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TMI Blog2012 (4) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance on the ground of obsolescence - the Appellate Authorities held that custom duty paid on goods claimed as irrecoverable and therefore the entire amount of Rs. 9,84,349/- should be allowed as an expenditure despite the assessee not establishing that this amount had become obsolete – Held that:- the understanding and the manner of working out of the extent of obsolescence by the appellate Commissioner was fully justified, having regard to the nature of the business the assessee carried on and the kind of product with which it is dealing with etc – against revenue. Whether the Appellate Authorities were correct in holding that custom duty paid on software and expenses incurred on MRB items should be allowed in full and not at 50% as held by the Assessing Officer and since computer software would become obsolete despite the assessee not producing any proof to claim such obsolescence - Held that:- having regard to the fact that the products got obsolete fairly fast in comparison to the other products in other industry and more so even in the computer industry a software having comparatively lessor shelf life we do not propose to disturb the view taken by the appellate a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returnable Rs. 38,72,250 ( v ) MRB item Rs. 66,07,131 3. In so far as the MODVAT credit dispute is concerned, the amount involved was a sum of Rs. 78,90,593 for the year in question and this amount was sought to be reduced by the assessee from the value of its stock in trade at the end of the accounting year, on the premise that the amount represented the excise duty paid by the assessee in respect of the purchase of inputs which were made use of by the assessee for the purpose of assembling or producing computers, the machinery part of which is popularly known as hardware. This deduction was not allowed by the assessing officer and therefore the amount remained with the value of the closing stock, boosting the profit figure to this extent. 4. In respect of both these aspects, amongst others, the assessee had preferred appeal to the commissioner of Income-tax (Appeals)-XVI, Bombay. The Commissioner in terms of his appellate order dated 28-3-1996, held that the assessing officer should not have rejected the method of accounting employed by the assessee, as it was a standard method of accounting and even as approved by the institute of Char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealing with etc. 8. The grounds raised by the revenue on both these issues have gone against the revenue and therefore the revenue is in appeal. 9. Appearing on behalf of the appellant revenue, submission of Sri G Kamaladhar, learned standing counsel, is that the question relating to the so-called addition or otherwise on account of MODVAT credit, has been examined by this court in the case of the very assessee, although for a subsequent assessment year, in ITA No 811 of 2006 and connected appeals, in terms of judgment dated 17-1-2012 and the matter having been remanded to the assessing officer on this aspect, particularly for giving an opportunity to the assessee to make good its justification for claiming such deduction and in the wake of the provisions of Section 43B of the Act, the result cannot be any different in the present appeal. 10. Sri T Suryanarayana, learned counsel for the respondent-assessee, on the other hand, submits that the question perhaps could have been more satisfactorily answered in the earlier appeal also, with reference to the judgment of the Supreme Court in the case of CIT v. Indo Nippon Chemicals Co. Ltd . [2003] 261 ITR 275/130 Taxman 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this aspect, also, the same course of action can be adopted and the second question should be answered accordingly to enable the assessee to place materials before the assessing officer. 14. However, in respect of issues arising out of the third question for our answer, submission of Sri Suryanarayana is that the tribunal and the appellate Commissioner were justified in taking the view that allowance should be 100% in respect of expenditure incurred on MRB items and not 50% as had been opined by the assessing officer and submits that this question should be answered in favour of the assessee and against the revenue. 15. On the third question, Sri Kamaladhar, learned counsel for the appellant-revenue, submits that the assessing officer had opined that the subject materials have some use and therefore if the assessing officer had taken the value in respect of obsolescence to be reduced to 50% due to other use of the material, the appellate authority should not have interfered with etc. 16. We have perused the assessment order and the order of the first appellate authority and the tribunal in the present case and also the assessment order for the assessment year 1991-9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntry in terms of the language of Article 141 of the Constitution of India. 19. Unless there is a law declared by the Supreme Court and the meaning of statutory provision is elucidated by a process of interpretation given to a statutory provision, the situation can only be a case of a binding precedent. 20. In so far as tax matters are concerned, each assessment year is different and facts vary from assessee to assessee and a general principle in so far as the method of accounting is not one that emerges, as a general principle of law, producing a ratio of a case that can have a larger or general application to all similar situations. As to what method of accounting one assessee follows, what practices one assessee follows may vary from other assessees. Comparison of the method of accounting followed by one assessee with the method of accounting followed by other assessees is odious. 21. Be that as it may, as we have discussed in the other order pertaining to other assessment years of the very assessee in so far as the dispute relating to the assessee being entitled to deduct the amount from out of its value of stock, an amount that is attributable to the excise duty pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment assessment order in terms of Section 144 of the Act and therefore the assessee should have been given a good and sufficient opportunity to make good its case in the wake of such requirement of law. It is for this reason we answer the first question in favour of the revenue and against the assessee, but deem it proper to remand this matter to the assessing officer on this question, so that the assessee can make good its claim in terms of actual payment etc. 25. We are not applying the reasons adopted by the Supreme Court in the case of Indo Nippon Chemicals Co. Ltd. ( supra ), as, on facts, we have found this is a case of deduction towards expenditure by way of excise duty being allowed or not allowed depending upon the actual payment and the assessee not making good actual payment by producing proof of payment etc. In our considered opinion, this does not involve any variation in the method of accounting or rejection of the method of accounting followed by the assessee, which, in fact, had not been disturbed, as the assessee was only required to make good the particular deduction on actual basis. We are of the opinion that all authorities under the Act have gone on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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