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TMI Blog2018 (2) TMI 1631X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A). Thus we concur with the view taken by the CIT(A). It is not gain saying that unutilized CENVAT credit only represents the availability of excise credit at the disposal of the assessee at the end of the year eligible to be set of against future liability Therefore, apparently the unutilized CENVAT credit cannot be adopted for the purposes of valuation of inventories in sphere of s.145A of the Act. - Decided in favour of assessee. - I.T.A. No.599/Ahd/2015 And Cross Objection No.78/Ahd/2015 - - - Dated:- 12-2-2018 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER For The Revenue : Shri Vilas Shinde, Sr.DR For The Assessee : Shri Bhavesh Shah, AR ORDER PER PRADIP KUMAR KEDIA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 4. In the first appeal, the CIT(A) decided the issue in favour of assessee and deleted the additions so made by the AO. The relevant para of the order of the CIT(A) is reproduced hereunder:- 5. I have perused the facts of the case as enumerated by A.O. and as submitted by appellant. 1 have perused the case laws relied on by A.O. as well as appellant. After careful consideration of facts, submission and contention of both A.O. as well as of appellant, ground wise adjudication is as follows: Ground No. 1 with six sub-grounds are against the addition of ₹ 1,02,17,252/- invoking section 145A of the Act for unutilized CENVAT credited both on legal as well as on merit grounds. I am inclined with contention of appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture has imposed a new system of valuing the closing stock it is bound to have an impact in that year, but becomes neutral in nature in the subsequent year. While applying Sec. MBA for valuing closing stock in the first year, the assessee cannot be permitted to adjust the opening stock of the year . Thus the ratio laid down is that for the A.Y. 1999-2000 there was no need to adjust the opening stock in compliance with section MBA in the case of Croydon Chemical Works Ltd. Ltd. Vs. ACIT (11 SOY 295) (Mumbai) the year under consideration was A.Y. 1999- 2000. It was held that in view of S. 145A, A.O. was justified in adding the debit balance in Modvat account as on 31st March 1999, to the value of closing stock . The said decision has no appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. The assessee was following the mercantile system of accounting but it was not the case of the Assessing Officer that the Assessing Officer was not in a position to deduce true profits of the year under consideration. Such duty of Central excise if added to enhance the value of closing stock would result in enhanced opening stock on the first day of the next accounting period, namely, April 1, 1997. So the next year's profits would get depressed accordingly. Over a period of time the whole exercise would even out, in other words, be revenue neutral. At the same time while disturbing the value of the closing stock the assessing authority could not change the method of accounting regularly employed. ( c) the assessment year b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 307 ITR 202 (SC). Assessee-has also placed reliance on Ashwin A. Shah 1 ITR 356 (Trib) [Ahd] for the legal proposition that the liability arises only at the time of removal of goods form the factory. Considering the totality of the facts and circumstances of the case and the law discussed above we hereby reverse the finding of the Id. CIT(A) and allow this ground. Assessee's appeal is allowed. 3.7 It is seen from the ratio laid down in the above mentioned case-laws that only in respect of A.Y. 1999-2000, being the first year after the insertion of section 145A, there is difference of opinion as to whether only closing stock had to be adjusted or whether all the three elements namely, purchases, sale and inventory are to be adjust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant consistently following exclusive method with due certification by tax auditor that inclusive method will be revenue neutral exercise, such additions are not justified on merit as well as on legal proposition related to the issue as well as section 145A of the Act. The A.O. is directed to delete the addition so made of ₹ 1,02,17,252/-. The appellant gets relief accordingly. Ground No. 1 along with sub-grounds are treated as allowed. Ground No. 2 against the levy of interest u/s 234A, 234B, 234C 234D is now consequential in view of relief granted at ground no. 1 above. The A.O. is directed to re-compute such interest if required only after giving effect to the relief granted in ground no.1. This ground is therefore treated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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