9911796707
TMI Blog2025 (4) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... an adjustment of Rs.2,42,59,980 was made to the income of the assessee and the loss was assessed at Rs.25,89,05,126. 4. Thereafter, scrutiny assessment proceedings in the case of the assessee was completed vide order dated 24.09.2021 passed under section 143(3) r.w.s 144B, assessing the total loss at Rs.20,23,45,760, after considering the loss determined in the intimation issued under section 143(1) of the Act as the starting point of computation and making addition on account of alleged under-valuation of closing work-in- progress ('WIP'). It is the factual position that during the year under consideration closing stock of work in progress was Rs. 44,79,95,000/- which was required to be loaded with Excise Duty applicable @ 12.625% amounting to Rs. 5,65,59,368/ -. Which was added by Ld. AO order dt. 24/03/2021 [Section 145 (a) (ii)] 5. Challenging the aforesaid addition(s) made in the assessment order, the assessee filed an appeal before the CIT(A), which was decided in favour of the assessee vide order dated 28.06.2022 as and by way of "impugned order". 6. Aggrieved, the department is in appeal before the Hon'ble Bench. 7. In Form No. 36 which is form of appeal to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red only is includable for the purpose of valuation of inventory and purchase and sale of goods 10. In the facts of the present case, no duty was leviable on closing WIP in the first instance inasmuch as excise Duty is payable only on 'manufactured goods' and that too only when such goods are moved out of the factory/excise border of the manufacturer [refer Mc. Dowell & Company Ltd. vs. CTO: 154 ITR 148 (SC); C1T vs. Groz Beckert Asia Ltd: 296 ITR 401 (P&H). 11. Issue squarely covered 11. It is further respectfully submitted that the aforesaid issue of ad-hoc inclusion of excise duty in the value of closing WIP now stands covered in favour of the assessee vide order dated 14.05.2018 passed in assessee's own case for assessment year(s) 2005-06 to 2007-08,2010-11 to 2012-13 wherein similar addition made was deleted by this Hon'ble Tribunal holding as under (refer pgs. 135-142 of PB): "30. We have considered the rival contentions. In the case in hand, the assessee has not paid any excise duty on the closing work in progress and hence there was no question of loading any excise duty on estimation basis. Even otherwise, if the value of the excise duty has to be inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act (refer pg. 98-110 of PB). 19. In this regard, it is respectfully submitted that the payment for bonus / ex- gratia made by the assessee was not reported in the TAR since the same was made after the date of signing of the TAR but before the date of furnishing the return of income for the year under consideration. The TAR, it is submitted, has been signed on 18.08.2018 whereas the payment of bonus / ex-gratia have been made on the following dates: S.No. Voucher Number Date of Payment Amount Bonus Payments 1. 100263437 30.10.2018 21,06,181 2. 100263439 30.10.2018 69,536 3. 100263440 30.10.2018 15,386 4. 2200002511 3,37,726 Total Bonus Paid before 30.11.2018 (A) 25,28,829 S.No. Voucher Number Date of Payment Amount Ex-gratia Payment 5. 2200002374 31.10.2018 6,643,794 6. 2200002413 31.10.2018 7,238,378 7. 100263422 18.10.2018 7,488,494 8. 100263431 18.10.2018 179,815 9. 100263438 30.10.2018 269,661 10. 100263440 30.10.2018 15,191 11. 2200002486 30.10.2018 152,414 12. 2200002434 31.10.2018 22,500 13. 2200002435 01.11.2018 22,500 14. 220002688 17.11.2018 22,496 15. 2200002374 31.10.2018 19,634 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end of the year but before the due date of filing the income tax return under section 139(1) of the Act. 15. Kind attention in this regard is invited to the certificate dated 30.11.2018 issued by an independent Chartered Accountant duly certifying that the assessee company had made the payment of bonus / ex-gratia aggregating to Rs.2,42,59,981 before the due date of filing the return of income under section 139(1) of the Act (refer pg. 122 of PB). 16. In view of the aforesaid, the payment for bonus / ex-gratia made after the end of the year and after the date of singing the tax audit report, but before the due date of filing the return of income was rightly claimed by the assessee and the action of the assessing officer in confirming the adjustment on this account has rightly been deleted by the CIT(A). 17. Even otherwise, it is a trite law that the opinion expressed by the auditor, is not determinative/ binding as the same only represents the auditor's view which may or may not be the correct position in law [refer PCITvs. IL&FS Energy Development Company Ltd: 399ITR 483 (Del); PCITvs. Escorts Ltd: 258 Taxman 402 (Del.)]. 18. In view of the aforesaid, the disallowance mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adhoc inclusion of excise duty in the value of closing work in progress stands covered in favour of assessee vide order dt. 14/05/2018 passed in assessee's own case for AY's 2005-06, 2007-08. 2010-11, 2012-13 wherein similar addition made was deleted by this Hon'ble Tribunal in para no. 30 in ITA No. 79/Chd/2009 / ITA No. 112/Chd/2009 by observing as under: " 30. We have considered the rival contentions. In the case in hand, the assessee has not paid any excise duty on the closing work in progress and hence there was no question of loading any excise duty on estimation basis. Even otherwise, if the value of the excise duty has to be included in the closing stock then the value of excise duty has also to be included in the opening stock and in that even there would be no difference in the result of the value of the opening stock and closing stock. Reliance in this respect is placed on the decision of the Delhi High Court in the case of 'Purolator India Itd.(supra) and of the Allahabad High Court in the case of 'CIT Vs. Sangam Structurals Ltd.' (2013) 35 taxmann.com 148 (All.). In view of this, we do not find any justification in making the aforesaid addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and in the premises as set out hereinabove respectfully following above order of our Coordinate Bench in (supra) in the Assessee own cases we dismiss the present appeal of Revenue as the issue is squarely covered. The Ld. CIT(A) has rightly deleted the addition of Rs. 5,65,59,368/ -. We also hold that Section 145A contemplates valuation of inventory to be made at lower of actual cost or net realisable value and tax, duty, cess or fee (by whatsoever called) shall not be includible in value of closing work in progress as no such amount of excise duty is paid as the stage of levy in law has not arisen. What is contemplated in law is actual payment and not proposed payment. 23. In so far as the issue of disallowance of Rs. 2,42,59,981/- being the amount of payment of bonus / ex-gratia made before due date of filing the return of income under section 139(1) of the Act i.e; 30/11/2018 we hold that requisite payment perse appears to have been made as is demonstrated before us(supra). We have also seen certificate issued by independent CA which is in paper book. We conquer with the contention of Ld. DR that there are contradiction in the impugned order. We hold that in para 6.4 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
