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TMI Blog2013 (10) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the credit side and was refunded in the next assessment year, i.e., Assessment Year 1996-97, when income of the assessee to the tune of Rs.7.16 crores was taxed on account of refund. This would amount to double taxation of the same amount in the two years. The issue in question is covered by the decision of the Supreme Court in CIT versus Indo Nippon Chemicals Company Limited, [2003 (1) TMI 8 - SUPREME Court], wherein it was observed that the Assessing Officer/Revenue was not correct in holding that MODVAT credit was irreversible credit available to the manufacturers upon purchase of duty paid raw material and it should amount to income, which is liable to be taxed under the Act - In the said case it was also noticed that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile system of accounting? 2. The assessment order records that there was accumulation of unutilised input MODVAT credit of Rs.3.95 crores. The assessee had claimed this as a deduction in the computation of income. This claim was made in the revised return. Assessee premised that they had paid excise duty and additional customs duty and this constitutes an expense under Section 37(1) of the Income Tax Act, 1961 (Act, for short). The claim was rejected by the Assessing Officer observing that the MODVAT credit had not been utilised and could have been utilised in the next year. 3. Commissioner of Income Tax (Appeals) recorded the statement of the assessee that excise duty and additional customs duty paid on the raw material formed part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 37(1) of the Act as it was forming part of raw material. The Assessing Officer held that credit in respect of MODVAT had accrued and was still available and, therefore, deduction under Section 37(1) was rejected. It was noticed that the refund received from the excise department of Rs.7.16 crores was offered for taxation in the Assessment Year 1996-97 by the respondent-assessee and was accordingly taxed. The tribunal observed that as payment of excise and additional customs duties had been made, it was to be allowed as a deduction under Section 37(1) of the Act. Unutilised MODVAT credit remained on the credit side and was refunded in the next assessment year, i.e., Assessment Year 1996-97, when income of the assessee to the tu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Income Tax (Appeals) create some doubt and suspicion whether net method was followed by the assessee, but the Assessing Officer has not commented adversely about the same in the assessment order. Findings of the Commissioner of Income Tax (Appeals) are tentative and not firm. In the income tax appeal and the grounds taken, there is no allegation or averment that the respondent-assessee was following gross method and not the net method or was following two different methods at the time of purchase/opening stock and valuation of the stock in hand. As noted above, SLP preferred by the Revenue in the case of the respondent was admitted as Civil Appeal No. 6449/2012 but has been dismissed. 7. In view of the aforesaid position an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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