Income Tax Appellate Tribunal - Kolkata
Dcit, Cir-8(1), Kolkata, Kolkata vs M/S Itc Ltd., Kolkata on 20 September, 2017
1
ITA No.478/Kol/2015
ITC Ltd., AY 2005-06
आयकर अपील
य अधीकरण, यायपीठ - "A" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH: KOLKATA
(सम )Before ी ऐ. ट . वक
, यायीक सद य एवं/and ी वसीम अहमद, लेखा सद य)
[Before Shri A. T. Varkey, JM & Shri Waseem Ahmed, AM]
I.T.A. No. 478/Kol/2015
Assessment Year: 2005-06
Deputy Commissioner of Income-tax, Vs. M/s. ITC Ltd. (PaN:AAACI5950L)
Circle-8(1), Kolkata.
Appellant Respondent
Date of Hearing 05.07.2017
Date of Pronouncement 20.09.2017
For the Appellant Md. Usman, CIT
For the Respondent Shri J. P. Khaitan, Adovcate
ORDER
Per Shri A.T.Varkey, JM
This is an appeal preferred by the revenue against the order of Ld. CIT(A)-3, Kolkata dated 11.02.2015 for AY 2005-06.
2. The sole issue of revenue's appeal is against the action of ld. CIT(A) in deleting the addition of Rs.270,06,83,951/- in respect of excise duty on closing stock.
4. Brief facts of the case are that the assessee is engaged in manufacture and sale of tobacco products, consumer goods, hotel business etc. The assessee filed its return of income on 31.10.2005 declaring total income of Rs.2559,04,19,101/- but subsequently filed revised return on 29.12.2006 declaring total income of Rs.2285,26,27,554/-. Consequently, assessment was completed u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the "Act") on 26.12.2008 at a total income of Rs.2313,57,88,013/-. Subsequently, the AO was of the opinion that double deduction has been allowed to the assessee in respect of excise duty on closing stock of Rs.270,06,83,951/-. Accordingly, notice u/s. 148 of the Act was issued on 29.03.2012 and later on notice u/s. 143(2) of the Act and the reasons recorded for proceedings u/s. 147 was issued. Before the AO, on behalf of the assessee it 2 ITA No.478/Kol/2015 ITC Ltd., AY 2005-06 was submitted that there is no charge of excise duty on closing stock as on 31.03.2005 in the P&L Account for FY 2004-05 i.e. the deduction for excise duty on closing stock as on 31.03.2005 of Rs.270.07 crores is not claimed and allowed to the company through the P&L Account in AY 2005-06. It was also submitted that Excise duty on the closing stock for FY 2004-05, which has been paid within the due date of filing the Return for AY 2005- 06 has to be allowed u/s. 43B of the Act in the AY 2005-06 itself on payment basis, in line with the provisions of Section 43B of the Act and also the Supreme Court's decision in Berger Paints India Ltd vs. CIT. Accordingly, the said sum of Rs.270.07 crores relating to excise duty on closing stock, which has been paid in line with the provisions of section 43B of the Act within the due date of filing the Return for AY 2005-06, which has been claimed as a deduction in FY 2004-05 (relevant to AY 2005-06) u/s. 43B of the Act and in accordance with the decision of Hon'ble Supreme Court in Berger Paints India Ltd vs. CIT and correctly allowed. Since there is no charge of excise duty on closing stock as on 31.03.2005 in the profit and loss account of FY 2004-05 i. e. deduction for excise duty on closing stock as on 31-3-2005 of Rs. 270.07 crores is not claimed/allowed through the Profit & Loss Account by the Company in AY 2005-06, the claim for excise duty on closing stock, paid within the due date of filing return for the AY, has been made separately in Return for AY 2005-06. This according to assessee proves that NO DOUBLE DEDUCTION has been claimed for this amount of Rs 270.07 crores. Further, it was brought to the notice of AO that the said amount of Rs 270.07 crores has been added back to Business Income separately in the next financial year i.e. FY 2005-06 relevant to AY 2006-07. Being dissatisfied with the submissions of the assessee, the AO held that the excise duty on closing stock had already been claimed in the P&L Account and hence, the claim of deduction of Rs.270.07 crores on payment basis amounted to claim for double deduction. Hence, the AO disallowed the said claim, which resulted in addition of Rs.270.07 crores. On appeal, the Ld. CIT(A) while deleting the addition vide para 10 has held as under:
"10. I have considered the facts of the case. The appellant has been regularly following the practice under which it debits P&L Account by excise duty on sales only. Since opening and closing stock were valued inclusive of excise duty, it passes a contra- entry to reverse effect of excise duty component in opening and closing stock. Thus, no net amount is charged to P&L account in respect of excise duty on closing stock. Since the closing stock is (mostly) cleared in the subsequent year prior to due date of filing of return of income, it claims deduction for excise duty on the clearance out of the same as per proviso of section 438 of the IT Act, 1961.3 ITA No.478/Kol/2015
