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Issues Involved:
The appeal under section 260A of the Income-tax Act, 1961 against the order passed by the Income-tax Appellate Tribunal regarding the addition made on account of under valuation of closing stock by non-inclusion of excise duty in value of closing stock. Summary: The question raised for consideration was whether the ITAT was justified in confirming the order of the CIT(A) deleting the addition made on account of under valuation of closing stock by non-inclusion of excise duty in value of closing stock. The Assessing Officer had made the addition of excise duty payable on the goods manufactured by the assessee in the computation of the value of the stock. The department relied on the decision of the Supreme Court in CIT v. British Paints India Ltd. [1991] 188 ITR 441. However, the High Court observed that the interpretation of the department was misconceived. The High Court referred to section 145A of the Income-tax Act, which states that the amount of tax, duty, cess, or fee should be included in the value of goods only if it is actually paid or incurred by the assessee to bring the goods to the place of its location. As the excise duty had not been paid by the assessee on the goods in stock since the goods did not leave the premises, there was no justification for adding the excise duty to the price of the raw material. Therefore, the High Court dismissed the appeal, stating that the question raised did not arise out of the facts of the case. This judgment clarifies the application of section 145A of the Income-tax Act in determining the value of goods for income tax purposes, specifically regarding the inclusion of tax, duty, cess, or fee in the valuation of goods in stock.
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