TMI Blog2013 (2) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases, sale, and closing stock, as held by in the case of Cabot India Ltd.'s (2009 (10) TMI 656 - BOMBAY HIGH COURT) and Nicholas Piramal India Ltd. [2009 (8) TMI 224 - BOMBAY HIGH COURT]. The Assessing Officer is directed to recompute accordingly. Addition u/s. 50 r.w.s. 50C - assessee contested against invoking sec 50C as it is depreciable asset and hence valuation adopted by stamp valuation authority should not be taken into consideration - Held that:- With regard to applicability of provisions of section 50C, in the case of depreciable assets, the issue now stands squarely covered in the case of ITO v. United Marine Academy [2011 (4) TMI 15 - ITAT MUMBAI] wherein held that sections 50 & 50C operate in two different fields and if the value adopted by the stamp valuation authority is accepted by the purchaser/seller there cannot be any variation for limited purposes of computing the consideration received, under section 50C. In the light of the decision cited no infirmity in the order passed by CIT(A)- against assessee. - IT APPEAL NO. 2464 (MUM.) OF 2010 - - - Dated:- 14-9-2012 - D. MANMOHAN AND RAJENDRA SINGH, JJ. M.M. Golvala and Sandeep Chetiwal for the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 on the ground that it is not pressed by the assessee. 6. Vide ground No. 3 it was contended that learned CIT(A) erred in confirming the addition made to closing stock u/s. 145A on account of Modvat credit amounting to Rs. 3,09,18,828/-. Without prejudice to the above it was contended that learned CIT(A) erred in not directing the Assessing Officer to increase the opening stock and purchases for the year under consideration by applying section 145A in its entirety, in the light decision of Hon'ble Bombay High Court in the case of CIT v. Cabot India Ltd. [ITA No. 2123 of 2009 dated 16.10.2009]. 7. Facts necessary for the disposal of the issue are stated in brief. The Assessing Officer noticed that unutilized Modvat credit/Cenvat credit outstanding at the end of the year works out to Rs. 3,09,18,828/- which deserves to be added to the closing stock as per the provisions of section 145A. Case of the assessee-company was that the net impact in profit and loss account is nil if suitable adjustment is made with regard to closing and opening stock. It was further submitted that in the light of the decision of Hon'ble Apex Court in the case of CIT v. Indo Nippon Chemicals Co. Ltd. [2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the decision of Hon'ble Bombay High Court in the case of CIT v. Indo-Nippon Chemical Ltd. [2000] 245 ITR 384 to submit that whether one applies the net method or gross method there is no understatement of profits and hence by applying inclusive method, if at all is to be applied, it has to be applied in totality and not in piecemeal i.e. if the closing stock has to be valued u/s. 145A, purchases also to be valued accordingly. Learned counsel placed reliance upon the decisions in the case of Cabot India Ltd.'s case (supra) and others to submit that any adjustment to the closing stock requires suitable modification to the opening stock, since net effect of adjustment will not result in any tax effect. It was also submitted that the Assessing Officer has not made any addition in A.Y. 2008-09 and thereafter. In other words, addition was confined only for 2 years i.e. A.Y. 2006-07 2007-08. It was also submitted that in respect of A.Y. 2000-01 which is the first year after the amendment the Assessing Officer has not made any addition and thus in the year of making adjustment the assessee is entitled to adjustment of opening stock as well as closing stock in which event, there will no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emed short term capital gains, in the instant case, by virtue of the fact that block of assets were exhausted upon sale of Nanak Niwas but the fact remains that it is depreciable asset and hence valuation adopted by stamp valuation authority should not be taken into consideration. It was further submitted that on the date of sale, property was more than 50 years old and as per the stamp duty Ready Reckoner 50% depreciation has to be adopted and if such a method is adopted value as per the Stamp Act works out to Rs. 1.55 crores whereas the property was sold for a consideration of Rs. 1.65 crores and hence no addition is called for. It was also contended that it was a mistake on the part of the buyer who has taken into consideration 40% depreciation and was willing to pay higher stamp duty as per value adopted by the Joint Sub-Registrar. Since registration and stamp charges are payable by the buyer, the assessee did not challenge the value adopted by the Joint Sub-Registrar but for the purpose of value to be adopted in the case of seller, u/s. 50C of the Income Tax Act, fair market value has to be adopted. 14. The Assessing Officer as well as learned CIT(A) rejected the contention ..... X X X X Extracts X X X X X X X X Extracts X X X X
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