Income Tax Appellate Tribunal - Mumbai
Suyash Laboratories Ltd ( Merged Witgh ... vs Ito 7(2)(4), Mumbai on 16 June, 2017
INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH "E", MUMBAI
BEFORE SHRI P.K.BANSAL, VICE PRESIDENT AND
SHRI PAWAN SINGH, JUDICIAL MEMBER
ITA No 1245/Mum/2013 for Assessment Year 2006-07
ITA No 1256/Mum/2013 for Assessment Year 2007-08
In the matter of
Suyash Laboratories Limited,
(Merged with Aarti Drugs Limited)
109-D, Mahendra Industrial Estate,
Ground Floor, Road No.29, Soin,
Mumbai-400022
PAN: AAACA4410D ----------- Appellant
Versus
Income Tax Officer- 7(2)(4)
Aayakar Bhavan
Mumbai-400020 ---------- Respondent
Appellant through : Sh. Vijay Mehta - FCA (AR)
Respondent through : Dr. A.K. Nayak - DR
Reserve for order: 15 June 2017
Date of pronouncement: 16 June 2 017
Order under section 254(1) of Income-tax Act
Per Pawan Singh, Judicial Member;
1. These two appeals by assessee under section 253 of Income-tax Act are directed against the orders of Commissioner (Appeals)-9 Mumbai, both dated 27.11.2012 for assessment year 2006-07 and 2007-08 respectively.In both the appeals the assessee has raised identical grounds of appeal; the facts of both the assessment year are also identical. Thus, both the appeals were heard together and are decided by common order to avoid the ITA No.1245 &1256/M/2013 Suyash Laboratories Ltd conflicting decision. Though the assessee has raised multiple issues in both the appeals, however in our view the sole ground of appeal is that "whether the learned Commissioner (Appeals) erred in upholding the addition under section 145A in respect of closing balance of MODVAT credit of raw material". For appreciation of facts, first we are discussing the facts of the appeal for assessment year 2006-07.
2. The brief facts of the case are that assessee is a Public limited Company engaged in manufacturing of bulk drugs and chemicals and job works activity for others, filed return of income for relevant assessment year on 20th November 2006 declaring total income of Rs- Nil. Since, there was a depreciation loss in the year the assessee paid tax on book profits of Rs.2,11,71,009/-. The assessment was completed under section 143 (3) on 26th December 2008. The assessing officer while framing assessment order made addition of Rs. 6,38,803/- under section 145A. The assessing officer made the addition holding that the assessee has not furnished correct particulars under section 145A in respect of unutilised MODVAT credit. On appeal before Commissioner (Appeals) the addition was sustained. Further, aggrieved by the order of Commissioner (Appeals) the assessee has filed present appeal before this Tribunal.
3. We have heard learned Authorised Representative ('AR') of the assessee and learned Departmental Representative ('DR') for revenue and perused 2 ITA No.1245 &1256/M/2013 Suyash Laboratories Ltd the material available on record. The learned AR of the assessee argued that the assessee has employed exclusive method of accounting for MODVAT credit and the assessing officer made the addition in respect of closing balance of MODVAT credit new material stock as well as in respect of Capital goods. It was further argued that the assessing officer committed illegality and the learned Commissioner (Appeals) sustained the addition without appreciating the facts that the provisions of section 145A are tax neutral. It was prayed that the addition is liable to be deleted. On the other hand the learned DR for the revenue supported the order of authorities below.
4. We have considered the rival submission of the parties and have gone through the orders of authorities below. The perusal of orders of the authorities below shows exclusive method of accounting is not in dispute. As per new provision of section 145A, the unutilised MODVAT credit had to be included in the closing stock of new material and work in progress, whereas the excise duty paid on unsold finished good had to be included in the inventory of finished goods. Even otherwise, the unutilised MODVAT credit not to be regarded as the same is tax neutral. The Hon'ble Bombay High Court in CIT Vs Parle Biscuits Ltd [2006] 282 ITR547, while following the decision of Hon'ble Apex Court in CIT Vs Nippon Chemicals Co. Ltd (261 ITR 275) held that MODVAT credit is not income 3 ITA No.1245 &1256/M/2013 Suyash Laboratories Ltd liable to tax and upheld the deletion of similar additions made on the basis of stock on that account. Thus, considering the above legal position, we direct the assessing officer to delete the addition made on account of MODVAT credit. Hence the ground of appeal raised by assessee is allowed.
5. In the result appeal of the assessee is allowed.
6. In appeal for assessment year 2007-08 the assessee has raised identical grounds of appeal, the facts of the assessment year are also identical. Thus keeping in view the principle of consistency the appeal for assessment year 2007-08 are also allowed with similar observations.
7. In the result both the appeal of the assessee are allowed. Order pronounced in the open court on 16th June, 2017.-
Sd/- Sd/-
(P.K. BANSAL) (PAWAN SINGH)
VICE PRESIDENT JUDICIAL MEMBER
मुंबई Mumbai; िदनां क Dated 16/06/2017
S.K.PS
आदे शकी ितिलिपअ े िषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकरआय ु त(अपील) / The CIT(A), Mumbai.
4. आयकरआय ु त/ CIT
5. वभागीय त न ध, आयकरअपील यअ धकरण, मब ुं ई/ DR, ITAT, Mumbai
6. गाडफाईल / Guard file.
आदे शानु सार/BY स या प ORDER, उप/सहायकपं जीकार (Asstt.Registrar) आयकरअपीलीयअिधकरण, मुं बई / ITAT, Mumbai 4