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TMI Blog2015 (2) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... ty while computing opening and closing stock - ITAT deleted disallowance - Held that:- A perusal of Section 145(A) of the Act and the clarification relating to the method of accounting, contained in the circular issued by the Institute of Chartered Accountant, does not enable us to hold that the opinion recorded by the Tribunal is in any manner perverse or arbitrary. The fact that the judgment in M/s Indo Nippon Chemical Industries Limited's case (Supra) relates to modvat credit would make no difference as it is the method of accountancy and the principle affirmed in M/s Indo Nippon Chemical Industries Limited's case (2003 (1) TMI 8 - SUPREME Court) that is relevant. Decided against the revenue. Interest on interest free advances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 93 of 2009 - - - Dated:- 7-1-2015 - Rajive Bhalla And B. S. Walia,JJ. For the Appellant : Ms Savita Saxena, Adv. For the Respondents : Mr Akshay Bhan, Sr. Adv. Mr Alok Mittal, Adv. JUDGMENT Rajive Bhalla,J (Oral) 1. By way of this order, we shall decide ITA Nos. 430 of 2006, 400 of 2007, 295 of 2009, 296 of 2009 titled as Commissioner of Income Tax-II, Ludhiana Vs. M/s Avery Cycles Inds. Ltd., ITA Nos. 297 of 2009, 298 of 2009 and 286 of 2009, Commissioner of Income Tax-II, Ludhiana Vs. M/s Avon Cycles Ltd. and ITA No. 593 of 2009, Commissioner of Income Tax-II, Ludhiana Vs. M/s Hero Cycles Ltd. 2. The revenue is before us challenging orders passed by the Income Tax Appellate Tribunal (here-in-after referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er considering the material on record, the Assessing Officer relied upon Section 145(A) of the Act to include excise duty while computing opening and closing stock, for evaluating the assessee's income. 5. Aggrieved by this order, the assessee filed an appeal before the Commissioner of Income Tax-II, Ludhiana. The CIT(Appeals) (hereinafter referred to as 'the CIT(A)') relied upon CBDT circular No. 772 dated 23.12.1998 and guidelines issued by the Institute of Chartered Accountants to delete the addition of ₹ 32,31,521/- made by the Assessing Officer. The revenue preferred an appeal before the Tribunal, which was dismissed by order dated 07.10.2005 by relying upon a judgment of the Hon'ble Supreme Court in CIT Vs. M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the back ground for the insertion of the new section 145A. It was clarified that a new section 145A had been inserted w.e.f. 1.4.1999 with a view to put an end to the point of litigation as to whether the value of the closing stock of the inputs, work in progress, and finished goods must necessarily include the element for which modvat credit is available. It was clarified that the new section 145A was inserted in order to ensure that the value of opening and closing stock reflect the correct value. (iii) The Learned Counsel has also alluded to the guidelines issued by the Instituted of Chartered Accountants, which is the CA's Apex Body. After having considered the rival submissions, I find force in the contentions of the Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the modvat credit was a reversible credit available to manufacturer, open purchase of duty paid raw material would not amount to income which was liable to be taxed under the act. 10. A perusal of Section 145(A) of the Act and the clarification relating to the method of accounting, contained in the circular issued by the Institute of Chartered Accountant, does not enable us to hold that the opinion recorded by the Tribunal is in any manner perverse or arbitrary. The fact that the judgment in M/s Indo Nippon Chemical Industries Limited's case (Supra) relates to modvat credit would make no difference as it is the method of accountancy and the principle affirmed in M/s Indo Nippon Chemical Industries Limited's case (Supra) that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Appellate Tribunal have both erred in deleting the interest. Counsel for the assessee on the other hand, submits that Section 234D of the Act does not apply to the appellant and even it is held that Section 234D of the Act is applicable, the rate of interest has to be calculated from the date of incorporation of Section 234D and not from the date set out by the Assessing Officer. Section 234D of the Act reads as follows:- 234D. (i) Subject to the other provisions of this Act, where any refund is granted to the assessee under sub-section (1) of section 143, and - (a) no refund is due on regular assessment; or (b) the amount refunded under sub-section(1) of section 143exceeds the amount refundable on regular assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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