9911796707
TMI Blog2015 (3) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... its return of income for A.Y. 07-08 on 31.10.2007 declaring total income of Rs. 33,48,105/-. The case was selected for scrutiny and thereafter the assessment was framed u/s. 143(3) vide order dated 29.12.2009 and the total income was assessed at Rs. 46,95,050/-. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) vide order dated 13.01.2011 granted partial relief to the Assessee. Aggrieved by the order of CIT(A), Assessee is now in appeal before us and has raised the following grounds:- 1. The order passed U/s. 250 of the I.T. Act on 13th January, 2011 for A.Y. 2007-08 by CIT(A)-XVI, Ahmedabad upholding the addition of Rs. 11,68,817 is wholly illegal, unlawful and against the principles of natural justice. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In response to which Assessee interalia submitted that it was consistently adopting exclusion method of closing stock valuation. It was also submitted that it was debiting the purchase account only with the purchases and not the Excise duty or VAT which was take to Balance sheet directly. It was further submitted that out of the total Excise Duty of Rs. 124.37 lacs debited, it had utilized the Excise Duty of Rs. 140.53 lacs which means that it has already utilized the payment of Excise Duty during the year and had also paid Rs. 16.16. lacs. The submissions of the Assessee were not found acceptable to the A..O as was of the view that by adopting exclusion method of closing stock valuation, the correct profit of the business was not reflecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sive method for the book purposes but for the purpose of tax audit report and disallowance u/s.43B it is necessary that the assessee must show the effect of Section 145A by following the inclusive method i.e. by including all tax, duties, cess etc. in the closing stock. These taxes, duties, etc. will have to be added to the closing stock of the current year in view of the above discussion. However, the assessee has to necessarily follow the closing stock of last year as opening stock of the current year. As stated earlier the assessee will get back refund of these excise duty receivable & vat receivable if he is fully exporter or they will be adjusted if does local sales and hence these are his income of the current year. In view of this re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have gone through the material on record and the orders passed by authorities below. We find that there is submission of the assessee before the authorities below that while the entire amount of excise duty realized on sales was included in the sale amount but out of entire amount of excise duty paid on purchases, only that portion of such excise duty paid which was utilized by way of MOD VAT, had been included in the value of purchases and the balance amount of Modvat credit which could not be utilized in the present year was shown in the balance sheet as an amount receivable and this portion of Rs.l1,25,3427- was not included in the value of purchases. Ld. D.R. could not controvert these submissions of the assessee made by the assessee be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the value of inventory. Aggrieved by the action of the Assessing Officer, Assessee carried the matter before CIT(A). CIT(A) after considering the submissions of the Assessee and relying on the decision of Ahmedabad Tribunal in the case of ITA 1358/Ahd/2009 allowed the appeal of the assessee by holding as under:- The appellant also pointed out that Hon'ble IT AT, Ahmedabad vide ITA No. 1358/Ahd/2009 has also concurred with a view that excise duty and/or customs duty should not be included in the closing stock. The operative part indicating observation of the Hon'ble ITAT is reproduced herein as under: "At the time of hearing, both the parties agreed that the issue is now squarely covered by the decision of Hon'ble Jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessing authority could not change the method of accounting regularly employed. [c] The assessment year being 1997-98 the provisions of section 145A of the Act inserted by the Finance (No. 2) Act, 1998 with effect from April 1, 1999 could not be invoked". [4.4] I have perused the assessment order and the written submissions made in this regard. Since the issue is squarely covered by the Jurisdictional 1TAT, I am of the view that no addition should be made on account of excise and customs duty in the valuation of closing stock. The addition made by the AO is thus directed to be deleted. The grounds raised by the appellant are thus allowed. 5. Aggrieved by the order of the Assessing Officer Revenue is now in appeal before us. 6. Befo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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