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Income Tax Appellate Tribunal, “J ”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN, JM & &
आदेश / O R D E R PER R.C.SHARMA (A.M):
These are the cross appeals filed by assessee and Revenue against the order of CIT(A)-40, Mumbai dated 16/03/2016 for A.Y.2011-12 in the matter of order passed u/s.143(3) of the IT Act.
3446/Mum/2016 M/s. Dimple Drums Barrels Pvt. Ltd., 2. The following grounds have been taken by the Revenue:-
1. The Hon'ble Tribunal failed to interpret the provisions of section 145A of Income tax Act, 1961 in its right perspective and true meaning.
2. On the facts and in the circumstances of the case, the Hon'ble Tribunal in law, erred in directing the A.O. to delete the additions of Rs. 16704085/- for the AY 2011-12 by invoking the provisions of section 145A of the Income Tax Act 1961 on the ground that the amounts were not claimed in the trading account, as the same were included in the purchases, as this amount had already been taxed and is already included in the purchases, so if the same is added to the closing stock, it would amount to double taxation of the amounts of Rs. 16704085/-.
3. On the facts and in the circumstances of the case, the substantial question of law involved is correct in the interpretation of section 145A of the I.T. Act 1961 as well as application of the Hon'ble Bombay High Court's decision in the case of Melmould Corporation vs CIT 202 ITR 789(Bom.)
4. The appellant states and submits that the revenue has not accepted the decision of the Hon'ble ITAT for A.Y. 2000-01, 2003-04, 2004-05, 2006-07, 2007-08 & 2008-09 and filed appeal before Hon'ble High Court.
The grounds taken by assessee are as under:- On the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals)-52, (CIT-A) Mumbai, erred in law as well as on facts, in confirming the disallowance of Rs. 7,96,592/- under section 14A, read with Rule 8D. 1.2 The reasons assigned by the CIT(A, for confirming the additions are wrong and incorrect. 1.3 The learned CIT(A) factually erred in observing in para 6.2 to the effect that (i) AR failed to produce evidence of utilization of borrowed funds and (ii) failure to establish availability of interest free fund. 1.4 The reliance was placed by CIT(A) on case reported 328 ITR 81 in respect of ground which not agitated, in preference to the conclusion of the Hon'ble Court on ground agitated. The Appellant relies on the same decision, which is in favour of the Appellant. 2. The Appellant next objects to confirming the disallowance of vehicle expenses and depreciation, totalling to Rs. 80,595/- which was based on earlier years facts which were substantially different.
3446/Mum/2016 M/s. Dimple Drums Barrels Pvt. Ltd., 2.2 The CIT(A) failed to appreciate that there cannot be an element of personal expenses in case of a company, particularly because to perquisite value of car by Director is included in income of Director. 3. The appellant craves leave to add, alter or amend any ground at the time of hearing or before that.
Rival contentions have been heard and record perused.
Facts in brief are that assessee is engaged in the business of manufacturing of drums and barrels. During the course of assessment, AO invoked provisions of Section 145A and made a trading addition of Rs.1,67,04,085/-. 6. By the impugned order, CIT(A) deleted the same after relying on the decision of the Tribunal in assessee’s own case for the A.Y.2003-04 to 2009-10 at para 5.3 to 5.5. Precise observation of the CIT(A) was as under:- 5.3 I have considered the submission of the appellant and perused the materials on record including copies of the orders of Hon’ble ITAT, Mumbai Bench in the case of the appellant , wherein the Hon’ble Tribunal had decided this issue in favour of the appellant for A.Ys.2001-01 to 2005-06. The relevant part of the order of Hon’ble ITAT dated 08-12-2006 for A.Y.2000-01{ITA No.5100/Mum/2003) is extracted as under:-- "In the present case, the credit available in the Moduat balance remaining as amount due from Central Excise authorities account was Rs.93,22,232/-. This amount was not claimed in the Trading Account, as the the same had not been included in the purchase. It shows that his amount had already been taxed and if the same was added to the closing stock, it would amount to double taxation of the amount of Rs. 93,22, 332/-. After taking all facts into consideration, we are of the view that the addition of Rs. 93 ,22,232 /- made by the AO to the closing stock is unjustified, as the same resulted into double taxation of the same amount", 5.4 Similar findings have been given by the Hon’ble ITAT vide order dated 28-02-2008 for A.Y.2002-03 (ITA No.4270/MUM/2005) . The 3446/Mum/2016 M/s. Dimple Drums Barrels Pvt. Ltd., operative part of order of the order of the Hon’ble ITAT dated 28-02- 2008 for A.Y.2002-03 is similarly reproduced as under:- "It is noted from the perusal of records that assessee is maintaining its books of account on exclusive method of accounting and, therefore, adjustments are to be made as per the provisions of Section 145A of the Act, in respect of inventories (both closing and opening purchase and sales and not only to the closing stock. Therefore, it would be having no impact on the profits of the year under consideration because the same amount would be added to the closing stock and to the purchases/ opening stock as the case may be. Although this should be done in view of specific provisions of section 1 45A, however, to avoid the multiplicity of proceedings having no impact on the ultimate profit shown by the assessee, we dismiss this ground of the Revenue. 5.5 It is observed that the A.O has made the impugned addition only with a view to keep the issue alive as the Department has filed appeals U/S.260A in earlier years before the Hon’ble Bombay High Court which are pending adjudication, despite the fact that both the first appellate authority as also the Hon’ble ITAT has decided this issue in favour of the assessee for different years as discussed above .Therefore, respectfully following the order of Hon’ble ITAT dated 08-12-2006 for A.Y.2000-01(ITA No.5100/Mum/2003) and order dated 28-02-2008 for A.Y.2002-03 (ITA No.4270/Mum/2005), it is is held that the addition of Rs.1,67,04,085/- made by the AO on account of unutilized Modvat/Cenvat credit is not sustainable . Therefore, the same is directed to be deleted. These grounds are decided in favour of the assessee .”
It is clear from the order of CIT(A) that he has followed the decision of the Tribunal in assessee’s own case for the A.Y.2003-04 to 2009-10. The department has taken this ground on the plea that department has filed an appeal before the High Court against the order of CIT(A) u/s.260A of the IT Act.
We had also gone through the order of the Tribunal and found that the issue is squarely covered by the order of the Tribunal in assessee’s own case wherein it was observed that no addition can be made on