DY.CIT 8(3), MUMBAI v. WHOLESALE WAREHOUSING (I)PVT LTD, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI RAJENDRA SINGH A.M. AND SHRI V. DURGA RAO J.M. ITA NO. 2540/MUM/2010 ASSESSMENT YEAR: 2001-02 DY. COMMISSIONER OF INCOME-TAX-8(3) APPELLANT ROOM NO. 217 AAYAKAR BHAVAN M.K. MARG MUMBAI 400 020. VS. WHOLESALE WAREHOUSING INDIA PVT. LTD. RESPONDENT IC-8 SARANG BUNGALOWS 3 RD CROSS ROAD LOKHANDWALA ANDHERI (W) MUMBAI 400 053. (PAN AAACW1439Q) APPELLANT BY : MR. PAVAN VED RESPONDENT BY : NONE ORDER PER V. DURGA RAO J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)- 18 MUMBAI PASSED ON 07/01/2010 FOR THE AS SESSMENT YEAR 2001-02 WHEREIN THE REVENUE HAS RAISED THE FOLLOWIN G GROUND OF APPEAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE H AD INCLUDED THE CUSTOM DUTY WHILE VALUING THE CLOSING STOCK AND THE ASSESSEE IS FOLLOWING INCLUSIVE METHOD OF ACCOUNTING WITHOUT AP PRECIATING THE FACTS OF THE CASE. 2. AT THE TIME OF HEARING BEFORE US NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER WE PROCEED TO DECIDE THE APPEAL AFTER HEARING THE LEARNED DR AND ON MERITS. ITA NO. 2540/MUM/2010 WHOLESALE WAREHOUSING INDIA PVT. LTD. 2 3. BRIEFLY THE FACTS OF THE CASE ARE THAT ON VERIFI CATION OF RECORD THE AO NOTICED THAT THE ASSESSEE HAD DEBITED AN AMO UNT OF RS. 2 36 65 580/- IN P&L A/C UNDER THE HEAD DIRECT EXPE NSES BEING CUSTOMS DUTY. THE CLOSING STOCK AS ON 31 ST MARCH 01 WAS VALUED AT RS. 3 69 01 737/- AND CUSTOM DUTY AMOUNTING TO RS. 2 36 65 580/- WAS NOT ADDED BACK TO THE VALUATION ITEMS. THE AO W AS OF THE VIEW THAT AS PER THE PROVISIONS OF SECTION 145A ANY TAX DUTY CESS OR FEE UNDER ANY LAW FOR THE TIME BEING IN FORCE SHALL IN CLUDE ALL SUCH PAYMENT NOTWITHSTANDING ANY RIGHT ARISING AS A CONS EQUENCE TO SUCH PAYMENT. THE AO HELD THAT SINCE THE ASSESSEE IS FOL LOWING EXCLUSIVE METHOD VALUATION IT IS CONTRARY TO THE PROVISIONS OF SECTION 145A NOT ADDING THE CUSTOMS DUTY WHILE VALUING THE CLOSING S TOCK. IN VIEW OF THE ABOVE THE AO ADDED THE UNUTILIZED MODVAT CREDI T TO THE EXTENT OF RS. 2 36 65 580/- TO THE CLOSING STOCK. ON APPEAL THE CIT(A) DELETED THE ADDITION MADE BY THE AO HOLDING THAT THE ASSESS EE HAS INCLUDED THE CUSTOMS DUTY WHILE VALUING CLOSING STOCK. AGGRI EVED THE REVENUE CARRIED THE MATTER IN APPEAL BEFORE THE ITAT. 4. THE LEARNED DR HAS PLACED RELIANCE ON THE ORDER OF THE AO. 5. WE HAVE HEARD THE LEARNED DR AND PERUSED THE REL EVANT MATERIAL ON RECORD AS WELL AS GONE THROUGH THE ORDE R OF CIT(A). THE ISSUE INVOLVED IN THIS APPEAL IS WHETHER THE CUSTOM S DUTY HAS BEEN ADDED BY THE ASSESSEE WHILE VALUING THE CLOSING ST OCK. AS PER THE AO THE ASSESSEE HAS NOT INCLUDING THE CUSTOMS DUTY OF RS. 2 36 65 580/- WHILE VALUING THE CLOSING STOCK WHEREAS THE CIT(A) HELD THAT THE ASSESSEE HAS ALREADY ADDED THE CUSTOMS DUTY WHILE V ALUING THE CLOSING STOCK HENCE THERE IS NO NEED FOR SEPARATE ADDITION OF RS. 2 36 65 580/-. WE FIND THAT THE CIT(A) HAS NOT GIVE N ANY FINDING TO ESTABLISH THAT THE ASSESSEE HAS ADDED THE CUSTOMS D UTY WHILE VALUING CLOSING STOCK. SINCE THE FINDINGS OF THE AO AS WELL AS CIT(A) ARE CONTRARY WE REMIT THE ISSUE BACK TO THE FILE OF TH E AO WITH A DIRECTION TO EXAMINE WHETHER THE CUSTOMS DUTY HAS BEEN ADDED WHILE VALUING THE CLOSING STOCK OR NOT IN ACCORDANCE WITH LAW AF TER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. ITA NO. 2540/MUM/2010 WHOLESALE WAREHOUSING INDIA PVT. LTD. 3 6. IN THE RESULT THE APPEAL OF THE REVENUE IS TREA TED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF FEBRUARY 2011. SD/- SD/- (RAJENDRA SINGH) (V. DU RGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI DATED: 28 TH FEBRUARY 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE G BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI. KV S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 23/02/11 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 24/02/11 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER