2013 (8) TMI 180 - AT - Income Tax

Re opening of assessment - excise duty on finished goods not cleared as per factory and custom duty on stock lying at port estimated at ₹ 46.5 lacs was not provided for in the books and was also not considered in the valuation of Inventories - Held that - As decided in Asian Tubes Ltd. case 2013 (6) TMI 115 - ITAT AHMEDABAD as relying ACIT Vs Narmada Chematur Petrochemicals Ltd. 2010 (8) TMI 263 - Gujarat High Court Tribunal was justified in excluding the excise duty at the time of valuation of the closing stock of finished goods as no deduction for the liability had been claimed by the assessee. The excise duty payable on the finished goods lying in the closing stock at the end of the relevant accounting period had been paid in the subsequent year before the due date of filing of the return of income and that was how the amount was available considering the fact that the assessment had been framed and the show-cause notice was issued much after the close of the accounting year. The assessment year being 1997-98 the provisions of section 145A inserted by the Finance (No. 2) Act, 1998 with effect from April 1, 1999 could not be invoked - In favour of assessee.

Summary

Issues:
Revenue's appeal against the order of CIT(A)-1, Ahmedabad for assessment year 2006-07 regarding the valuation of closing stock in relation to excise duty and customs duty.

Analysis:
The appeal was filed by the Revenue challenging the order of CIT(A)-1, Ahmedabad for the assessment year 2006-07. The Assessee, a company engaged in manufacturing, filed its return of income declaring a total loss. The Assessing Officer, during reassessment, added excise duty on finished goods and customs duty on stock lying at the port to the value of inventory based on Section 145A. However, CIT(A) allowed the appeal of the Assessee, relying on a decision of the Ahmedabad Tribunal, which held that excise duty and customs duty should not be included in the closing stock valuation. The Tribunal concurred with this view, stating that the issue was covered by a decision of the Jurisdictional High Court. As the issue was already settled by the Jurisdictional ITAT, no addition was warranted for excise and customs duty in the valuation of closing stock.

The Revenue, aggrieved by the order of the Assessing Officer, appealed before the ITAT. During the hearing, the learned D.R. relied on the Assessing Officer's order, but the ITAT upheld the decision of CIT(A) stating that the issue was conclusively settled by the jurisdictional Tribunal's decision. The ITAT found no reason to interfere with CIT(A)'s order and dismissed the appeal of the Revenue. The ITAT's decision was based on the principle that no addition should be made on account of excise and customs duty in the valuation of closing stock, as established by the previous decisions and the Jurisdictional Tribunal's ruling.

In conclusion, the ITAT upheld the order of CIT(A) and dismissed the Revenue's appeal, emphasizing that the issue regarding the valuation of closing stock in relation to excise duty and customs duty had already been decisively settled by previous judgments and did not warrant any further addition to the value of inventory.