Varroc Engineering Pvt. Ltd., v. A C I T, Range 1,

ITA 48/PUN/2005 | misc
Pronouncement Date: 23-12-2010 | Result: Allowed

Appeal Details

RSA Number 4824514 RSA 2005
Bench Pune
Appeal Number ITA 48/PUN/2005
Duration Of Justice 5 year(s) 11 month(s) 10 day(s)
Appellant Varroc Engineering Pvt. Ltd.,
Respondent A C I T, Range 1,
Appeal Type Income Tax Appeal
Pronouncement Date 23-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted Not Allotted
Tribunal Order Date 23-12-2010
Assessment Year misc
Appeal Filed On 13-01-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV (JM) AND SHRI G.S. PANNU (AM) ITA NO. 48 & 49/PN/2005 (ASSTT. YEARS : 2000-01 & 2 001-02) VARROC ENGINEERING PVT. LTD. E-4 MIDC INDUSTRIAL AREA WALUJ AURANGABAD - 431136 PAN : NOT AVAILABLE .. APPELLANT V/S. A.C.I.T. RANGE 1 AURANGABAD RESPONDENT APPELLANT BY : SHRI KISHORE PHADKE RESPONDENT BY : SHRI SANGRAM GAIKWAD ADDL.DIT ORDER PER BECH BOTH THESE APPEALS PERTAIN TO THE SAME ASSESSEE FO R A.YS. 2000- 01 & 2001-02 AND INVOLVE COMMON GROUNDS THE SAME A RE BEING DISPOSED OF BY COMMON ORDER FOR THE SAKE OF CONVENI ENCE. GROUNDS RAISED READ AS UNDER : 1.THE LEARNED CIT(A)-I AURANGABAD ERRED IN LAW AN D ON FACTS IN CONFIRMING AN ADDITION OF RS. 15 02 167/- (FOR A.Y. 2001-02 RS. 16 49 699/-)TO THE TAXABLE INCOME OF THE ASSESSEE C OMPANY. 2.THE LEARNED CIT(A)-I AURANGABAD ERRED ON FACTS A ND IN LAW IN ACCEPTING THE PRINCIPLE SUBMISSION OF THE ASSESSEE COMPANY ON ONE HAND THAT FOLLOWING NET METHOD OR GROSS METHOD DOES NOT ALTER PROFITS/ INCOME OF THE COMPANY AND NOT GIVIN G TO THE SAID PRINCIPLE ON THE OTHER HAND ON THE REASON THAT REVI SED CALCULATION IS NOT ADVANCED BY THE ASSESSEE COMPANY. 3. THE LEARNED CIT (A)-I AURANGABAD FURTHER ERRED ON FACTS IN NOT CONSIDERING DETAILED EXERCISE PROVIDED IN ANNEX URE B WITH TAX ITA NO 48 & 49/PN/2005 VARROC ENGINEERING PVT. LTD. A.Y 2000-01 AND 2001-02 PAGE OF 4 2 AUDIT REPORT WHICH GIVES ALL FIGURES REQUIRED FOR T HE PURPOSE OF SECTION 145A. 4. THE ERRONEOUS ASSESSMENT ORDER PASSED BY THE ACI T RANGE-1 AURANGABAD AND CONFIRMED BY THE LEARNED CI T(A)-I AURANGABAD MAY PLEASE BE CANCELLED / ANNULLED AND A DDITIONS TO INCOME MADE MAY PLEASE BE DELETED. 2. AT THE OUTSET OF HEARING LD. A.R. POINTED OUT T HAT SIMILAR ISSUE AROSE IN ASSESSEES OWN CASE IN A.Y. 1999-2000 WHE REIN VIDE PARA NO. 6 OF ITA NO. 2517/MUM/2003 ORDER DT. 22 ND AUGUST 2008 TRIBUNAL HAS SET ASIDE THE MATTER TO THE FILE OF A.O. WITH CERT AIN DIRECTIONS. RELEVANT PARA NO.6 OF TRIBUNAL ORDER (SUPRA) IS REPRODUCED BELOW : 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. SECTION 145A WAS INSE RTED BY THE FINANCE (NO.2) ACT 1998 WITH EFFECT FROM 1.4.1999 WHICH PROVIDES THAT THE VALUATION OF PURCHASE AND SALE OF GOODS AN D INVENTORY FOR THE PURPOSE OF DETERMINING THE INCOME CHARGEABLE UN DER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION SHALL BE IN ACCORDANCE WITH THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE AND FURTHER ADJUSTED TO INCLUDE THE AM OUNT OF ANY TAX DUTY CESS OR FEES BY WHATEVER NAME CALLED ACT UALLY PAID OR INCURRED BY THE ASSESSEE TO BRING THE GOODS TO THE PLACE OF ITS LOCATION AND CONDITION AS ON THE DATE