9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (6) TMI 135 - HC - Income TaxEligibility of sale proceeds of the exim scrips for the exemption under Section 10B Held that - The issue is covered against the assessee by reason of the Apex Court decision in M/s Liberty India Versus Commissioner of Income Tax 2009 (8) TMI 63 (SC) - in favour of the Revenue Allowing the expenditure on gift articles as deduction as per rule 6B revenue appeal against the Tribunal Order - Held that - Considering the expenditure and that the presentation of a small gift on the occasion of festival season, it would not amount to advertisement - against revenue. Exclusion of the value of the customs duty from the closing stock Revenue contested that the assessee while claiming modvat benefit against its actual liability for excise duty has valued its closing stock without including the duty component paid by it at the time of purchase of raw material - Held that - Guided by the decision of the Apex Court CIT v. INDO NIPPON CHEMICALS CO. LTD 2003 (1) TMI 8 (SC) the assessee was liable to pay excise duty on the goods manufactured by them and got MODAVT credit for the excise duty paid on the purchase of raw materials and the proportionate part of the modvat credit was set off against their excise duty liability on the sale of manufactured goods - the assessee being adopting the net method - on the sole ground that the modvat credit was an irreversible credit available to manufactures upon purchase of duty paid raw material, the same would not amount to income which was liable to be taxed under the Act - not permissible for the AO to adopt the gross method for valuation of raw materials at the time of purchase and the net method for valuation of stock on hand - the assessee had availed modvat credit in respect of the excise duty paid on the raw materials and on the final product on which excise duty was payable - in respect of customs duty paid on the determined value, the Revenue does not dispute the fact that the assessee had been consistently adopting the method of accounting on net valuation method on the closing stock against revenue.
Issues:
1. Exemption on sale proceeds of exim scrips under Section 10B 2. Deduction on gift articles as per Rule 6B 3. Exclusion of value of customs duty from closing stock Analysis: Issue 1: Exemption on sale proceeds of exim scrips under Section 10B The Tribunal's order regarding the exemption on the sale proceeds of exim scrips under Section 10B was challenged by the Revenue. The Apex Court decision in Liberty India v. CIT and a decision of the High Court in CIT v. MENON IMPEX P. LTD were cited, leading to the order of the Tribunal being set aside in favor of the Revenue. Issue 2: Deduction on gift articles as per Rule 6B The Assessing Authority disallowed the deduction on gift articles as per Rule 6B for the relevant assessment years. The assessee argued that the nature of the expenses, being negligible, did not warrant disallowance as advertisement expenses. Reference was made to the decision of the Karnataka High Court in MOTOR INDUSTRIES CO. LTD v. DEPUTY CIT. The Court rejected the Revenue's plea, confirming the Tribunal's view that presenting small gifts on festival occasions did not amount to advertisement. Issue 3: Exclusion of value of customs duty from closing stock The Tribunal upheld the assessee's case in excluding the value of customs duty from the closing stock, based on the new method adopted by the assessee in valuing the opening and closing stock. The Commissioner of Income Tax (Appeals) and the Tribunal concurred with the assessee's contention, considering the modvat benefit claimed against the excise duty liability. The Tribunal applied the decision in CIT v. INDO NIPPON CHEMICALS CO. LTD and rejected the Revenue's plea. The Court affirmed the Tribunal's order, guided by the decision of the Apex Court, dismissing the Tax Case Appeal in this regard. In summary, the judgment addressed issues related to tax exemptions, deductions, and valuation of closing stock, providing detailed analysis and references to legal precedents to support the decisions made by the Court.
|
