Income Tax Appellate Tribunal - Ahmedabad
A.T.E. Industries Pvt. Ltd (Now Known As ... vs The Acit.,Circle-4,, Ahmedabad on 22 May, 2017
ITA No. 813/Ahd/2014 ATE Industries Pvt Ltd Vs. ITO Assessment year: 2005-06 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCH 'D', AHMEDABAD [Coram: Justice P P Bhatt, President, and Pramod Kumar, Vice President] ITA No. 813/Ahd/2014 Assessment year: 2005-06 A.T.E. Industries Private Limited ......................................Appellant (Now known as InspirOn Engineering Pvt Ltd) Nr. Odhav GIDC, Odhav Road, Ahmedabad - 381 425 [PAN : AAACM 7178 A] Vs The Assistant Commissioner of Income-tax ...................................Respondent Circle -4, Ahmedabad Appearances by Vasant Tanna, for the appellant Lalit P Jain, for the respondent Date of concluding the hearing : 06.12.2018 Date of pronouncement : 04.03.2019 O R D E R Per Pramod Kumar, Vice President:
1. By way of this appeal, the assessee appellant has challenged correctness of the order dated 20 th January 2014 passed by the CIT(A) in the matter of assessment under section 143(3) of the Income-tax Act, 1961, for the assessment year 2005-06.
2. Grievances raised by the appellant are as follows:-
"1. a) The learned Commissioner of Income Tax (Appeals)-XXI, Ahmedabad has erred in law and on facts in not deleting the addition/disallowance of Rs.31,42,126/- made by the AO on account of unutilized Modvat Credit by invoicing the provisions of Section 145A of the I.T. Act.
b) The learned Commissioner of Income Tax (Appeals)-XXI, Ahmedabad has erred in law and on facts in not deleting the ITA No. 813/Ahd/2014 ATE Industries Pvt Ltd Vs. ITO Assessment year: 2005-06 Page 2 of 4 addition/disallowance of Rs.31,42,126/- made by the AO on account of unutilized Modvat Credit by invoking the provisions of Section 145A of the I.T. Act on the erroneous presumption that the appellant assessee is not following the exclusive method of accounting.
As a matter of fact, the appellant assessee has been consistently following the exclusive method of accounting in respect of Modvat and Excise duty which fact was duly submitted before the AO as well as CIT(A).
c) The learned Commissioner of Income Tax (Appeals)-XXI, Ahmedabad has erred in law and on facts in not following the ratio of the binding judgment of the ITAT, Ahmedabad Bench in the case of Sachdev Steel Products Limited vs. DCIT in ITA No. 1360/Ahd/2009 and Alpanii Vs. ACIT, ITA No. 169 and 170/Ahd/2005 with the erroneous observation that the appellant assessee is following mixed system of accounting for excise duty in purchase and sales.
As a matter of fact, the appellant assessee has been consistently following the exclusive method of accounting in respect of Modvat and Excise duty which fact was duly submitted before the AO as well as CIT(A).
It is therefore prayed that the impugned disallowance made by the AO may please be deleted.
2. The learned Commissioner of Income Tax (Appeals)-XXI, Ahmedabad has erred in law and on facts in directing the AO to include excise duty elements in opening stock, purchases, sales and closing stock and compute the impact of Section 145A of the IT, Act.
The appellant says that since the company has been consistently following the exclusive method of accounting and in view of the ratio of the judgments of the Hon'ble ITAT in the case of Sachdev Steel Products Limited vs. DCIT in ITA No. 1360/Ahd/2009 and Alpanil Vs. ACIT, ITA No.169 and 170/Ahd/2005, the deduction of the learned CIT (A) to compute the disallowance is in violation of the principles of judicial discipline.
It is therefore prayed that the impugned disallowance may please be deleted."
3. When this appeal was called out for hearing, learned representatives of the parties fairly agree that the issue in appeal is covered, in favour of the assessee, by a co-ordinate bench decision dated 17 th October 2018 in the case of DCIT vs. Adani Gas Limited and vice versa (ITA Nos. 775/Ahd/2014, 2346, 2797, 2775/Ahd/2016). Learned Departmental Representative nevertheless relied upon the stand of the authorities below.
