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2015 (6) TMI 357 - ITAT LUCKNOW

2015 (6) TMI 357 - ITAT LUCKNOW - TMI - Disallowance of employer's contribution to P.F. of employees - payment beyond the time prescribed under the provision of I.T. Act, 1961 as well as Provident Fund Act - Held that:- It has been clearly established that the payment of Provident Fund contribution was made before the due date of filing of the return of income, therefore, the same is allowable under section 43B of the Act - Decided in favour of assesse.

Valuation of closing stock - AO .....

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. But since liability of payment of excise duty has been incurred on the production of the goods, the same is to be included in the closing stock. It is totally irrelevant whether the same was claimed to be expenditure in the profit and loss account by the assessee. As per provisions of section 43B of the Act, the expenditure on account of excise duty can only be allowed if it is paid before the due date of filing of the return of income. Therefore, we find no force in the arguments of the ld. c .....

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ent : Shri. Shyam Lal, C.A. ORDER Per Sunil Kumar YADAV: This appeal is preferred by the Revenue against the order of the ld. CIT(A), inter alia, on the following grounds:- 1. That the order of the Ld. CIT (Appeals) Bareilly is erroneous in law and on facts as the A.O. has rightly disallowed ₹ 59,60,316/- as employer's contribution to P.P. of employees on the ground that assessment order do not indicate any material evidence to. rebut the claim of the assessee for payment. The A.O. dis .....

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#8377; 33,79,849/- has already been disallowed by the assessee itself and same is added back in computation of income for the period under consideration. Therefore the decision of Ld. CIT(A) is not accepted . 3 That the Ld. CIT (Appeals) has wrongly deleted the addition of ₹ 4,03,21,627/- as addition of Excise Duty to the value of the closing stock in the instant case, no excise duty has been computed and included against the closing stock and thereafter in trading account. The A.O. added .....

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wrongly deleted the addition. 5 That the order of the Ld. CIT(A) being erroneous in law and on facts may be cancelled and the order of the A.O. may be restored. 2. Apropos ground No.1, it is submitted on behalf of the assessee that this issue is covered in favour of the assessee, as the payment of Employees Contribution to Provident fund of the employees was made before the due date of filing of the return of income. The Assessing Officer has disallowed the said payment by invoking the provision .....

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the sake of reference:- I have considered the issue, It is seen from the order of the AO that the AO has made the basis of disallowance, Annexure E and El of the Audit report. The copy of this report as filed in appeal before me shows that that the mode of payment was shown as draft/ cheques. All the draft and cheques are issued well before the due date for filing the return of income. The return in question was filed on 19.9.2008 as mentioned in Annexure E and E-1 shows that the payments menti .....

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ncurred as aforesaid and the evidence of such payment is furnished by the assessee alongwith such return. A carefully perusal of the assessment order do not indicate any material evidence to rebut the claim of the appellant for payment. In the facts and circumstances of the case I have no option but to deleted the disallowance made by the AO. 3. Since the ld. D.R. could not point out any fault in the order of the ld. CIT(A), we find no infirmity in the order of the ld. CIT(A) on this issue, as i .....

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authorities, we find that the Assessing Officer has disallowed the payment for want of proper evidence with regard to the payment of purchase tax before due date of filing of the return of income. Before the ld. CIT(A), the relevant evidence was filed to establish that the payments were made before the due date of filing of the return of income. During the course of hearing of this appeal, the ld. D.R. could not dispute the factual aspect. Since the payments were made before the due date of fili .....

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Officer by issuing show cause notice and in response thereto a reply was filed and on perusal of the same, the Assessing Officer was of the view that the assessee has not included any amount of excise duty in closing stock. He accordingly revalued the closing stock including the excise duty and made addition of the excise duty having invoked the provisions of section 145A of the Act, according to which while valuing the purchase and sale of goods and inventory for the purposes of determining the .....

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ssion that the assessee has not claimed any expenditure on account of payment of excise duty, therefore, the same cannot be included in the valuation of closing stock. The ld. CIT(A) re-examined the claim of the assessee in the light of his contentions and has finally deleted the addition in the light of the judgments of the Hon'ble Madras High Court reported in 267 ITR 600 and 243 ITR 502 and the judgment of the Hon'ble Apex Court in the case of Chainrup Sampatram, 24 ITR 481(SC) and Hi .....

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inance (No.2) Act, 1998 w.e.f. 1.4.1999 whereas the judgments referred to by the assessee relate to the assessment year prior to the amendment, therefore, the scope of section 145A of the Act was never examined either by the Hon'ble High Courts or the Apex Court. The ld. D.R. has further contended that the closing stocks are to be computed as per provisions of the law and the expenses on account of excise duty can only be allowed as per provisions of section 43B of the Act, according to whic .....

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ection 145A of the Act and included the excise duty computed on the stocks manufactured in the factory of the assessee. 8. The ld. counsel for the assessee, besides placing reliance upon the order of the ld. CIT(A), has contended that since he has not claimed any expenditure on account of payment of excise duty, the same cannot be included in the closing stock. He has also placed reliance upon the following judgments:- 1. CIT vs. Dynavision Ltd., 348 ITR 380(SC). 2. CIT vs. Torrent Cables Ltd., .....

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pe of provisions of section 145A of the Act was not examined by the Hon'ble High Court or the Tribunal. 10. In the case of CIT vs. Dynavision Ltd. (supra), the relevant assessment year is 1987-88 whereas the provisions of section 145A of the Act was introduced w.e.f. 1.4.1999. Therefore, there was no occasion for the Hon'ble Supreme Court to examine the scope of section 145A of the Act. Similar is the position in the case of CIT vs. Torrent Cables Ltd. (supra) where the assessment year i .....

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r incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation are to be included in the valuation of closing stock. For the sake of reference, we extract the provisions of section 145A of the Act as under:- SECTION 145A. Notwithstanding anything to the contrary contained in section 145,- (a) the valuation of purchase and sale of goods and inventory for the purposes of determining the income chargeable under the head Profits and gains of busi .....

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uch payment notwithstanding any right arising as a consequence to such payment. 11. As per sub-clause (ii) of clause (a) of section 145A of the Act, excise duty actually paid or incurred by the assessee is to be included in the valuation of closing stock. Excise duty always incurred on manufacturing of goods, though it is to be paid at the time of movement of the goods outside the factory. But since liability of payment of excise duty has been incurred on the production of the goods, the same is .....

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