TMI Blog2014 (1) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... he same time while disturbing the value of the closing stock the assessing authority could not change the method of accounting regularly employed - Decided against Revenue. Whether interest from Bank Guarantee Deposits, letter of Credit be eligible for deduction u/s 80IA - Held that:- Following Liberty India Vs. Commissioner of Income Tax [2009 (8) TMI 63 - SUPREME COURT] - They should be treated as separate items of revenue or income and accounted for accordingly - These cannot be credited against the cost of manufacture of goods debited in the Profit & Loss account for purposes of Sections 80-IA/80-IB as such remissions would constitute independent source of income beyond the first degree nexus between profits and the industrial undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at Rs.25,40,810/-. That while passing the assessment order, the AO disallowed and consequently directed to make addition of Rs.11,09,733/- on the ground of undervaluation of closing stock due to noninclusion of excise duty and also disallowed deduction under section 80IA of Rs.2,19,216/- derived from derived from Bank Guarantee Deposits, Letter of Credit and on delayed payments. 2.01. Feeling aggrieved and dissatisfied with the order passed by the AO, making disallowance of Rs.11,09,733/- and consequently making addition of the aforesaid amount on the ground of undervaluation of closing stock due to non-inclusion of excise duty as well as disallowance of deduction under section 80IA with respect to interest of Rs.2,19,216/- and other di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned advocate appearing on behalf of the respondent. 3.01. Now, so far as question No.(1), Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law approving exclusion of excise duty from valuation of closing stock of finished goods, is concerned, it is reported that the said issue is now not res-integra in view of the decision of the Division Bench of this Court in the case of Assistant Commissioner of Income Tax Vs. Narmada Chematur Petrochemicals Ltd., reported in [2010] 327 ITR 369 (Gujarat). It is required to be noted that the issue / dispute in the present case is with respect to the period prior to amendment in the Act i.e. 1/4/1999. Therefore, the ratio and the law laid down by the Divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise would even out, in other words, be revenue neutral. At the same time while disturbing the value of the closing stock the assessing authority could not change the method of accounting regularly employed. (c) the assessment year being 1997-98 the provisions of section 145A of the Act inserted by the Finance (No.2) Act, 1998 with effect from April 1, 1999 could not be invoked. Under the circumstances and applying the ratio and law laid down by the Division Bench in the case of Narmada Chematur Petrochemicals Ltd. (supra), question No.(1) is answered against the revenue. 3.02. Now, question No.(2), Whether the Appellate Tribunal was right in holding that interest of Rs.2,19,216/- derived from Bank Guarantee Deposits, Letter of Credi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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