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TMI Blog2015 (1) TMI 1302X X X X Extracts X X X X X X X X Extracts X X X X ..... ieved by the aforesaid order of Ld. CIT(A), Revenue is now in appeal before us and assessee has also filed a CO. The grounds raised by Revenue reads as under:- "1. The Ld. CIT(A) erred in law and on facts in deleting the additions of excise duty to closing stock to the extent it has been paid before the due date of filing return, out of total addition of Rs. 5,62,693/-. 2. The Ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 3,61,872/- made on account of disallowance of excess interest paid u/s. 40A(2)(b) of the Act. 3. The Ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 1,41,200/- made on account of disallowance u/s. 40(a)(ia) of the Act." On the other hand, the grounds raised by the assessee in the CO reads as under:- "1. The Ld. CIT(A) has erred in retaining the addition in part for the undervaluation of closing stock made by the Assessing Officer after deleting the amount of excise duty pertaining to the closing stock which has been paid before the due date of filing of return. 2. The Ld. CIT(A) has erred in confirming the addition of Rs. 37,200/- made by the Assessing Officer for the alleged cash credits (unsecured loans) u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing stock. Consequent to this the assessee can debit equal amount of excise duty on the expenditure side but at that moment section 43B comes into play. Under Section 43B the same would be allowed only if the appellant pays this duty on or before the due date of filing of return. The Hon'ble ITAT Mumbai in the case of West Coast Paper Mills Ltd, [102 ITD 19] has stated as under:- .......................................................................................... ......................................................................................... 2.3.3 From the above, it is clear that even if the assessee follows exclusive method of accounting, still it has to give effect to the adjustments as per Section 145A. As stated above, the appellant is required to add the taxes, duties, etc. to both opening and closing stock as well as in the purchases and sales. However, in the first year the opening stock cannot be changed from the closing stock of the earlier year as per the basic accounting principle and as discussed by the Hon'ble ITAT in the case of West Cost Paper Mills Ltd. (Supra). This principle has been upheld by the Hon'ble ITAT, Ahmedabad also in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. by including all taxes, dues, cess etc in the closing stock. He has further held that excise duty which is added to the closing stock has to be allowed u/s. 43B of the Act on payment basis. Before us, Revenue has not brought any material on record to controvert the findings of Ld. CIT(A) nor has brought any contrary binding decision in its support,. We therefore find no reason to interfere with the order of Ld. CIT(A). Thus this ground of Revenue is dismissed. 9. Second ground is with respect to disallowance made u/s. 40(a)(2)(b) of the Act. 10. On the basis of details filed by the assessee, AO noticed that assessee had made payment of interest to persons specified u/s. 40(a)(2)(b) at 18% (The list of such persons is tabulated at page 9 of the assessment order). AO was of the view that during the relevant period of general rate of interest for loans was around 12% per annum and therefore the interest paid at 18% was excessive to the extent of 6%. He therefore considered the interest at 6% (difference between 18% paid by the assessee and 12% being the general rate as per AO) to be excessive and accordingly disallowed the excess interest paid of Rs. 3,61,872/-. Aggrieved by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while deleting the addition Ld. CIT(A) has noted that assessee had obtained form no. 15G from Shri Kamlesh Gupta and therefore there was no liability on the part of assessee to deduct TDS. Before us, Revenue has brought any material on record to controvert the findings of Ld. CIT(A). We therefore find no reason to interfere with the order of Ld. CIT(A) and thus this ground of revenue is dismissed. 17. In the result, the appeal of the revenue is dismissed. Now we take up the CO of assessee 18. Before us Ld. AR submitted that the ground no. 1 raised by the assessee is interconnected with ground no. 1 raised by Revenue. We have heard the rival submissions and perused the material on record. We while deciding ground no. 1 of revenue's appeal hereinabove and for the reasons stated therein have dismissed the ground of Revenue. We for similar reason also dismiss the present ground of assessee also. 19. Ground No. 2 is with respect to confirming the addition made u/s. 68 of the Act. 20. On perusing the details of unsecured loan accepted by the assessee, AO noticed that assessee has accepted aggregate amount of Rs. 37,200/- (From Vyas Upendrakumar. Someshwar and Rs. 18,550/- and fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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