THE COMMISSIONER OF INCOME TAX vs. SRI JAYANTHILAL SURANA

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ITA/1084/2006HC KarnatakaKAHC01059225200627 November 2013Bench: N.KUMAR,RATHNAKALA4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the assessee's claim of not including excise duty in closing stock needed to be examined by the assessing authority. The substantial question of law was answered in favour of the revenue.

What were the facts?

The Revenue challenged the Tribunal's order regarding the inclusion of excise duty in closing stock. The assessee contended that excise duty was not included in the closing stock, and therefore, no deduction was claimed.

What were the issues?

Whether excise duty should be included in the closing stock and if the assessee's claim of not including it requires further verification.

Which sections of the Income-tax Act were involved?

Section 145A

AI-generated summary — verify with the full judgment below

- 1 - IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 27TH DAY OF NOVEMBER 2013 P R E S E N T THE HON’BLE MR. JUSTICE N. KUMAR A N D THE HON’BLE MRS. JUSTICE RATHNAKALA INCOME TAX APPEAL NO.1084 OF 2006

BETWEEN:

1.

THE COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE, C.R. BUILDING, QUEENS ROAD, BANGALORE.

2.

THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE – 6(1), C.R. BUILDING, QUEENS ROAD, BANGALORE.

... APPELLANTS.

(BY SRI M.THIRUMALESH, ADV.)

AND:

SRI. JAYANTHILAL SURANA, PROP. M/S. STERLING LAB, NO.203, SWISS COMPLEX, RACE COURSE ROAD, BANGALORE.

...RESPONDENT.

(BY SRI S PARTHASARATHI, ADV.)

THIS ITA IS FILED UNDER SEC.260-A OF I.T. ACT, 1961, ARISING OUT OF ORDER DATED 02-03-

- 2 - 2006 PASSED IN ITA NO.1076/BANG/2004, FOR THE ASSESSMENT YEARS 1999-2000, PRAYING THAT THIS HON'BLE COURT MAY BE PLEASED TO:

I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN,

II. ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT, BANGALORE IN ITA NO.1076/BANG/2004, DATED 02-03-2006 CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-6(1), BANGALORE, IN THE INTEREST OF JUSTICE AND EQUITY.

THIS APPEAL IS COMING ON FOR HEARING THIS DAY, N. KUMAR, J., DELIVERED THE FOLLOWING: -

JUDGMENT

This appeal is preferred by the revenue challenging the order passed by the Tribunal insofar as the inclusion of the excise duty in the closing stock is concerned.

2.

The Tribunal has held that the assessing authority while applying the provisions of Section 145A of the Income Tax Act, 1961 and increasing the value of the closing stock and the same is allowed as deduction as part of the cost of the materials. Consequently, the gross profit as declared by the appellant did not require

- 3 - interference. Therefore, the impugned addition as recommended to the assessee by the Additional Commissioner was deleted.

3.

Learned Counsel for the assessee submits that in the instant case, assessee has not included the excise duty in the closing stock and therefore, question of claiming deletion of the said amount in the closing stock also would not arise. In view of the fact that the assessee has not claimed any benefit, the order passed by the Tribunal cannot be found fault with. Now as the law stands today, the obligation is cast on the assessee to include the excise duty in the closing stock and thereafter claim deduction. As the assessee contends that the excise duty is not included in the purchase price and therefore, he has not claiming any deduction, same requires to be gone into by the assessing authority.

4.

In that view of the matter, the appeal is allowed. The substantial question of law is answered in favour of the revenue and against the assessee. However, the

- 4 - entire matter is remitted back to the assessing authority to consider the contentions of the assessee.

Sd/- JUDGE

Sd/- JUDGE

nvj

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