ITC Ltd., AY 2005-06 As and when it files return of income for the subsequent year, it adds back excise duty on opening stock as the same had already been claimed as deduction in the return of the preceding year in form of excise duty on (the then) closing stock. I do not see as to how the same can be called claiming deduction doubly. In fact, the entire exercise is revenue neutral over the period of a few years. Even for a single year, the method appears to be in conformity with well accepted principle of accounting as well as the provision of section 145A and section 438 of the Income Tax Act, 1961. It is noted, that this issue was examined by Kolkata bench of tribunal in ITA NO.1640/Ko1/2012 in the case of DCIT Cir-1, Kolkata vs. Exide Industries Ltd. A.Y.2006-0, in which addition for similar ground had been made. In its order dated 19.4.2013, the tribunal had, following its own order in the earlier assessment years, deleted the disallowance with the following observation:-
"We have heard the rival contentions and carefully perused the material available on record. On careful perusal of facts and circumstances of the case leading to disallowance u/s. 43B of the Act by hypothetically holding a view that the claim of the assessee becomes double deduction has not been interpreted correctly by the AO for the impugned assessment year even when the matter has been adjudicated upon and deliberated by the Tribunal in assessee's own case for the immediately preceding assessment years beginning from 1996-97. We have also perused the computation made as contradictory in the order of AO who has misinterpreted the finding of the Tribunal in his own manner in so far he has discussed the decision of the ITAT Kolkata Bench at page 4 of his order which required consideration was for the valuation of stock settles the issue as per the requirement of law whether could be challenged under the same law of claiming deduction for disallowance u/s. 43B of the Act as well. In so far as the Ld. DR has not been able to point out any specific defect in the accounting therein when on the judicial citations as relied upon and were before the Tribunal as well as the Hon'ble High Court the matter was actually clarified in so far as the valuation of stock is not part of the claim of excise duty remaining unpaid. Therefore, it was misapplication of facts and figures in the mind of the AO to have discovered double deduction for the purpose of disallowance u/s. 438 of the Act."
Appeal filed by the department against the said order was dismissed by the Hon'ble Calcutta High Court in CIT, Kolkata-1 vs. Exide Industries Ltd. ITA No. 158/2013 vide order dated 20.01.2014. Thus, the issue is now covered in favour of the appellant by the order of jurisdictional bench of Hon'ble tribunal, confirmed by Hon'ble High Court. In view of the same, the addition made by the assessing officer by way of disallowance of excise duty payment amounting to Rs. 270,06,83,951/- is deleted."
Aggrieved, revenue is now in appeal before us.
5. At the time of hearing before us, Ld. DR relied on the order of the AO and on the other hand, the Ld. Counsel for the assessee submitted that the issue is now squarely covered in favour of the assessee in its own case in ITA Nos. 301/K/2015, 684/K/2014 & 1027/K/2013 for AYs 2009-10, 2008-09 and 2007-08 vide order dated 03.02.2016.
6. We have heard rival submissions and gone through facts and circumstances of the case. We find that the coordinate bench of this Tribunal vide its order dated 03.02.2016 in assessee's own case, cited supra on identical issue allowed the claim of assessee and 4 ITA No.478/Kol/2015 ITC Ltd., AY 2005-06 dismissed the revenue's appeal on this aspect. Since the facts are similar and issue is identical and the Ld. DR was unable to bring out any controverting material on facts or change in law which could have warranted our interference, we respectfully following the Tribunal's order dated 03.02.2016, cited supra, delete the disallowance as made by the AO. Therefore, this ground of appeal of revenue is dismissed.
7. In the result, the appeal of revenue is dismissed.
Order is pronounced in the open court on 20.09.2017
Sd/- Sd/-
(Waseem Ahmed) (Aby. T. Varkey)
Accountant Member Judicial Member
Dated :20th September, 2017
Jd.(Sr.P.S.)
Copy of the order forwarded to:
1. Appellant - DCIT, Circle-8(1), Kolkata
2 Respondent - M/s. ITC Limited, 37, Chowringhee Road, Kolkata-71.
3. The CIT(A), Kolkata
4. CIT , Kolkata
5. DR, Kolkata Benches, Kolkata
/True Copy, By order,
Sr. Pvt. Secretary