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2019 (3) TMI 1558 - BOMBAY HIGH COURTDeduction u/s 43B - provision for payment of excise duty on obsolete inventory , which was not removed from the factory premises on or before the due date for filing of Return of Income - addition insisting on a direct correlation between the duty paid and the goods manufactured - valuation of obsolete inventory - HELD THAT:- The admitted position is that the amount in question was actually paid by way of excise duty. This liability was computed on the basis of goods manufactured by the Assessee. On the valuation of such goods, the Assessee would make a provision of excise duty liability and actually pay the same either before the end of the financial year of at any rate, latest by the due date of filing the return. Tribunal was correct in holding that the deduction could not have been disallowed by insisting on a direct correlation between the duty paid and the goods manufactured. If for any reason it is found later on that the excise duty was paid in relation to certain goods manufactured, but the funds were not cleared and that therefore, no excise duty liability arose, the adjustment would automatically be made in the later years when the Assessee would estimate its liability for payment of excise duty. Such a situation may arise under various circumstances such as damage or destruction of the goods. However, it would be inconceivable that the Assessee would not claim the reduced liability for paying excise duty. - Decided against revenue Addition of closing stock being provision for obsolete inventory - provision has been made on the basis of internal guidelines and not as per provisions of Income Tax Act, which provides for valuation of closing stock either at cost or at market price - ITAT deleted the addition - HELD THAT:- Tribunal noted that the Assessee has been consistently following this method of evaluating the stock which the Department has also accepted. - Decided against revenue
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