OF VALUATION. THE HONBLE DELHI HIGH COURT N THE AFORENOTED JUDGEMENT IN MAHA VIR ALLUMINIUM LIMITED (SUPRA) IN THE CONTEXT OF SECTI ON 145A HAS HELD THAT WHENEVER THERE S A CHANGE IN THE VALUATIO N OF CLOSING STOCK THEN THERE MUST NECESSARILY BE A CORRESPONDI NG CHANGE IN THE VALUATION OF OPENING STOCK OTHERWISE THE TRUE PROFIT WOULD NOT BE REFLECTED. THE EFFECT OF THIS JUDGEMENT IS THAT OPENING STOCK PURCHASE SALES AND CLOSING STOCK ARE REQUIRED TO B E VALUED BY ITA NO 48 & 49/PN/2005 VARROC ENGINEERING PVT. LTD. A.Y 2000-01 AND 2001-02 PAGE OF 4 3 INCLUDING THE AMOUNT OF EXCISE DUTY WHICH WILL BE P AID OR INCURRED BY THE ASSESEE. IT CANNOT BE THE ONE WAY INCLUSION TO THE VALUE OF CLOSING STOCK ONLY AND NOT GIVING CONSEQUENTIAL EFF ECT TO THE VALUE OF THE OPENING STOCK. THE CONTENTION OF THE LD. DR THAT IF THE VALUE OF THE OPENING STOCK IS ALSO INCREASED THEN IT WOUL D HAVE EFFECT OVER THE PROFITS OF THE EARLIER YEARS IN CHAIN AND HENCE THE OPENING STOCK BE NOT ALTERED DOES NOT MERIT ACCEPTANCE FOR THE REASON THAT WHENEVER THERE IS A BONA FIDE CHANGE IN THE METHOD OF STOCK VALUATION IN A PARTICULAR YEAR THEN ITS EFFECT SHOU LD NOT BE VIEWED BEYOND THE RELEVANT YEAR. UNDER THESE CIRCUMSTANCE S AND FOLLOWING THE AFORENOTED JUDGMENT OF THE HONBLE DE LHI HIGH COURT WE HOLD THAT THE EFFECT HAS TO BE GIVEN TO SECTION 145A BY VALUING THE CLOSING AS WELL AS OPENING STOCK ALONE AS HAS B EEN DONE IN THE IMPUGNED ORDER. SINCE THE DETAILS CONCERNING TH E DUTY RELATABLE TO THE OPENING STOCK ARE NOT EMERGING FRO M THE RECORDS BEFORE US WE ARE OF THE OPINION THAT IT WOULD BE JUST AND FAIR IF THE IMPUGNED ORDER IS SET ASIDE AND THE MATTER IS RESTO RED TO THE FILE OF THE ASSESSING OFFICER. WE ORDER ACCORDINGLY AND DI RECT HIM TO DECIDE THIS ISSUE AFRESH AS PER LAW AND IN THE LIGH T OF OUR DIRECTIONS CONTAINED HEREINABOVE AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE-FIRM. THE SECOND GROUN D RAISED BY THE ASSESSEE WOULD ALSO BE TAKEN CARE OF WHEN THE A O WOULD RECOMPUTED THE INCOME IN ABOVE TERMS. 3. LD. D.R. SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL PLACED ON RECORD WE FIND THAT SIMILAR ISSUE AROSE IN ASSESSE ES CASE IN A.Y. 1999- 2000 AND THE MATTER WAS RESTORED TO A.O WITH DIRECT ION TO DECIDE THE SAME AS PER ITAT DECISION FOR A.Y. 1999-2000 (SUPRA ). WE ACCORDINGLY RESTORE THE MATTER TO THE FILE OF A.O FOR THESE YE ARS ALSO WITH A DIRECTION TO DECIDE THE ISSUE IN THE LIGHT OF ITAT DECISION I N ASSESSEES OWN CASE ITA NO 48 & 49/PN/2005 VARROC ENGINEERING PVT. LTD. A.Y 2000-01 AND 2001-02 PAGE OF 4 4 AS DISCUSSED ABOVE FOR A.Y. 1999-2000 AND AS PER FA CTS AND LAW AFTER PROVIDING DUE OPPORTUNITY OF BEING HEARD TO THE ASS ESSEE. THE GROUNDS RAISED ARE ALLOWED FOR STATISTICAL PURPOSES. 5. IN RESULT APPEALS ARE ALLOWED FOR STATISTICAL P URPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 23RD DECEMBER 2010. SD/- SD/- (G.S.PANNU) ACCOUNTANT MEMBER (SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER PUNE DATED THE 23RD DECEMBER 2010 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT AURANGABAD 4. THE CIT(A)-I AURANGABADK 4. THE D.R. B BENCH PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE