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2016 (3) TMI 1005 - AT - Income TaxRevision u/s 263 - deduction in respect of excise duty on closing stock was claimed - Held that - In the present case the facts are that a deduction in respect of excise duty on closing stock was claimed in AY 2009-10 and the same was added back in the computation of income for the following assessment year i.e. AY 2010-11. The tax rate for both the years was 33.99%. Similarly, a deduction was claimed in the earlier assessment year i.e. AY 2008- 09 and added back in the computation in AY 2009-10. The deduction was claimed and allowed in the assessment in line with the case of Berger paints India Ltd. (2004 (2) TMI 4 - SUPREME Court ) and as per the said decision of Hon ble Supreme Court, deduction u/s. 43B is to be fully allowed for excise duty and other duties on payment basis inclusive of the amount included in closing stock. In view of above discussion, we find that the order passed by the ld. CIT u/s 263 of the Act is not erroneous in so far as it is prejudicial to the revenue. Interest on the refund granted by the AO under section 244A - Held that - The assessee is very much entitled to have the refund along with the interest. Therefore we deem it that the AO s order is not erroneous in so far as it is prejudicial to the revenue. Hence provisions of section 263 are not applicable and should be dropped we allow this ground of appeal of the assessee accordingly.
Issues Involved:
1. Legality of the Commissioner's order under Section 263 of the Income Tax Act, 1961. 2. Double deduction claim for excise duty on closing stock. 3. Interest on excess Dividend Distribution Tax (DDT) paid and its refund under Section 244A of the Act. Detailed Analysis: Issue 1: Legality of the Commissioner's Order under Section 263 The assessee challenged the legality of the Commissioner's order under Section 263 of the Income Tax Act, 1961, arguing that the Assessing Officer's (AO) original order was neither erroneous nor prejudicial to the interests of the revenue. Section 263 allows the Commissioner to revise an AO's order if it is erroneous and prejudicial to the revenue. The tribunal examined whether the Commissioner had validly invoked Section 263 by considering the AO's inquiries and the provisions of the Act. The tribunal concluded that the AO had conducted adequate inquiries and that the order was not erroneous or prejudicial to the revenue, thereby invalidating the Commissioner's invocation of Section 263. Issue 2: Double Deduction Claim for Excise Duty on Closing Stock The Commissioner argued that the AO allowed a double deduction for excise duty on closing stock, which was prejudicial to the revenue. The assessee claimed that the deduction of Rs. 868,67,87,534 for excise duty on closing stock for AY 2009-10 was added back in the computation for AY 2010-11, and similarly, a deduction of Rs. 372,89,01,394 for AY 2008-09 was added back in AY 2009-10. The tribunal noted that the AO had examined the issue thoroughly during the assessment process and allowed the deduction in line with the Supreme Court's decision in Berger Paints India Ltd. vs. CIT. The tribunal found that the AO's order was not erroneous or prejudicial to the revenue as the excise duty deduction was correctly handled according to the law. Issue 3: Interest on Excess Dividend Distribution Tax (DDT) Paid The Commissioner disallowed the interest on the refund of excess DDT paid, arguing there was no provision under the Act for such interest. The assessee contended that interest on the excess DDT paid was rightly granted under Section 244A of the Act, supported by CBDT circular No. 549 dated 31.10.1989. The tribunal reviewed Section 244A, which provides for interest on refunds due under the Act, including excess DDT paid. The tribunal cited judicial precedents and the Supreme Court's ruling in Union of India v. Tata Chemicals Ltd., which upheld the right to interest on excess tax payments. The tribunal concluded that the AO's granting of interest was correct and not prejudicial to the revenue. Conclusion: The tribunal held that the AO's original order was not erroneous or prejudicial to the revenue. Therefore, the invocation of Section 263 by the Commissioner was invalid. The tribunal allowed the assessee's appeals on all issues, confirming that the deductions and interest granted were in accordance with the law. Result: All three appeals of the assessee were allowed. The order was pronounced in the open court on 3.2.2016.
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