2015 (1) TMI 1067 - HC - Income Tax

Addition in the value of closing stock towards excise duty - ITAT and CIT(A) deleted the addition as - Held that - In view of the earlier decision of this court in case of Assistant Commissioner of Income Tax Vs. Narmada Chematur Petrochemicals Ltd. 2010 (8) TMI 263 - Gujarat High Court wherein held excise duty is required to be excluded at the time of valuation of the closing stock on finished goods at the end of the accounting period, the question is answered accordingly. The Tribunal was justified in law in holding that the excise duty should not be taken into account for valuation of the closing stock. - Decided in favour of assessee.

Summary

Issues:
- Whether the Appellate Tribunal was right in confirming the order of the CIT (A) deleting the addition in the value of closing stock towards excise duty?

Analysis:
The High Court of Gujarat considered multiple appeals admitted together, including Tax Appeal No.1485 of 2007, based on the common substantial question of law regarding the addition in the value of closing stock towards excise duty. The court heard arguments from the counsels representing the appellant and the respondents. It was noted that Tax Appeal No.1485 of 2007 was segregated and separately considered by the court earlier. The court found that the question at hand had already been addressed in a previous judgment concerning the exclusion of excise duty in the valuation of closing stock. Referring to the decision in Assistant Commissioner of Income Tax Vs. Narmada Chematur Petrochemicals Ltd., the court concluded that excise duty should not be considered for the valuation of closing stock, as established in the earlier ruling. Consequently, the court dismissed the appeals in favor of the assessee, in line with the previous judgment.

In the specific case of the present appeal, the court reiterated the decision made in the earlier case of Assistant Commissioner of Income Tax Vs. Narmada Chematur Petrochemicals Ltd., confirming that excise duty should not be factored into the valuation of closing stock. Following the precedent set by the previous judgment, the court ruled in favor of the assessee and against the revenue. Consequently, the appeals were dismissed with no order as to costs, maintaining consistency with the established legal interpretation regarding the treatment of excise duty in the valuation of closing stock.