2020 (8) TMI 828 - AT - Income Tax

Additions under Section 145A - unutilized CENVAT credit to the closing stock - HELD THAT - We restore the matter back to the file of Ld. AO on similar lines to redo the computations in accordance with earlier years as per the directions of the Tribunal. 2011 (9) TMI 261 - ITAT MUMBAI - This ground stand allowed for statistical purposes.

Summary

Issues:
Cross-appeals for AY 2007-08 challenging CIT(A) order, TP adjustments, alternative disallowance, MAP resolution, TP adjustments finality, Section 145A addition.

Analysis:
1. The case involved cross-appeals for AY 2007-08 contesting the CIT(A) order. The assessee, engaged in manufacturing, faced TP adjustments of ?726.84 Lacs due to international transactions. The CIT(A) reduced the adjustment to 50% and rejected alternative disallowance proposed by the AO, leading to cross-appeals. The assessee opted for MAP under India USA Tax Treaty, resolving TP adjustments to ?181.71 Lacs. Consequently, both revenue's appeal and assessee's grounds 1 to 6 were dismissed as infructuous.

2. The only surviving issue in the assessee's appeal was the addition of ?81,61,042 under Section 145A. The AO noted the exclusive accounting method for CENVAT credit contrary to Sec.145A. The assessee argued that the adjustment would not impact profits, supported by ICAI guidance note and judicial pronouncements. Despite the assessee's submissions and past adjustments, the AO made a net addition of ?81.61 Lacs. The CIT(A) upheld the addition, citing adjustments in opening and closing stock. The assessee appealed, referencing similar cases and past Tribunal directions.

3. In line with the assessee's arguments and precedent, the Tribunal found merit in the appeal. Referring to the assessee's case for AY 2006-07, the Tribunal remitted the matter to the AO for computation alignment with previous years' orders. Consequently, the ground was allowed for statistical purposes. Ultimately, the revenue's appeal was dismissed, while the assessee's appeal was partly allowed for statistical purposes.

This detailed analysis covers the key issues addressed in the judgment, including TP adjustments, MAP resolution, Section 145A addition, and the Tribunal's decision on the appeals.