following the decision of his predecessor and observing that the AO has made the aggregate addition as per the provisions of section 145A, he upheld the action of the AO. However, he directed that the opening value of the stock for the next year should be amended accordingly. & 1105/Del/2017 8. Aggrieved with such order of the CIT(A), the assessee in appeal before the Tribunal.
We have heard the rival arguments made both the sides and perused the record. We find, the AO, applying the provisions of section 145A, made addition of Rs.9,81,560/- on account of undervaluation of closing stock of free sugar, levy sugar and molasses on account of non-inclusion of education cess and higher education cess. We find, the ld.CIT(A), following the order of his predecessor for A.Y. 2011-12 and the assessment order for A.Y. 2008-09, upheld the action of the AO. However, he directed the AO to consider the opening value of the stock for the next year which is the closing stock for the current year as per the revised valuation. Since the ld.CIT(A), while deciding the issue has followed the order of his predecessor for A.Y. 2011-12 in assessee’s own case and the ld. Counsel for the assessee could not throw any light as to the fate of such order, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the CIT(A) with a direction to find out as to what is the fate of the issue in A.Y.s 2008-09 and 2011- 12. He shall decide the issue on the basis of the order for A.Y.s 2008-09 and 2011-12 which has been followed by the CIT(A) and as per fact and law, after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The Grounds of appeal
No. 1 and 2 raised by the assessee are accordingly allowed for statistical purposes. & 1105/Del/2017
10. Ground of appeal No.3 reads as under:-
“3. That the learned CIT(A) Moradabad has also erred on facts and in law in confirming the action of A.O. in treating Rs.49077705.00 being interest earned from Cooperative Societies and Bank as income from other sources instead of business income.”
The ld. Counsel for the assessee, at the outset, submitted that the ground of appeal
No.3 taken by the assessee is decided against the assessee by the order of the Tribunal in assessee’s own case in order dated 4th May, 2007 for AY 2001-02. In view of the above submission by the ld. Counsel for the assessee and in absence of any objection from the side of the ld. DR, the ground No.3 raised by the assessee is dismissed. (A.Y. 2012-13)
12. The ground of appeal No.1 raised by the assessee reads as under:-
“1. That the learned Commissioner of Income Tax (Appeals) Moradabad has erred on facts and in law in confirming the action of A.O. in making addition Rs.509007.00 in the closing stock of sugar & molasses on account of education cess and higher education cess on excise duty u/s 145A of the Income-tax Act, 1961.”
After hearing both the sides, we find the above ground is identical to ground of appeal No.1 and 2 in . We have already decided the issue and the grounds raised by the assessee have been allowed for statistical purposes. Following the similar reasonings, the above ground raised by the assessee is also allowed for statistical purposes.
Ground of appeal No.2 raised by the assessee reads as under:- 6
“2. That the learned CIT (Appeals)Moradabad has also erred on facts and in law in disposing of the following grounds: “Without prejudice to the above the learned A.O. has also erred on facts and in law in not allowing the benefit of addition on account of education & higher education cess on excise duty on closing stock amounting to Rs.1059457.00 made in A.Y. 2011-12.”
The ld. Counsel for the assessee submitted that the ld.CIT(A) has not decided the above ground raised before him. He accordingly submitted that he has no objection if the matter is restored to the file of the CIT(A) with a direction to dispose of the ground. The ld. DR has no objection for the same. Accordingly, ground of appeal No.2 raised by the assessee is restored to the file of the CIT(A) with a direction to decide the same as per fact and law, after giving due opportunity of being heard to the assessee. We hold and direct accordingly. Ground No.2 is accordingly allowed for statistical purposes.
16. Ground No.3 raised by the assessee reads as under:-
“3. That the learned CIT(A) Moradabad has also erred on facts and in law in confirming the action of A.O. in treating Rs.35098788.00 being interest earned from Cooperative Societies and Bank as income from other sources instead of business income.”
The ld. Counsel for the assessee fairly conceded that the above ground is decided against the assessee by decision of the Tribunal vide order dated 4th May, 2007 for A.Y. 2001-02. In absence of any objection from the side of the ld. DR to the above submission of the ld. Counsel, ground No.3 raised by the assessee is dismissed.
Ground No.4 being general in nature is dismissed.