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Issues involved: Disallowance of deduction u/s 35D and addition of unutilized MODVAT credit.
Disallowance of deduction u/s 35D: The appeal was filed against the order of the Ld.CIT(A) for the Assessment Year 2001-02. The ITAT restored the appeal for deciding Grounds No II & VI, which were not decided earlier. Ground No II related to the disallowance of deduction u/s 35D amounting to Rs. 14,70,263 made by the AO and confirmed by the Ld.CIT(A) against the assessee's claim. The ITAT referred to previous decisions in the assessee's own case for AY 1999-00 and AY 2002-03 where deduction u/s 35D was allowed. Following the precedent, the ITAT directed the AO to allow the deduction claimed by the assessee u/s 35D for the year under consideration. Ground No II of the appeal was accordingly treated as allowed. Addition of unutilized MODVAT credit: Ground No VI of the appeal related to the addition of unutilized MODVAT credit of Rs. 3,86,76,373 made by the AO. The assessment year under consideration was 2001-02, and section 145A was applicable. The ITAT observed that section 145A requires the inclusion of tax, duty, cess, etc., in the valuation of purchases, sales, and inventory. As the authorities had not adjusted other figures with the amount of tax, duty, cess, etc., the ITAT set aside the impugned order and restored the matter to the file of AO for fresh consideration in accordance with relevant judgments and the provisions of section 145A. Ground No VI was allowed for statistical purposes. The judgment was pronounced on June 7, 2013, by Dr. S.T.M. Pavalan, Judicial Member.
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