ITA No. 813/Ahd/2014ATE Industries Pvt Ltd Vs. ITO Assessment year: 2005-06 Page 3 of 4
4. In the co-ordinate bench decision in the case of Adani Gas Ltd (Supra), it has been, inter alia, observed as follows:-
"5. When the matter was called for hearing, the learned AR for the assessee in Revenue's appeal submitted at the outset that controversy as per the ground no.1 of the Revenue's appeal revolves around applicability of Section 145A of the Act towards alleged under valuation of closing stock. The learned AR submitted that the assessee has followed exclusive method of accounting and therefore, the closing stock has not been loaded with the taxes and dues as contemplated under s.145A of the Act. The learned AR submitted that in view of the exclusive method of accounting consistently followed, the action of the assessee is revenue neutral. The learned AR submitted that the exclusive method of accounting postulates exclusion of tax, dues etc. embedded in purchases of raw material as well as in corresponding sale. Such taxes are accounted for separately for the purposes of discharging liabilities. The effect of such accounting does not ultimately have any impact on the ultimate profitability when followed year after year. The learned AR submitted that the issue is no longer res integra and covered in favour of the assessee by long line of judicial precedents, viz., CIT vs. Bell Granito Ceremica Ltd. (Guj.) Tax Appeal No.436-437 of 2011, judgment dated 13.06.2011; Narmada Chematur Petrochemicals Ltd. (2010) 327 ITR 369 (Guj.) and General Motors India (P.) Ltd. v. Deput y Commissioner of Income-tax [2013] 37 taxmann.com 403 (Ahmedabad) to name a few. The learned AR, thereafter, on facts, referred to the tabulated statement at the beginning of para no.2 of the assessment order and pointed out that as against Rs.5.04 Crore unutilized CENVAT credits in controversy merely Rs.9.19 Lakhs concerns raw material etc. and the remaining amount of CENVAT credit is attributable to capital goods item and input service which do not attract the provisions of Section 145A of the Act in any event. The learned AR accordingly submitted that the learned CIT(A) has rightly concluded the issue in favour of the assessee after detailed analysis of facts and law prevailing in this regard and interference thereof is not called for.
6. The learned DR for the Revenue, on the other hand, relied upon the order of the AO.
7. We have carefully considered the rival submissions on the issue towards applicability of Section 145A of the Act as well as perused the order of the lower authorities. While it is a case of the Revenue that the element of excise duty/CENVAT etc. would represent part of the closing stock of the assessee in terms of Section 145A of the Act, it is the case of the assessee on the other hand that Section 145Aof the Act has no application to the facts of the case. It is further case of the assessee that assessee follows exclusive method of accounting for ITA No. 813/Ahd/2014 ATE Industries Pvt Ltd Vs. ITO Assessment year: 2005-06 Page 4 of 4 valuation of inventory and therefore, entire exercise would be tax neutral. The CIT(A) has examined the issue on facts and binding judicial precedents and concluded the issue in favour of the assessee. In the absence of any impact on the profitability of the assessee per se due to method of accounting followed, we do not see any error in the conclusion drawn by the CIT(A). In parity with judicial precedents cited, we decline to interfere with the order of the CIT(A) on the issue."
5. We see no reasons to take any other view of the matter than the view so taken by the co-ordinate bench. Respectfully following the same, we delete the impugned addition of Rs.31,42,126/- in respect of unutilized CENVAT credit. The assessee gets the relief accordingly.
6. In the result, the appeal is allowed in the terms indicated above. Pronounced in the open court today on the 4 th day of March, 2019.
Sd/- Sd/-
Justice P P Bhatt Pramod Kumar
(President) (Vice President)
Ahmedabad, dated the 4 th day of March, 2019
Copies to: (1) The appellant (2) The respondent
(3) CIT (4) CIT(A)
(5) DR (6) Guard File
By order etc
True Copy
Assistant Registrar
Income Tax Appellate Tribunal
Ahmedabad benches, Ahmedabad
1. Date of dictation: ...order prepared as per the two pages manuscripts of Hon'ble VP which are attached herewith........04.03.2019..........
2. Date on which the typed draft is placed before the Dictating Member: .... 04.03.2019.......
3. Date on which the approved draft comes to the Sr. P.S./P.S.: ...04.03.2019...
4. Date on which the fair order is placed before the Dictating Member for Pronouncement:... 04.03.2019...
5. Date on which the file goes to the Bench Clerk : ......
6. Date on which the file goes to the Head Clerk : ..................................
7. The date on which the file goes to the Assistant Registrar for signature on the order: ....
8. Date of Despatch of the Order: ........................