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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: Shri S. S. Godara & Shri Amarjit Singh
PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This assessee’s appeal for A.Y. 2011-12, arises from order of the CIT(A)-4, Ahmedabad dated 26-03-2009, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.
The grievance of the assessee is against the decision of the ld. CIT(A) confirming the decision of the assessing officer of sustaining
I.T.A No. 1132/Ahd/2015 A.Y. 2011-12 Page No 2 Vardhman Stampings Pvt. Ltd. vs . Dy.CIT
the addition of Rs. 58,26,826/- made by the assessing officer u/s. 145A of the act. The assessing officer observed during the course of assessment proceedings that assess has shown amount of Rs. 2,51,87450/- as un-utilized MODVAT/CENVAT under loan and advances but was not included in the value of closing stock. . The assessing officer further observed that taxes/duty/cess/fees related to stock need to be included in the value of the closing stock as per provision of section 145A of the act. Consequently , the assessing officer concluded that the sum of Rs. 2,51,87,450/- was required to be added to the value of closing stock. Thereafter, the assessing officer has made addition of Rs. 58,26,826/- (Rs. 2,51,87450/- -Rs. 193,60,624/-) to the total income of the assessee. The assessing officer had also made similar additions in the preceding assessment year 2010-11 for the amount of Rs. 1,93,60,624/-.
The assessee preferred appeal before the Ld. CIT(A). The ld. CIT(A) held that the assessing officer was justified in increasing the value of closing stock in view of provision of section 145A of the act. During the course of appellate proceedings before us the Ld. DR has supported the order of the Ld. CIT(A). But we have noticed that Co- ordinate bench of ITAT in the case of the assessee itself for the assessment year 2010-11 on the identical issue has deleted the addition made by assessing officer by observing as under:- “12. We further, observe that similar issue relating to addition made by invoking provisions of 145A of the Act, came up before the Co-ordinate Bench in the case of ITO V/s Mamata Bramptom Engg. Pvt. Ltd (su pra) and was decided against the revenue, following the judgment of Juri ictional High Court in the case of Narmada Chematur Petrochemicals Ltd.(327 ITR 369) by observing as follows:
I.T.A No. 1132/Ahd/2015 A.Y. 2011-12 Page No 3 Vardhman Stampings Pvt. Ltd. vs . Dy.CIT
“We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The issue in the present case is with respect to the addition of unutilized CENVAT credit to the closing stock. We find that the Ld.CIT(A) while deciding the issue in favour of assessee has given a finding that assessee is following exclusive method of accounting whereby the excise duty is not included in the valuation of stock and raw-materials as the excise duty paid and collected is not made part and parcel of the Profit & Loss A/c. He has further given a finding that assessee has complied with the provisions of section 145A of the Act and the effect of including excise duty is valuation of closing stock does not affect the profit and is Revenue neutral. He has further relied on the decision of Hon’ble Gujarat High Court in the case of Narmada Chematur Petrochemicals Ltd.(supra). Before us, Revenue has neither controverted the finding of ld.CIT(A) nor has placed any contrary binding decision in its support. We further find that the Hon’ble Apex Court in the case of Indo Nippo Chemicals (2003) 261 ITR 375 has held that unavailed MODVAT credit cannot be construed as income and there is no liability to pay tx on such unavailed MODVAT credit. In view of the aforesaid facts, we find no reason to interfere with the order of the LD.CIT(A). This ground of Revenue is dismissed”
Respectfully following the decision of Co-ordinate Bench, and in view of totality of facts discussed above, we are of the view that unavailed CENVAT credit cannot be construed has income as there is not liability to pay tax on such unavailed CENVAT credit and also there will be Nil effect on the profit as the taxes and duties if added to the closing stock will form part of the opening stock in the subsequent year. We therefore find no reason to interfere with the order of Ld.CIT(A). We uphold the same.”
Respectfully following the decision of the Co-ordinate Bench, we are of the view that unavailed CENVAT credit will have Nil effect on the profit as the taxes and duties if added to the closing stock will form part of the opening stock in the subsequent year, therefore, we are not inclined with the decision of the ld. CIT(A). Therefore, the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 14-09-2017 (S.S. GODARA) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 14/09/2017
I.T.A No. 1132/Ahd/2015 A.Y. 2011-12 Page No 4 Vardhman Stampings Pvt. Ltd. vs . Dy.CIT
आदेश क" ""त"ल"प अ"े"षत / Copy of Order Forwarded to:-
Assessee
Revenue
Concerned CIT
CIT (A)
DR, ITAT, Ahmedabad
Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील"य अ"धकरण, अहमदाबाद