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2017 (8) TMI 188 - HC - Income TaxAddition of excise duty - valuation of closing stock made u/s 145A - special audit scope - Held that - Order of Tribunal, deleting the addition of excise duty is concerned, the same appears to be on the basis of report of the Comptroller & Auditor General of India. The special audit was done under Section 142(2A) of the Act. The special auditor in his report also stated that the tax impact is nil. The Tribunal has considered the tax report. The tax audit report of the statutory auditor and the audit report of the Comptroller & Auditor General of India shows that the impact of inclusion of excise duty in the value of closing stock stands nil. - No additions - Decided against the revenue.
Issues involved:
1. Assessment for the years 1999-2000, 2004-2005, and 2003-2004. 2. Deletion of additions in closing stock under Section 145A of the Income Tax Act. 3. Claim for delayed payments of PF and ESIC. 4. Addition of excise duty not included in the closing stock. Analysis: Issue 1: Assessment for the years 1999-2000, 2004-2005, and 2003-2004 The appeals filed by the Revenue for the mentioned assessment years were dismissed by the Tribunal. The questions of law raised in the appeals focused on various aspects related to the assessment, including the treatment of certain expenses and additions in the closing stock. Issue 2: Deletion of additions in closing stock under Section 145A of the Income Tax Act The primary contention by the Appellant was the deletion of 2% of the total value of raw materials, stores, and spares in the closing stock made under Section 145A of the Income Tax Act. The Appellant argued that the Tribunal erred in deleting this addition without proper verification of whether excise duty was included in the closing stock. The Respondent, on the other hand, supported the Tribunal's decision, citing that the audit reports confirmed the impact of tax as nil, thus justifying the deletion of the excise duty addition. Issue 3: Claim for delayed payments of PF and ESIC The Appellant also challenged the Tribunal's decision to allow the claim of the Assessee on account of delayed payments of PF and ESIC of employees' contribution. The Appellant argued that such claims should not have been accepted, while the Respondent maintained that the Tribunal's decision was supported by the audit reports and previous judgments in the Assessee's own case. Issue 4: Addition of excise duty not included in the closing stock The Appellant raised concerns regarding contradictory reports submitted by the Assessing Officer regarding the provision for excise duty in the closing stock and its impact on the company's profit. The Appellant argued that the Tribunal should not have deleted the addition of excise duty without conclusive evidence of its inclusion in the closing stock. However, the Tribunal relied on the reports of the Comptroller & Auditor General of India and the special auditor, both confirming a nil impact of tax due to the inclusion of excise duty in the closing stock. In conclusion, the High Court dismissed the appeals, stating that no substantial question of law arose based on the facts and findings presented. The Court upheld the Tribunal's decision, considering the audit reports and expert opinions that supported the deletions and claims made by the Assessee.
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