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2016 (3) TMI 1005 - ITAT KOLKATA

2016 (3) TMI 1005 - ITAT KOLKATA - TMI - Revision u/s 263 - deduction in respect of excise duty on closing stock was claimed - Held that:- In the present case the facts are that a deduction in respect of excise duty on closing stock was claimed in AY 2009-10 and the same was added back in the computation of income for the following assessment year i.e. AY 2010-11. The tax rate for both the years was 33.99%. Similarly, a deduction was claimed in the earlier assessment year i.e. AY 2008- 09 and ad .....

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as it is prejudicial to the revenue.

Interest on the refund granted by the AO under section 244A - Held that:- The assessee is very much entitled to have the refund along with the interest. Therefore we deem it that the AO's order is not erroneous in so far as it is prejudicial to the revenue. Hence provisions of section 263 are not applicable and should be dropped we allow this ground of appeal of the assessee accordingly. - ITA No. 301/Kol/2015, ITA No. 684/Kol/2014, ITA No. 1027/K .....

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ramed by ACIT, Range-8,/JCIT(OSD) Circle-8/DCIT, Circle-8, Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') vide their orders dated 31.03.2013, 28.12.2011 and 31.12.2010 for assessment years 2009-10, 2008-09 & 2007-08 respectively. 2. At the time of hearing none appeared on behalf of Revenue and DR filed the adjournment application for 16 cases. The bulk adjournment in 16 cases is not accepted. So we decided to hear these cases without the appeara .....

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venience and disposing them by passing a consolidated order. We take a lead case in assessee's appeal in ITA No.301/Kol/2015 for the AY 2009-10 which is reproduced below:- "1. For that the order made by the Learned Commissioner of Income Tax under section 263 of the Income tax Act, 1961 is illegal, invalid and not sustainable in law. 2. For that the Learned Commissioner of Income Tax, erred in law as well as in facts in holding that the Assessing Officer was not justified in allowing do .....

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d excise duty paid on closing stock fully allowable under the provisions of section 43B and in accordance with the ratio of the Hon'ble Supreme Court's decision in Berger Paints India Ltd. vs. CIT [266 ITR 99 (2004)] (SC)]. 5. For that the learned Commissioner of Income Tax was not justified in treating the same as prejudicial to the interests of Revenue since the appellant company had reversed and offered the excise duty claimed on closing stock in the following year i.e. assessment yea .....

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sessment order passed under section 143(3) of the Act was neither erroneous nor prejudicial to the interest of the revenue. 8. For that the learned Commissioner of Income Tax was not justified in holding that the assessment order passed by the Assessing Officer under section 143(3) dated 31.3.2013 is set aside for fresh assessment and verification." 4. The facts in brief are that assessee is a limited Company and engaged in various businesses such as manufacture and sale of tobacco products .....

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ct and by debiting the profit & loss account for the assessment year under consideration i.e. 2009-10. 2) The assessee for the year under consideration has paid more dividend distribution tax (DDT for short) than the actual liability. The AO has granted the refund of the excess DDT along with interest for an amount of ₹ 58,10,576.00 under section 244A of the Act. The ld. CIT found that there is no provision under the Act for the grant of interest on refund of excess DDT paid. According .....

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s above, AO has allowed the relief of the excise duty element in the finished goods by virtue of the provisions of Sec. 43B of the Act after exhaustive examination. 4.1 The assessee in connection with the interest granted under section 244A of the Act submitted that the assessee is very much entitled for interest on the excess DDT paid by the assessee in terms of provisions of Sec. 244A of the Act and relied on the CBDT circular No. 549 dated 31.10.1989. However, the Ld. CIT has disregarded the .....

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DDT and double deduction of excise duty by the order of AO is erroneous in so far as it is prejudicial to the revenue. Hence, file was restored to the file of AO for fresh adjudication after necessary verification of the facts and reasonable opportunity to the assessee. 5. Aggrieved, assessee has preferred the present appeal before us. 6. We have heard Ld. AR and perused the materials available on record. Ld. AR submitted paper book which containing pages 1 to 208 and submitted that deduction of .....

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tax rate for both the years was 33.99%. The ld. AR drew our attention on page 28 of the paper book where auditor certificate is placed certifying that the opening and closing stock does not include the excise duty. Our attention was also drawn on page 7 & 8 of the paper book where the notice was issued by the assessing officer regarding seeking the clarification about the excise element in the closing stock of the company. The reply for the same is placed on page 15 of the paper book. The ce .....

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g it for tax in the next assessment year i.e. AY 2010-11 was not prejudicial to the interest of the Revenue in AY 2009-10. The Assessing Officer had exhaustively examined the above claim during the assessment for AY 2009- 10 and allowed the deduction in accordance with the abovementioned judgments of Hon'ble Apex Court. 6.1 Regarding the payment of interest under section 244A it was submitted that the interest of ₹ 58,10,576/- on refund of excess DDT paid by the company has been correc .....

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which there is no provision under the Act. Therefore the ld. CIT held the order of the AO erroneous in so far as it is prejudicial to the revenue. However, now to arrive at the correct conclusion of the case, we deem it necessary to reproduce the relevant provisions of section 263 of the Act. (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer is erroneous in so far as it is prejud .....

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oner may call for an examine the record of any proceeding under the Act; 2) If he considers that the order passed by the AO is (i) Erroneous; and (ii) Is prejudicial to the interest of Revenue; 3) He has to give an opportunity of hearing in this respect to the assessee; and 4) He has to make or cause to make such enquiry as he deems necessary; 5) He may pass such order thereon as the circumstances of the case justify including, (i) An order enhancing or, (ii) Modifying the assessment or (iii) Ca .....

