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TMI Blog2018 (1) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(A) has followed his identical finding in said earlier assessment year concluding that the impugned expenditure is in the nature of routine wear and tear associated with use of old factory building. We therefore adopt consistency in the impugned assessment year as well to confirm the CIT(A)’s findings under challenge qua this second issue. Unutilized CENVAT credit addition u/s 145A - Held that:- CIT(A) has followed his findings in assessment year 2010-11 deleting an identical addition on the ground that it is mainly revenue neutral case stating that unutilized CENVAT credit cannot be subject matter of addition under Section 145A of the Act being tax neutral. - ITA No. 532/Ahd/2016 - - - Dated:- 18-1-2018 - Shri S. S. Godara, Judicial Member And Shri Pradip Kumar Kedia, Accountant Member By Revenue : Shri V. K. Singh, Sr. D.R. By Assessee : Shri S. N. Divatia, A.R. ORDER Per S. S. Godara, Judicial Member This Revenue s appeal for assessment year 2012-13 arises against the CIT(A)-1, Ahmedabad s order dated 18.12.2015, in case no. CIT(A)-1/DCIT,Cir- 1(1)(1)/656/2014-15, reversing Assessing Officer s action inter alia making Section 41(1) addition of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its books of account and even not written back in Profit !Toss account hence applying provisions of section 41(1), no such addition can be made even though debt is time barred or outstanding for more than three years. On identical facts, Hon'ble Gujarat High court in the case of CIT V/s Bhogilal Ramjibhai Atara [2014] 43 taxmann.com 55 has held as under: Section 41(1) of the Income-tax Act, 1961 - Remission or cessation of trading liability (Cessation of liability) - Assessment year 2007-08 - In return of income for assessment year 2007-08, assesses had shown a certain amount by way of his debts - He supplied details of 27 different creditors - Assessing Officer undertook exercise to verify records of so called creditors and found that creditors had no dealing with assessee - Assessing Officer further having found that debts were outstanding since several years applied section 41(1) and added above amount in income of assessee as deemed income -There was nothing on record to suggest that there was remission o cessation of liability that too during previous year relevant to assessment year 2007-08 - Whether in peculiar facts of case amount in question could not be added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d pleads that the CIT(A) has erred in law as well as on facts in deleting disallowance of ₹ 9,40,688/- claimed as factory repairing expenses despite the fact that the same are capital in nature. Learned counsel representing assessee files before us this tribunal s order in Revenue s appeal itself for assessment year 2010-11 wherein the co-ordinate bench in its order dated 01.05.2017 has concluded that assessee s identical renovation involving replastering, re-flooring, replacement of doors, re-plumbing etc. could not be taken as capital expenditure. We find that the Assessing Officer had invoked Section 30 explanation to disallow the impugned expenditure after concluding that the relevant repairs involving plastering, flooring, structuring etc. amounted to capital expenditure. Learned Departmental Representative fails to dispute that the CIT(A) has followed his identical finding in said earlier assessment year concluding that the impugned expenditure is in the nature of routine wear and tear associated with use of old factory building. We therefore adopt consistency in the impugned assessment year as well to confirm the CIT(A) s findings under challenge qua this second issue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in making the addition of the said CENVAT credit, treating the same as part and parcel of the closing stock of the appellant. The appellant has also cited the various decisions of ITAT, Ahmedabad and Gujarat High Court (supra). We would also draw your kind attention that CIT (A) has deleted the addition made u/s 145A for unutilized balance of MODVAT for A.Y.2010-11. 6.4. After going through the facts of the case and legal position, Hon'ble Jurisdictional High Court in the case of Narmada Chematur Petrochemicals 327 ITR 369 (Guj.) has held that unless and until the amount of the Duty is not entered on one side as an item of cost, it cannot be taken as a component of the value of the closing stock on the either side. The true purpose of crediting the value of unsold stock is to balance the cost of those goods entered into other side of account. There is an another decision of an Hon'ble Gujarat High Court pronounced in the case of CIT vs. Unique Industries 307 ITR 350 (Guj.),wherein it is held that the Excise duty, Sales Tax and other duties form part of the closing stock when the same are incurred. In that case, it was noted that the assessee had not debited any exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be a reason to make any addition in the income of the assessee because even if we include such VAT receivable in the value of closing stock, the same is also required to be included in the value of purchases and it will have no impacts on the profits of the assessee. The ITAT Hon'ble Ahmedabad ITAT in the case of ITO v/s Gujarat Parafins Pvt. Limited (ITA No. 2335/Ahd/2011) dated 20th March, 2015 had followed the ratios of the Gujarat High Court referred to above and has categorically held that unutilized CENVAT credit cannot be subject matter of addition under Section 145A of the Act being tax neutral. Considering the facts discussed herein above and relying upon decisions referred, supra and following the decision of my predecessor, the addition of ₹ 27,99,678/- made by Assessing Officer is deleted. The ground of the appellant is allowed. 7. Heard rival contentions. It has come on record that the CIT(A) has followed his findings in assessment year 2010-11 deleting an identical addition on the ground that it is mainly revenue neutral case. We find from tribunal s order (supra) para 5.3 that the Revenue has lost his identical substantive ground therein as we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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