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TMI Blog2009 (12) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income Tax vs. English Electric Co. Of India Limited reported in [2008 -TMI - 15290 - MADRAS High Court] held that excise liability not to be included in valuation of closing stock. The Assessing Officer disallowed the investment allowance claim on the ground that by notification 50 - 233(e) dated 19.03.1990, the Government abolished the scheme of investment allowance with effect from 01.04.1990. – held that - the imported goods are yet to be cleared from the customs and they still remain in the bonded warehouse and the manufactured goods are also very much available within the assessee's factory and it is not cleared by payment of excise duty. - excise liability not to be included in valuation of closing stock - that increas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessing Officer disallowed the investment allowance claim on the ground that by notification 50 233(e) dated 19.03.1990, the Government abolished the scheme of investment allowance with effect from 01.04.1990. (ii) The First Appellate Authority set aside that finding and directed the Assessing Officer to allow assessee's claim in respect of incremental cost after verifying the arithmetical accuracy of the actual sum which is claimed and after ensuring that other conditions in this behalf is satisfied. Against that, the revenue preferred an appeal before the Income Tax Appellate Tribunal. The Tribunal, by reason of the impugned order, rejected the appeal. The revenue once again on appeal before this Court under Section 260-A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods not cleared from the factory and when the taxable event is yet to come, whether the excise duty can be included in the valuation is the point that arises for consideration. 7. The issue came up before this Court in the case of Commissioner of Income Tax vs. English Electric Co. Of India Ltd., reported in 243 ITR 512, wherein, this Court while rejecting the submission of the learned counsel for the revenue held that the liability for payment of excise duty arises at the point of manufacture and, therefore, that liability goes to increase the value of stock awaiting sale. By observing that the argument proceeded on a misconception held that the stock which the assessee has at the end of the financial year is required to be valued at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be entitled to remove the imported raw material from the ports. On payment of such duty, it necessarily constituted a part of the cost of the raw material to the assessee. The value of that imported raw material would not undergo any change depending on whether it is used up in the course of manufacture, or is stored in the godown to be used at a future point of time in the course of manufacture. The value of the imported raw material was, therefore, required to be shown uniformly when it was used up in the process of manufacture as also when it was required to be valued as part of the closing stock by including the customs duty component. We find there is a material difference between the Southern Asbestos case with which reliance h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not cleared by payment of excise duty. Hence, the said different factor make an ocean of difference with the Southern Asbestos's case. But the facts are identical with that of English Electric Co.'s case. Hence the first issue is answered in favour of the assessee. 9. In respect of the 2nd question of law, we are of the vies that the issue is already covered in favour of the assessee in Southern Asbestos's case referred to above. In that case also, the question of law to the following effect was referred for opinion. "Whether on the facts and in the circumstances of the case, and on a proper construction of section 43 B of the Income Tax Act, 1961, the assessee is entitled to a revenue deduction in respect of customs and excise d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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