Income Tax Appellate Tribunal - Ahmedabad
The Dy. Cit., Circle-4(1)(1),, ... vs M/S. Shilp Gravures Ltd.,, Ahmedabad on 19 April, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "C" BENCH
Before: Shri S. S. Godara, Judicial Member
And Shri Amarjit Singh, Accountant Member
ITA No. 2462/Ahd/2016
Assessment Year 2009-10
The DCIT, M/s. Shilp Gravures Ltd.
Circle-4(1)(1)(1), 101, Kashi Parekh Co mple x,
Ah medabad-380015 Vs B/h. Bhag wati Cha mbes,
(Appellant) C.G. Road, Navrangpura,
Ah meabad-380009
PAN: AADCS0868G
(Respondent)
Reve nue by: Shri Prasoon Kabra, Sr. D.R.
Assessee by: Shri R.T . Shah, A.R.
Date of hearing : 28-03-2018
Date of pronounce ment : 19-04-2018
आदेश /ORDER
PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This Revenue's appeal for A.Y. 2009-10, arises from order of the CIT(A)- 8, Ahmedabad dated 11-07-2016, in proceedings under section 143(3) r.w.s. 147 of the Income Tax Act, 1961; in short "the Act".
2. The revenue has raised following grounds of appeal:-
"1. Whether the ld. CIT(A) is right in law and on facts in deleting the addition made on account of disallowance u/s. 145A of Rs. 58,44,592/-."
3. In this case, return of income declaring income of Rs. 2,13,39,631/- was filed on 25th Sep, 2009. The scrutiny assessment u/s. 143(3) of the act was I.T.A No. 2462/Ahd/2016 A.Y. 2009-10 Page No 2 DCIT vs. M/s. Shilp Gravures Ltd.
completed on 22nd No, 2011 assessing total income at Rs. 2,54,26,460/-. Thereafter, the case was reopened by issuing of notice u/s. 148 of the act on the ground that assessee was showing purchase and sale of goods net of MODVAT and closing balance of MODVAT was required to be added for arriving value of closing stock of finished goods and raw material. Consequently, the assessing officer has made addition for Rs. 58,44,592/- on account of under valuation of stock as discussed above.
4. Aggrieved assessee filed appeal before the ld. CIT(A). The ld. CIT(A) has allowed the appeal of the assesse by observing as under:-
"5. Appellate finding:
I have considered the assessment order and submission of the appellant and also the case laws referred by the appellant. From the assessment order and submission both, it is noticed that the appellant is following exclusive method of accounting for last many years and all purchases and sales of goods are accounted net of MODVAT including inventory i.e. opening stock and closing stock. On this issue the Hon'ble ITAT Bench of Ahmedabad in the case of Alpanil Industries V. ACIT in ITA No. 169/AHD/2005 and 170/AHD/2005 for A.Y. 1999-2000 & 2000-2001 has discussed the principle related to valuation of closing stock U/S.145A of the Act. The relevant portion is reproduced as under:
" Section 145A requires revaluation of not inventory alone but also requires revaluation of purchase and sales. On revaluation of purchase by including the amount of excise duty in respect of which Modvat Credit is available to the assessee, the purchase of the assessee will increase resulting in corresponding decrease in the profit of the assessee. The assessee 's contention that value of closing stock is credited in the profit and loss account to set off the value of unconsumed items of purchase and therefore, both should have same basis cannot be controverted. The only exception to this theory is that when the Modvat value is less than the cost then effectively unrealized loss is allowed as a deduction to the assessee on the well settled principles. In the instant case, the lower authorities were ot justified in revaluing only closing stock so as to include the amount of excise duty paid on purchase without revaluing the corresponding purchases. We have gone through the guidelines explained by the ICAI and find ourselves in agreement therewith that there will not be any effect on the profit of loss arrived at either by following inclusive method of accounting or exclusive method of accounting for excise duty. The only effect will be that -the excise duty payable on closing stock of finished goods will be to the extent not deposited with the government before the due date of furnishing of return will be added to the income of the assessee in view of provision of Section 43B of the Act. In view of the discussion made hereinabove, in our considered opinion, there will be no effect in the taxable profit of the assessee by including the amount of excise duty paid on purchase in the value of closing stock of raw material, whether as raw material or as forming part of work-in progress or finished goods. We therefore, set aside the orders of the lower authorities on this issue in both the year under appeal and allow the grounds of appeal of the assessee."I.T.A No. 2462/Ahd/2016 A.Y. 2009-10 Page No 3
DCIT vs. M/s. Shilp Gravures Ltd.
In view of the detailed discussion on the issue by the jurisdictional ITAT in above quoted case, I have no reason to differ from the conclusions on the applicability of section 145A in the case of the appellant. As the method of valuation of closing stock remains the same as in last years, the AO is directed to delete the addition of Rs. 58,44,592/-. The ground of appeal is accordingly allowed."
5. We have heard rival contentions and perused the material on record carefully. After considering the finding of the ld. CIT(A) along with judicial finding, we consider that there will be no effect in the taxable profit of the assessee by including the amount of excise duty paid on purchase in the valuation of closing stock of raw material since the assessee was following excusive method of accounting as elaborated in the findings of the Ld.CIT(A), therefore, we do not find any reason to interfere in the decision of ld. CIT(A). Accordingly, the appeal of the revenue is dismissed.
6. In the result, the appeal of the revenue is dismissed.
Order pronounced in the open court on 19-04-2018
Sd/- Sd/-
(S.S. GODARA) (AMARJIT SINGH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad : Dated 19/04/2018
आदेश क त ल प अ े षत / Copy of Order Forwarded to:-
1. Assessee
2. Revenue
3. Concerned CIT
4. CIT (A)
5. DR, ITAT, Ahmedabad
6. Guard file.
By order/आदेश से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण,
अहमदाबाद