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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI INTURI RAMA RAO
सुनवाई क� तार�ख/Date of hearing : 27.06.2019 घोषणा क� तार�ख /Date of Pronouncement : 19.08.2019 आदेश /O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER: These two appeals are filed by the Assessee directed against the common order of the Commissioner of Income Tax (Appeals)-3, Chennai, (in short ‘CIT(A)’) dated 28.09.2018 for the Assessment Years 2012-13 & 2013-14. Since common issues involved in these two appeals, we heard both the appeals together and dispose the same by this common order.
There is delay of 21 days in filing the appeals. The assessee filed an affidavit for condonation of delay of 21 days by stating as under:-
(I) The Appellant Company received the order passed by the Commissioner of Income Tax -Appeals -3, under section 250(6) of the Income Tax Act vide ITA 0.177/2016-17/CIT(A)-3 for the appeal preferred against the order passed by the AO under section 143(3) read with 92CA(3) for AY 2013-14 dated 28th September 2018 received on 25th October 2018.
(2) The Appeal should have been filed on or before 24th December 2018.
(3) One of the employee named Ms.Shafika, Executive - Accounts of PHA India Pvt Limited who is in-charge for handling the Company's tax related correspondence and co-ordination went on long leave (intermittently) due to health issues between 3rd November 2018 till 23rd December 2018 and returned to office on 24th December 2018.
(4) Subsequently, while checking the papers she realized the receipt of the order passed by CIT Appeals-5 for AY 2013-14, on 26th December 2018, and the brought the same to the notice of the tax in charge within the company, who in turn forwarded the same to the tax counsel handling the tax matters
(5) Due to the mentioned reason there is a delay of 21 days(approximately) and the appeal has already become time barred by time limitation. Realizing the same no time was wasted and the Appellant immediately taken steps to file the Appeal before the hon'ble Income Tax Appellate Tribunal, Chennai.
(6) In the interest of the justice, we pray that the delay in filing the Appeal be condoned.
The Ld.DR has no serious objection for condonation of delay. Accordingly, we condone the delay of 21 days and admit the appeals.
The issue in the grounds of appeal was not pressed during the course of hearing. Hence the appeal of the assessee is dismissed as withdrawn
The Assessee raised the following grounds of appeal:
1. The Honorable CIT(A)/AO erred in not appreciating the law relating to section 145A and doing disallowance thereof. 2 The Ld ClT(Appeals)/AO erred in not considering the weighted deduction under section 35 (2AB) 0 f the act incurred towards scientific research 0 n in- no use research and development facility, on the basis that certain procedural aspects not fulfilled. 2.1 The Ld. AO and ClT(A) failed to appreciate the fact that the recognition for the in-house research and development has been given by the DSIR for continuous period of 6 years(For the 1st 3 years- 1st Apri12011 to 31st March 20 1 4 and again for the next 3 Years 1st April 2014 to 31st March 2016) 2.2 AO not appreciated the fact that substantive benefit cannot denied for mere procedural lapse.
3. The Appellant craves leave to add or alter, by deletion, substitution, modification or otherwise, the above grounds of appeal, either before or during the hearing of the appeal.
5. The brief facts of the case are as under: The appellant namely M/s. PHA India Private Limited, is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of manufacturing automobile components. The return of income for the assessment year 2013-14 was filed on 30.11.2013 disclosing total income of Rs.5,34,88,390/-. Against the said return of income, the assessment was completed by the Deputy Commissioner of Income Tax, Corporate Circle-5(2), Chennai (hereinafter referred as ‘AO') vide order dated 22.12.2016 passed U/s.143(3) of the Income Tax Act, 1961 (in short ‘the Act’) at total income of Rs.12,93,78,319/-. While doing so, the AO made addition of Rs.72,49,284/- U/s.145A of the Act and disallowed the claim of deduction of Rs.6,86,40,645/- U/s.35(2AB) of the Act.
Being aggrieved, an appeal was preferred before Ld.CIT(A), who vide impugned order confirmed the additions. Being aggrieved, the appellant is in appeal before us in the present appeal.
During the course of hearing the appeal, the appellant has withdrawn the Grounds of appeal No.2. Hence the Grounds of appeal No.2, 2.1 & 2.2 are dismissed as not pressed. The Ground of appeal No.1 with regard to the provisions of Section 145A, it is submitted that the assessee valued the opening as well as the closing stock in accordance with the accounting standards by including the excise duty and VAT. However, with regard to the purchase, the assessee availed the MODVAT credit which is not considered as the part of the value of the opening or finished stock. However, the AO had computed the value of opening and closing stock by including the value of VAT. It is submitted that when the assessee was availing MODVAT credit, the same should not be considered for the opening or closing stock valuation. On the other hand, the Ld.DR relied on the orders of the lower authorities.
We heard the rival submissions and perused the material on record. The sole issue involved in the present appeal is valuation of opening stock as well as closing stock in terms of provisions of Section 145A of the Act. The provisions of Section 145A inserted in the statute with effect from 01.04.1999 mandates that valuation of purchase and sale of goods and inventory shall be in accordance with the method of accounting regularly employed by the assessee and further be adjusted to include the amount of any tax, duty, cess actually paid or incurred by the assessee. Thus the provisions of Section 145A contains non-obstante clause and therefore the provisions of Section 145A are mandatory in nature and admittedly in the present case, the assessee had not included the VAT in the value of the opening and closing stock and the AO rightly adjusted the value of the closing stock by including the component of VAT and therefore, we do not find any merit in the appeal filed by the assessee.
In the result, the appeals filed by the assessee for the assessment years 2012-13 & 2013-14 are dismissed.
Order pronounced in the court on 19th August, 2019 at Chennai.