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tation of Income (Revised) (Statement No. 14), the amount of Excise duty on closing stock of finished goods as at 3.03.2009 is claimed u/s. 43B in this assessment year at ₹ 868,67,87,534/-. On the other hand the amount of excise duty on closing stock of finished goods as on 31.03.2008 claimed u/s. 43B in the AY 2008-09 and written back as per column no. 26 of the computation of income (Revised) is ₹ 372,89,01,394/-. Therefore, there is a net deduction claim of ₹ 495,78,86,140/- .....

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followed for accounting of excise duty on closing stock and claim of the same in the profit and loss account and in the computation of income u/s. 43B of the Act. 8. Furnish the details of dividend distribution tax paid by the company u/s 115) and state whether it has been paid within the stipulated time limits as per the Income Tax Act, 1961." In response to the notice issued u/s 142(1) of the Act, the reply of the assessee stand as under:- "1. Claim for excise duty on closing stock i .....

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e the deduction for excise duty on closing stock as on 31.03.2009 of ₹ 868.68 crores has not been claimed by / allowed through the profit & loss account to the company in AY 2009-10." (b) Order sheet entry on dated 06.03.2013 and 22.03.2013 which are placed at pages 45 & 46 of the paper book, the relevant portions are extracted below:- 06/3/13 ARs, Shri K. Mukherjee S. Seksaria,& Shri G.Goel appeared and in course of hearing of the case, filed the details as per the letter .....

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13 at 4.30 p.m. Sd/- KM Sd-Illegible Sd/- illegible Sd/- Illegible 22/3/13 22/3/13 " From a perusal of the order u/s. 263 of the Act, we find that the Ld. CIT has exercised jurisdiction u/s. 263 of the Act on the ground that the AO did not conduct any enquiry with regard to excise duty in closing stock vis-à-vis Sec. 43B of the Act and grant of refund with interest u/s. 244A of the Act on refund of dividend distribution tax. This is clear if we read para-5 of the Ld. CIT's order. .....

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ly be determined from what has been stated in the assessment order alone, it has to be examined as to whether any inquiry was at all conducted by the AO. There exists a difference between lack of inquiry and inadequate inquiry. If there were any inquiry, even inadequate that would not give an occasion to exercise jurisdiction u/s 263 of the Act. Besides the above, we also find the various orders of the court on the above issue and on that basis it can be concluded that the order of AO is not pre .....

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B of the Income Tax Act, 1961, as a deduction in respect of that year, irrespective of the amount of excise duty / customs duty included in the violation of the assessee's closing stock at the end of the accounting year as relating thereto' The Supreme Court also noted the observations made in Indian Communication Network Pvt. Ltd. v. IAC of IT [206 ITR (AT) 96 (1994) (Delhi Special Bench of the IT] which is given below: 'We would like to make it absolutely clear that the removal of .....

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DCIT [134 ITD 351 (2012) has held that there is no case of double deduction and the claim for deduction is valid in law. In the present case the facts are that a deduction of ₹ 868,67,87,534/- in respect of excise duty on closing stock was claimed in AY 2009-10 and the same was added back in the computation of income for the following assessment year i.e. AY 2010-11. The tax rate for both the years was 33.99%. Similarly, a deduction of ₹ 372,89,01,394/- was claimed in the earlier ass .....

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ot;The entire amount of excise duty/customs duty paid by the assessee in a particular accounting year is allowable u/s. 43B of the Income Tax Act, 1961, as a deduction in respect of that year, irrespective of the amount of excise duty/customs duty included in the valuation of the assessee's closing stock at the end of the accounting year as relating thereto." 6.5 In view of above discussion, we find that the order passed by the ld. CIT u/s 263 of the Act is not erroneous in so far as it .....

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er section 115WJ or collected at source under section 206C or paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of one half percent for every month or part of a month comprised in the period from the 1std day of April of the assessment year to the date n which the refund is granted: Provided that no interest shall be payable if the amount of refund is less than ten pe .....

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ll refunds that arise under the Income Tax Act. The Section begins with "where refund of any amount becomes due to the assessee under this Act…." DDT is nothing but an "additional income tax" for which the charging section is section 115-O of the Income tax Act, Section 115-O lays down that - 'Notwithstanding anything contained in any other provision of this Act and subject to the provisions of this section, in addition to the incometax chargeable in respect of the .....

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rest under Section 244A is applicable on the same. Clause (a) of Section 244A(1) deals with refunds that arise on account of excess payment of advance tax, TDS/TCS. Clause (b) of section 244A(1) applies to refunds that arise "in any other case". As such, Clause (b) is of wide import and any payment which does not fall in clause (a), are covered under clause (b) - like refund of excess tax payment made against demand raised, refund of excess self assessment tax paid, refund of excess DD .....

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funds, the CBDT had clarified in the said circular that apart from being complicated, the earlier sections for refund/interest had left certain gaps for which interest was not paid by the department to the assessee for money remaining with the Government. To remove this inequity, as also to simplify the provisions in this regard, the Amending Act, 1987 has inserted a new section 244A in the Income-tax Act, applicable from the assessment year 1989-90 and onwards, which contains all the provisions .....

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ities have held that interest has to be granted u/s. 244A(1)(b) on self assessment tax. Reference can be made to the following case laws which have upheld the grant of interest on refund of self assessment tax: (1) Asst Comm. of Income tax vs. M/s Kerala Transport Co. -2013 (10) TMI 1232 9Kerala High Court) (2) Comm. of Income tax, Coimbatore vs ABT Industries Ltd. - 2013 - TIOL - 332-High Court-MAD-IT (Madras High Court) (3) Addl. CIT vs Royal Bank of Scotland N.V. [2011] 15 taxmann. Com 333 (K .....

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