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2016 (1) TMI 1079 - AT - Income TaxChange in method of accounting for the excise duty from exclusive method to inclusive method - old brought forward CENVAT credit balance from the sales in the name of changing the method of accounting to comply with the provisions of section 145A - Held that:- Prior period accumulation has to be given credit during the year, when purchases and sales are accounted with or without excise duty, and if such exercise is carried out there would be difference in profits. So far as the amount of ₹ 81,09,050/- which the AO held it to be a notional duty, the Ld. CIT(A) on a correct appreciation of facts has given correct finding, which can not be interfered with as the total excise duty payable on the sale during the year was at ₹ 1,51,44,409/- and after reducing the opening credit of ₹ 70,35,659/- the balance remaining payable on the sale was ₹ 81,09,750/-. This was further reduced from the amount of the excise duty paid on inputs during the year for sales aggregating to ₹ 1,96,74,139/-. The balance remaining on current purchases is ₹ 1,15,47,370/- and this has been duly accounted for in the manner provided u/s 145A in this year. The Ld. CIT(A) already given relief on account excise portion of the opening stock of ₹ 30,60,519/- as it was part of the brought forward MODVAT credit of ₹ 70,50,659/-. However, the sum of ₹ 39,74,140/- which has been confirmed by the CIT(A) cannot be upheld in principle because these are accrual over the years and when there is change in the method of accounting in the assessment year 2005-06, the entire amount gets due in this year which has to be allowed. However such an allowance is subject to limited verification by the AO, whether the assessee has forgone the MODVAT credit as per Excise law and rules and instead availed the benefit under the Income-tax Act in this year and further if the said amount has already subjected to tax in the earlier years in a way that the assessee had not claimed the benefit of excise duty on this amount in the earlier year and hence relief has to be given in this year. Thus, with this limited direction of verification the issue raised vide revenue’s ground are treated as dismissed whereas the amount of ₹ 39,74,140/- as confirmed by the CIT(A) is treated as partly allowed for statistical purposes. Deduction u/s 80IB - Held that:- As pointed by Ld. Counsel right from assessment years 2001-02 to 2004-05, assessee has been allowed deduction u/s 80IB continuously in 3 years by the department even when, the assessee’s case has been assessed under scrutiny proceedings u/s 143(3). If similar facts are permeating in this year also, then as a matter of consistency different view cannot be taken in this year. The fundamental aspect of allowing deduction u/s 80IB has been examined and granted earlier, then without any change in the material facts a different view should not be taken. Accordingly, we hold that, the activities carried out by the assessee amounts to manufacturing and accordingly, the assessee is entitled for claim of deduction u/s 80IB. Thus, the ground raised by the assessee is allowed.
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