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TMI Blog2018 (2) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... fluctuation risk as service fees, when" 2. Ground Nos. 1 & 3 are general in nature needs no separate adjudication and 3. Ground No.2 is against the deleting the addition of Rs. 1,93,48,000/- as treating the premium paid to hedge against exchange fluctuation risk as service fees. 4. Briefly stated facts giving rise to the present appeal are that the assessment was reopened and assessment u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961(hereinafter called as 'the Act') was framed thereby, the assessing officer made addition of Rs. 1,93,48,000/- in respect of disallowance of the expenditure claimed by the assessee as premium paid on swap paid. 5. Aggrieved by this assessee filed an appeal before the Ld. CIT(A) who after considering the submissions deleted the disallowance. Now Revenue is in appeal. The Only effective ground is against deletion of addition of Rs. 1,93,48,000/- made on account of disallowance of expenditure premium paid for swap of prepayment of loan. 6. Ld. DR supported the order of the AO and Ld. counsel for the assessee supported the order of Ld. CIT(A) and submitted that the issue is covered in favour of the assessee. Similar addition was made in earlier ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he service fee charged by Citi Bank on taking over the repayment of loan to Bridgestone Corporation Japan on the agreed date in JPY on payment of Rs. 59,89,99,401/- by the appellant to Citi Bank. The appellant has drawn attention to the fact that the similar amounts claimed in the preceding years have ben allowed and has also explained in detail that the loan from Bridgestone Corporation Japan was utilized for working capital needs and repayment of existing loans and hence has to be treated as on revenue account and not on capital account and hence as the expenditure was incurred for the purposes of business it was also allowable u/s 37 of the Act. In view of the above the claim of the appellant is found to be eligible for allowance in the year under consideration. These grounds of the appellant are therefore allowed. The above finding on fact is not controverted by the Revenue, we, therefore, do not see any reason to interfere with the finding of the Ld. CIT(A), same is hereby affirmed. Thus, grounds raised by the revenue are dismissed. Now coming to ITA No.1539/Ind/2016 pertaining to A.Y. 2011- 12. The Revenue has raised following grounds of appeal: "Whether on the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opening stock of raw material consumption. The details facts of the case as per the assessment order are reproduced at para no.2 above and the detailed submissions of the appellant are reproduced at para no.3 above. The crux of the appellant's contention is that the adjustments are only made to the opening and closing stock whereas as per the provisions of section 145A of the Act such adjustment should have been also made to the purchases and consumption. Appellant also highlighted the fact that additions made to the closing stock on identical facts for the earlier years were deleted in appeal by CIT(A) as well as I.T.A.T. for the A.Y. 2009-10 the CIT(A)-1 Indore in his order in Appeal NO.IT-74/13-14/332 dated 21.8.2014 has observed as under:- "The AO added the excise component in closing stock of raw material & spares and increased the closing stock by Rs. 68,10,565/- by invoking the provisions of section 145A I.T. Act by observing that such provisions required that the closing stock should be worked out in accordance with method of accounting regularly employed by the assessee and further adjusted to include the amount of any cess, duty or tax actually paid or incurred, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in closing stock of raw materials and spares in accordance with closing stock by invoking the provisions of section 145A the Act by observing that such provisions require that closing stock has been worked out in accordance with the method of accounting regularly employed by the assessee and further adjusted to include the amount of any cess, duty or tax actually paid or incurred. The above provision has overriding effect on section 145. The assessee's contention that as per the audit report, the assessee has accounted these purchases of raw materials and incidental goods net of excise duty as Cenvet is available. Therefore, the assessee submitted that if the excise duty is added only to the closing stock of raw material and incidental goods, then it will result to distortion of profit unless purchases and opening stock are increased by component of excise duty. We are of the view that as per section 145A of the Income Tax Act, 1961, wherein method of valuation will be applicable not only in closing stock, but on inventory i.e. opening and closing stock as well as on both purchases and sales. Therefore, the AC is not justified in adding the excise duty in closing stock of raw ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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