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TMI Blog2012 (4) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... ite the assessee not establishing that this amount had become obsolete. 3. Whether the Appellate Authorities were correct in holding that custom duty paid on software and expenses incurred on MRB items should be allowed in full and not at 50% as held by the Assessing Officer and since computer software would become obsolete despite the assessee not producing any proof to claim such obsolescence. 2. The assessee is an Indian company and the assessment year is 1992-93. The assessee had filed its return of income for the assessment year in question, which was examined by the assessing officer and an order was passed under Section 143(3) of the Act on 28-2-1995. In so far as the present appeal is concerned, two aspects of assessment such as an amount claimed by way of MODVAT credit to be reduced from the valuation of closing stock of the assessee for the purpose of ascertaining the profits of the assessee for the accounting period relating to the assessment year in question and the other questions relating to claim towards obsolescence and in respect of the following five items: (i) User Guide Rs. 3,86,722 (ii) Custom duty on software Rs. 33,72,387 &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e directed disallowance up to this extent being set aside and the assessing officer to allow the same. 6. The revenue appealed against this order of the appellate Commissioner to the Income-tax Appellate tribunal, amongst many other contentious issues. In so far as these two aspects, which have become subject matter of this appeal, are concerned the tribunal, purporting to follow the view taken by the Income-tax Appellate Tribunal, Mumbai in the case of S.H. Kelkar & Co. Ltd. v. Dy. CIT [1993] 44 ITD 170 (Bom.) and also in the case of Berger Paints India Ltd. v. Dy. CIT [1992] 42 ITD 546 (Cal.) and held that the assessing officer was not justified in adding the amount on account of MODVAT etc., and therefore upheld the view of the appellate Commissioner and dismissed the appeal of the revenue on this aspect. 7. On the question of disallowance on the ground of obsolescence, the tribunal took the view that the understanding and the manner of working out of the extent of obsolescence by the appellate Commissioner was fully justified, having regard to the nature of the business the assessee carried on and the kind of product with which it is dealing with etc. 8. The grounds raised b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late Commissioner in the appeal of the assessee for the assessment year in question and with reference to this order, it is justified the correctness of the order passed by the appellate Commissioner for the assessment year 1992-93 also. 13. However, on the question relating to obsolescence etc., Sri Suryanarayana submits that disallowance to the extent of Rs. 9,84.349/- by the assessing officer, as the assessee company having not factually established that this amount has become obsolete, the question may have to be answered in favour of the revenue and the assessee would not seriously contest the matter, as if on fact it had not made good the claim to that extent if the appellate authorities had allowed, no need to go further into this aspect and therefore submits this question could have been answered accordingly, as it is a fact that the assessee hold not placed supporting materials, but as the matter is being remanded to the assessing officer on the first question, to enable the assessee to place materials before the assessing officer on this aspect and claim the benefit of deducting the actual excise duty paid on this aspect, also, the same course of action can be adopted an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken the cost of purchases at net, but not allowing the value of stock at net; that in so far as the profit computation for the assessment year is concerned, it does not make any difference whether the computation is on the basis of acquisition being net and value of stock being net or value of purchases being with excise duty and value of stock as such loaded with duty and therefore submits that the appellate Commissioner as well as the tribunal were justified in disallowing the method adopted by the assessing officer and even otherwise submits that the judgment of the Supreme Court in the case of Indo Nippon Chemicals Co. Ltd. (supra) covers the matter. 18. In so far as the judgment of the Supreme Court to be applied or followed is concerned, it can be on two principles viz., on the conventional, traditional, legal principle of a binding precedent if there is any discernible ratio emerging from a decision of a superior court and in so far as the Supreme Court of our country is concerned, the law declared by the Supreme Court which will have to be followed and applied by all courts in the country in terms of the language of Article 141 of the Constitution of India. 19. Unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of purchases includes a duty component, that should be made good to the hilt. It is for this reason, we have opined that on the principle or requirement of Section 43B of the Act, an assessee was duty bound to make good actual duty it has paid on account of purchases it made and that not having made good anywhere on record, in fact, for the other assessment years also, that is a matter which can be made good as amount claimed, but not in vacuum. 23. We find that the concept of method of accounting as is sought to be applied, particularly in the context of the provisions of section 145 of the Act is more in the nature of a jugglery than a standard method of accounting for the purpose of claiming a duty deduction on the cost of purchases. A duty paid can always he claimed in terms of Section 43B of the Act, but not otherwise as the section mandates it. 24. It is for this reason that we have permitted the assessee to make good that aspect before the assessing officer, particularly as rejection of the assessee's claim by the assessing officer virtually amounts to passing a best judgment assessment order in terms of Section 144 of the Act and therefore the assessee should have been g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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