2011 (6) TMI 823 - AT - Income Tax

Summary

Issues involved: Appeal challenging CIT(A)'s order u/s 143(3) of the Income Tax Act, 1961 for the assessment year 2005-06 regarding the deletion of addition made u/s 145A on account of unutilized Cenvat credit.

Summary:

Issue 1: Correctness of CIT(A)'s order

The Assessing Officer questioned the correctness of the CIT(A)'s order which deleted the addition made u/s 145A of the Income Tax Act, 1961 amounting to Rs. 16,27,533 on account of unutilized Cenvat credit. The AO contended that the amendment to section 145A of the IT Act required any tax or duty paid or incurred by the assessee to be included in inventories. The assessee argued that the balance with Central Excise Authorities was not includible in closing stock as purchases were already reduced from gross cost. The CIT(A) deleted the addition based on the Tribunal's decision in the assessee's own case for the assessment year 2000-2001. The Assessing Officer appealed this decision.

Issue 2: Tribunal's Decision

The Tribunal found that the issue was covered in favor of the assessee by previous decisions in the assessee's own case for earlier assessment years. The Tribunal noted that adjustments under section 145A of the Act should be made in respect of inventories, purchases, and sales, not only in closing stock. The Tribunal upheld the CIT(A)'s decision to delete the addition based on consistency with previous rulings for the assessment years 2000-2001 to 2004-05. The Tribunal dismissed the appeal and upheld the decision of the CIT(A).

Conclusion

The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 16,27,533 made u/s 145A of the IT Act on account of unutilized Cenvat credit. The Tribunal found the issue to be in favor of the assessee based on previous rulings and declined to interfere with the CIT(A)'s decision. The appeal was dismissed, and the decision was pronounced on 13th June 2011.