TMI Blog2005 (7) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... essee firm filed its return of income of ₹ 1,37,190 which was subjected to assessment under section 143(3)(ii) read with section 145(3). In his assessment, the Assessing Officer negated the contention of the assessee regarding the allowability of MODVAT credit having a bearing on the consumption of raw materials. He considered that MODVAT is not allowable till the use of the raw materials. MODVAT credit is available on the finished excisable goods on the manufacture of which the assessee uses the inputs and pays excise duty. Holding this view, the Assessing Officer held that the assessee's right to such credit crystallizes when he produces the excisable goods and till then it is only an ambulatory right, invoking the provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board's circular No. 772 dated 27-12-1998 being explanatory notes on provisions relating to direct taxes in Finance (No. 2) Act, 1998 vide para 52.2 [1999] 235 ITR 74 (St.)] highlighted the purpose of introducing section 145A by stating that in order to ensure that the value of opening and closing stock reflect the correct value a new section 145A is inserted. Thus the Board had opening stock also in sight for the purposes of section 145A. Even the Institute of Chartered Accountants of India vide para 23.13 at page No. 70 its publication Guidance Note on Tax Audit under section 44AB of the Income-tax Act, 1961 (Edition 1999) opined that whatever adjustment is made in the valuation of closing stock, the same will be reflected in the ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment proceedings and had not submitted a copy of the guidance note as relied on. However, the remand report was silent on the issue and adjustment in respect of excise duty and MODVAT credit. With respect to the second issue agitated by the revenue, ld. CIT(A) held that the disallowance by the Assessing Officer was on misinterpretation of evidence and facts as brought on record by the assessee before the Assessing Officer. Therefore, the addition of ₹ 55,414 was deleted. 6. On both the issues, we are inclined to uphold the contention of the ld. CIT(A) in so far as the law relating to provisions of section 145A are very clear and the assessee had clarified that the adjustments require to be made under section 145A including that re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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