Bombay High Court
Pr.Commissioner Of Income Tax-14 vs M/S.Godrej Industries Ltd on 9 January, 2019
Author: B. P. Colabawalla
Bench: Akil Kureshi, B. P. Colabawalla
42.itxa.1126.16..doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL NO. 1126 OF 2016
Pr. Commissioner of Income Tax-14
Mumbai ..Appellant
Vs.
M/s Godrej Industries Ltd ..Respondent
Mr. Suresh Kumar, for the Appellant.
Mr. F. V. Irani a/w Mr. Atul Jasani, for the Respondent.
CORAM:-AKIL KURESHI &
B. P. COLABAWALLA, JJ.
DATE :- JANUARY 9, 2019.
P. C.:
This Appeal is filed by the Revenue challenging the judgment of the Income Tax Appellate Tribunal raising following question for our consideration:-
"Whether on the facts and circumstances of the case and in law the Hon'ble Tribunal is justified in deleting the addition made by AO and confirmed by the CIT(A) in respect of the amount of unavailed cenvat balance as on 31.03.2007 at Rs. 7,90,65,760/- which was not included in the cost of inventory as the cenvat element was integral part of valuation of closing inventory?"
2 The issue pertains to inclusion of cenvat credit balance as part of the closing stock. We noticed that the Supreme Court in the case of Commissioner of Income Tax v/s Indo Nippon Aswale 1/2 ::: Uploaded on - 11/01/2019 ::: Downloaded on - 12/01/2019 06:53:03 :::
42.itxa.1126.16..doc Chemicals Co Ltd reported in 261 ITR 275 confirmed the decision of the High Court in which the accounting practice consistently followed by the Assessee of excluding Modvat credit (which was prevailing at the relevant time and which was later on replaced by cenvat in the valuation of closing stock.) Following the judgment of the Supreme Court in the case of Indo Nippon Chemicals Co Ltd (supra), a Division Bench of this Court in the case of Commissioner of Income Tax v/s Diamond Dye Chem Ltd 396 ITR 536 dismissed the Revenue's Appeal making following observations:-
"We have considered the submissions. It is not disputed that the assessee was liable to excise duty. The assessee got credit in the excise duty already paid on the raw materials purchased by it and utilized in the manufacturing of excisable goods. The assessee was adopting the exclusive method, i.e., valuing the raw materials on the purchase price minus (-) the Modvat credit. The same would be permissible. The apex court in the case of Indo Nippon Chemicals Co. Ltd (supra) while affirming the order of the High Court, has observed that the income was not generated to the extent of Modvat credit or unconsumed raw material. Merely because the Modvat credit was irreversible credit offered to manufacturers upon purchase of duty paid raw materials, that would not amount to income which was liable to the taxed under the Act. It is also held that whichever method of accounting is adopted, the net result would be the same. "
3 In the result, the Tax Appeal is dismissed.
( B. P. COLABAWALLA, J. ) ( AKIL KURESHI , J. ) Aswale 2/2 ::: Uploaded on - 11/01/2019 ::: Downloaded on - 12/01/2019 06:53:03 :::