Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI
Before: SHRI D.T. GARASIA & SHRI ASHWANI TANEJA
Date of hearing : 24-01-2017 Date of order : 15 -02-2017 O R D E R
PER ASHWANI TANEJA, AM:
This appeal has been filed by the assessee against the order of Commissioner of Income-tax (Appeals)-5, Mumbai [hereinafter called CIT(A)] dated 14-11-2014 passed against the order of the assessing officer u/s 143(3) dated 18-02-2014 for AY 2011-12 on the following grounds:- “
Being aggrieved by the order passed by the learned Commissioner of Income-Tax (Appeals)-5, Mumbai (hereinafter referred to as "the CIT(A)") your Appellant submits the following ground of appeal for your sympathetic consideration:
1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in enhancing the addition made to closing stock on account of CENVAT Credit and VAT Set off from INR 1,36,61,622/- to INR 1,64,63,088/- on the contention that there is deviation from the method of valuation prescribed under section 145A.
The learned CIT(A) ought to have appreciated that the Method' for valuation of inventories mandated by ICAI and accordingly, booking its purchases of inputs and valuing its inventories net of CENVAT and sales tax set off. The learned CIT(A) further erred in rejecting the impact of deviation on profits of the company worked out by the appellant given in Annexure IV of Tax Audit Report. He ought to have appreciated that the impact of deviation on profits is NIL and has been worked out as illustrated in Guidance Note of Tax Audit u/s 44AB of the Income Tax issued by the ICAI.”
During the course of hearing, it was stated by the Ld. Counsel of the assessee that the only issue involved in this appeal is with regard to the valuation of stock in accordance with section 145A of the Act. Identical issue was involved in A.Ys. 2010-11 and 2009-10 wherein the Tribunal vide its orders dated 06-06-2016 and 08-06-2016 has restored the matter back to the file of the AO. Therefore, in this year also, these orders may be followed and the issue be restored to the file of the AO.
Per contra, the Ld. DR did not raise any objection in restoring the issues back to the file of the AO in line with the orders of the Tribunal for earlier years. 4. We have gone through the orders passed by the lower authorities as well as the orders passed by the Tribunal for earlier years. It is noted that the Tribunal vide its order for A.Y. 2010-11 has held as under:-
“6. We have heard the rival contentions and perused the record. The assessee has demonstrated in the statement prepared by him that there is no impact on the net profit, if taxes are accounted either under exclusive or under inclusive method. We have noticed that the tax authorities have not examined the statement furnished by the assessee though learned CIT(A) has made certain computations and granted partial relief to the assessee. We have noticed that he has not found fault with the statement furnished by the assessee. Under these set of facts, we are of the view that this issue requires fresh examination at the end of the Assessing Officer by duly considering reconciliation statement furnished by the assessee. Accordingly, we set aside the order passed by learned CIT(A) on this issue and restore the same to the file of the Assessing Officer with the direction to examine the reconciliation statement furnished by the assessee and take appropriate decision in accordance with law after affording necessary opportunity of being heard to the assessee.”
Similar view has been followed by the Tribunal in order for A.Y. 2009-10 with following observations:- “6. Similar issue has been decided by coordinate bench of the Tribunal in the case of Hawkins Cookers Ltd., order dated 11-8-2008 [2008-(1D2)-GJX- 0272-TB0M], wherein the Tribunal held as under:- On consideration of section 145A, above Memorandum and CBDT circular explaining the provisions section 145A and above Judgment of the Delhi High court we noted that when the adjustments are made in the valuation of inventories, this will affect both the opening as well as closing stock. Whatever adjustment is made in the valuation of closing stock, the same will be reflected in the opening stock also irrespective of any consequences on the computation of income for tax purposes. We further noticed that Section 145A starts with the non-obstante clause "Notwithstanding anything to the contrary contained in section 145". Therefore, to give effect to section 145A, the opening stock as on 1.4.98 will have to be increased by any tax, duty, cess or fee actually paid or incurred with reference to such stock if the same has not been incurred with reference to such stock if the same has not been added for the purpose of valuation in the accounts. The AO is directed to give the effect of section 145A as per above discussion. 7. Similar view has been taken by Hon'ble Bombay High Court in the case of M/s The Mahalaxmi Glass Works Pvt. Ltd., 2009- (IT1)-GJX-0104Born, vide order dated 1-4-2009. 8. As per our considered view when the due addition is made by AO by disturbing the closing stock, necessary adjustment is also required to be made in the opening stock in respect of MODVAT credit. Accordingly, we restore this matter back to the file of AO for making necessary adjustment of CENVAT credit and VAT in the value of opening inventory. We direct accordingly.”
We have gone through the orders passed by the Tribunal. No distinction had been made out by either party before us. Therefore, we restore the issue back to the file of the AO and direct him to follow the orders of the Tribunal for earlier years as reproduced above and decide this issue after giving adequate opportunity of hearing to the assessee for submitting requisite details and documentary evidences. As a result, the appeal may be treated as allowed for statistical purposes.
In the result, the appeal is allowed, for statistical purposes. Order pronounced in the open court at the conclusion of the hearing.