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Issues involved: The appeal concerns the addition of excise duty to the closing stock u/s 145A of the Income Tax Act, 1961 for A.Y. 2006-07.
Details of the judgment: Issue 1: Addition of excise duty to closing stock u/s 145A: The Assessing Officer (A.O.) proposed to add excise duty amounting to Rs. 34,39,994/- to the valuation of closing stock based on the annual report, despite the note specifying no impact on profits. The assessee contended that excise duty was accounted for at the time of goods clearance, availing Modvat credit and paying taxes accordingly. The A.O. ignored the payment of Rs. 73,50,000/- made before the return filing due date, adding the amount under section 145A. The CIT(A) partially allowed relief, considering only a portion of CENVAT credit. During the hearing, the counsel argued for full deduction under section 43B, as the excise duty liability was discharged before the due date. The Tribunal found the assessee compliant with section 43B and directed the A.O. to allow the balance amount sustained by the CIT(A). Conclusion: The Tribunal allowed the appeal, emphasizing the assessee's fulfillment of conditions under section 43B for excise duty payment, directing the A.O. to permit the balance amount of Rs. 8,09,935/- sustained by the CIT(A).
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