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TMI Blog2015 (7) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has filed the appeal on following grounds:- 1. The ld. Asstt. CIT erred in disallowing deduction u/s 80HHC on sale of DEPB without considering the facts. Considering it deduction u/s 80HHC is to be allowed on sale of DEPB. 2. The appellant craves, leave to add, to allow or substitute all or above grounds of appeal. 3. The assessee is engaged in the business of formulations and manufactures tables and syrup in pharma. In this case assessment was originally completed u/s 143(3) determining total income at Rs. 1,73,19,981/-. While finalizing the assessment DEPB license income of Rs. 1,10,45,628/- was excluded from the profits eligible for deduction u/s 80HHC and deduction to the extent of 90% of export incentive was denied. The CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the Act, the difference between the sale value and the face value of the DEPB credit will fall under clause (iiid) of section 28 of the Act. The cost of acquiring the DEPB credit is not nil because the person acquires it by paying customs duty on the import content of the export product and the DEPB credit which accrues to a person against exports has a cost element in it. The DEPB credit represents part of the cost incurred by a person for manufacture of the export product and hence even where the DEPB credit is not utilized by the exporter but is transferred to another person, the credit continues to remain as a cost to the exporter. When, therefore, the DEPB credit is transferred by a person, the entire sum received by him on such t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the AO made addition of Rs. 5,23,379/- on account of closing stock valuation by invoking provisions u/s 145(A) of the Act. Similar ground was raised by the assessee in AY 2005-06. While adjudicating the appeal for AY 2005-06 the CIT(A) held :- ''The issue relating to whether the value of closing stock of the inputs, work-in-progress and finished goods must necessary include the element for which MODVAT credit is available was a hotly debated topic. Sec.145A was inducted to clarify that while computing the value of the inventory as per the method of accounting regularly employed by the assessee, the same shall include the amount of any tax, duty, cess or fees paid or liability incurred for the same under any law in force, notwithstand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as inducted to clarify that while computing the value of the inventory as per the method of accounting regularly employed by the assessee, the same shall include the amount of any tax, duty, cess or fees paid or liability incurred for the same under any law in force, notwithstanding anything to the contrary contained in Section1 45. The explanation to section 145A provides that for the purposes of this section, any tax, duty, cess or fees (by whatever name called) under any law for the time being in force, shall include all such payment notwithstanding any right arising as a consequence to such payment. In this circumstances the appellant has no choice but to include the excise duty liability for the inventory. Therefore, this ground of app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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