9911796707
TMI Blog2008 (9) TMI 616X X X X Extracts X X X X X X X X Extracts X X X X ..... stock to that amount of Rs. 14,53,767. Before the CIT(A), it was submitted by the assessee that the assessee has followed a method of accounting, there is in fact, no impact on the profit and loss account of the company on giving effect of section 145A. The assessee produced the working before the CIT(A) which is as under :-- Particulars Amt. (Rs.) Amt. (Rs.) Net profit as per Profit & Loss Account 7,18,98,566 Add: Excise Duty on Closing Stock (As per provisions of section 145A) Finished goods 2,11,32,299 Raw material 3,25,63,272 5,36,95,571 12,55,94,137 Less: (a) Excise Duty deemed to be paid under section 43B for finished goods as the same has been debited in RG 23A (2,11,32,299) (b) Amount of Excise Duty on Purchases (remained in Closing Stock) not debited to Profit & Loss Account now debited (3,25,63,272) (c) Excise Duty to be included in opening stock (as per provisions of section 145A) (5,22,41,804) (10,59,37,375) Add: (a) Excise Duty on opening finished goods stock (as the same is being recovered from the customers) 1,89,57,178 (b) Refund of excise duty by taking credit thereof through MODVAT on the Raw Material's Opening Stock 3,32,84,626 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady added in the books of account. (b)Any tax, duty, cess or fee actually paid or incurred on sale of goods should be added to the sales, if not already added in the books of account. (c)Any tax, duty, cess or fee actually paid or incurred on the inventory (finished goods, work-in-progress, raw materials etc.) should be added to the inventories, if not already added while valuing the inventory in the accounts. 3.3 The Institute of Chartered Accountants of India on insertion of section 145A issued guidance Note on Tax Audit under section 44AB of the Act explaining the statutory requirements to give the effect of section 145A which are as under:-- "23.9 The statutory required under section 145A can be explained by the following example: Particulars Qty. Rate Rate of excluding excise excise duty duty Opening stock 10 10 2 Raw material purchased 90 10 2 Other manufacturing cost 80 10 - Finished goods manufactured 80 - - Sales of finished goods 60 25 3 Closing stock of raw material 20 10 2 Closing stock of finished goods 20 20 3 The input output ratio of raw material to finished goods is 1:1 I. Duty paid on inputs may, be debited to a separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsumed (o) To manu- 80 10 800 facturing cost (p) To excise 60 3 180 duty on finished goods (q) To excise duty 20 3 60 on closing stock of finished goods. (r) To gross profit 300 Total 2140 Total 2140 23.11 It may be pointed out that the 'inclusive method' is not permitted by AS2 which is made mandatory from accounting year beginning on or after 1-4-1999. Further, in the Guidance Note on Accounting for MODVAT the second method (inclusive method) has been withdrawn with effect from accounting year commencing from 1-4-1999. In view of the above, the adjustments under section 145A will have to be made in all cases where 'exclusive method' is followed. 23.15 When the exclusive method is followed in the accounts, the adjustments to be made under section 145A can be explained by the following illustrations which is required to be reported under clause 12(b). Sl. No. Particulars (Rs.) (Rs.) Increase Decrease in profit in profit 1. Increase in cost of opening stock on 20 inclusion of excise duty on which MODVAT credit is available/availed (j-a) 2. Increase in purchase cost of raw 180 material on inclusion of excise duty on which MODVAT cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this account is personal account, an item of assets side of the Balance Sheet which always having a debit balance. Question of allowable/disallowable arises only in respect of excise duty expenditure where the assessee follows exclusive method of accounting and effect of section 145A is to be given. It may be noted that after making the addition to the closing stock under section 145A, it will be possible to claim a separate deduction for excise duty actually paid after the year end but before the due date for filing the return of income on production of evidence as provided under section 43B. Therefore, in the above illustration if the assessee has paid Rs. 60 added in the valuation of closing stock of finished goods before due date of filing the return deduction for the same can be separately claimed in the computation of income under section 43B, if other conditions of that section are satisfied. 3.5 In case where there is no actual payment but adjustable against MODVAT account, whether the assessee is entitled to claim deduction under section 43B. For this purpose we would like to refer the decision of ITAT Special Bench, Chandigarh in the case of Dy. CIT v. Glaxo Smithkli ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
