TMI Blog2017 (9) TMI 726X X X X Extracts X X X X X X X X Extracts X X X X ..... luation of closing stock - Held that:-the profit computed under the inclusive and the exclusive method of accounting are the same and there would not be any change even if the profit computed by the assessee is adjusted in accordance with the provisions contained u/s 145A of the I.T. Act because to the extent the closing stock will be increased. In respect of raw materials the cost of the purchase and the opening stock will be increased by the component of the excise duty. Since the issue involved related to the valuation of the closing stock in respect of raw material, the question of any disallowance u/s 43 B will also not arise. We have already held that he profit of the assessee cannot be effected if the assessee followed the inclusive method of accounting or the exclusive method of accounting because in any case the stock is increased to that extent the debit side in the P & L account which will be increased by the increase in value of opening stock as well as the cost of the purchase due to the inclusion of the excise duty incurred by the assessee at the time of the purchase of the raw materials. In view of the aforesaid discussion the second ground is allowed. Disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee on UPS @60% - Held that:- This issue is duly covered by the decision in the case of DCIT vs. Datacraft India Ltd. [2010 (7) TMI 642 - ITAT, MUMBAI] in which it was specifically held that the UPS shall be entitled for depreciation @60%. UPS was an essential ingredient in order to run computer effectively, therefore the assessee shall be entitled for depreciation @60% - ITA No.4116 /Mum/2013 - - - Dated:- 11-9-2017 - Shri P K Bansal, Vice President And Shri Pawan Singh, Judicial Member For The Appellant : Shri Rajesh Chamaria For The Respondent : Shri V. Justin ORDER Per P.K. Bansal, Vice President This appeal has been filed by the Revenue against the order of the CIT(A)-12, Mumbai dated 27.01.2013 for A.Y. 2008-09. 2. Ground No. 1 taken by the assessee relates to the sustenance of the disallowance of ₹ 92,68,533/- out of interest and ₹ 38,50,802/- out of expenses under section 14A of the Income Tax Act totalling to ₹ 1,31,19,335/-. 3. The brief facts of the case are that the AO while examining the Balance Sheet noted that there were investments in equity shares totalling to ₹ 5,74,03,16,008/-. Out of these investments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it got the dividend income. The assessee has not claimed the said dividend income as exempt. The dividend income has been shown as income from other sources and due tax has been computed by the assessee in the computation statement. Therefore no question arises on making disallowance in respect of investment made in foreign subsidiary company. The assessee has also made investments in Indian companies but did not earn any dividend income. In view of the decision of the Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT 378 ITR 33 no expenses can be disallowed under section 14A as the assessee has not earned any exempt income. Same view has been taken by the Hon'ble Bombay High Court in the case of Principal CIT vs. Ballarpur Industries Ltd. ITA No. 51 of 2016. No contrary decision was brought to our knowledge. We, therefore, delete the disallowance made by the AO and sustained by the CIT(A). Thus ground No. 1 taken by the assessee is allowed. 7. Ground No. 2 relates to the addition made on account of inclusion of cenvat credit in valuation of closing stock. 8. The facts relating to this ground are that the AO noted that the assessee is following the excl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case is following exclusive method. If the AO had to increase the value of closing stock by taking into consideration the Cenvat credit then he has to take into consideration all purchases also to include the Cenvat credit. Had once that included in the purchases ultimately there is no effect on the profit and understatement of the profit would not arise. Similar view has been taken by the Hon'ble Supreme Court in the case of CIT vs. Indo Nippon Chemicals Co. Ltd. 261 ITR 275. Similar view was also taken by the Hon'ble Calcutta High Court in the case of CIT vs. Berger Paints India Ltd. 264 ITR 503. The Hon'ble Bombay High Court in the case of CIT vs. Mahalaxmi Glass Works (P) Ltd. 318 ITR 116 following the Hon'ble Delhi High Court decision in the case of Mahavir Alluminimum Limited 297 ITR 77 held that to give effect to section 145A if there is a change in the closing stock at the end of the year, there must necessarily be a corresponding adjustment made in the opening stock of that year. This does not amount to giving total benefit to the assessee. It would be necessary to compute the true and correct profit for the purpose of the assessment. In our view, under ei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of accounting are the same and there would not be any change even if the profit computed by the assessee is adjusted in accordance with the provisions contained u/s 145A of the I.T. Act because to the extent the closing stock will be increased. In respect of raw materials the cost of the purchase and the opening stock will be increased by the component of the excise duty. Since the issue involved related to the valuation of the closing stock in respect of raw material, the question of any disallowance u/s 43 B will also not arise. We have gone through the decision of the Hon'ble Supreme Court in the case of CIT vs. Indo Nippo Co. Ltd. This case relates to the provisions of section 145 and not to the provisions of section 145 A because Section 145 A was inserted from the Assessment Year 1999-2000. We have also gone through the order of the Maruti Udyog Ltd. vs. CIT reported in 92 ITD 119. Although this case relates to the claim of the deduction u/s 43B but the proposition laid down in this case is equally applicable to the facts of the case of the assessee. We have already held that he profit of the assessee cannot be effected if the assessee followed the inclusive method of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used for commerce or an article of commerce which is traded on an authorised commodity exchange is known as commodity'. The article should be movable of value, something which is bought or sold and which is produced or used as the subject of barter or sale. (d) In short, commodity includes all kinds of goods. The Forward Contracts (Regulation) Act, 1952 (FCRA) defines 'goods' as 'every kind of movable property other than actionable claims, money and securities'. (e) The Delhi Bench of ITAT in the case of Munjal Showa Ltd. v. DCIT 94 TTJ 227 has held as under: Foreign currency or any currency is neither commodity nor shares. The Sale of Goods Act specifically excludes cash from the definition of goods. Besides, no person other than authorised dealers and money changers are allowed in India to trade in foreign currency, much less speculate. S. 8 of the Foreign Exchange Regulations Act, 1973, provides that except with prior general or special permission of the RBI, no person other than an authorised dealer shall purchase, acquire, borrow or sell foreign currency. In fact, prior to the LERMS, residents in India were not even permitted to cancel forward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction entered into by the Respondent assessee was speculative in nature. It further holds that at no point of time did Revenue challenge the assertion of the Respondent assessee that the activity of entering into forward contract was in the regular course of its business only to safeguard against the loss on account of foreign exchange variation. Even before the Tribunal, we find that there was no submission recorded on behalf of the Revenue that the Respondent assessee should be called upon to explain the nature of its transactions. Thus, the submission now being made is without any foundation as the stand of the assessee on facts was never disputed. So far as the reliance on Accounting Standard11 is concerned, it would not by itself determine whether the activity was a part of the Respondent-assessee's regular business transaction or it was a speculative transaction. On present facts, it was never the Revenue's contention that the transaction was speculative but only disallowed on the ground that it was notional. Lastly, the reliance placed on the decision in S. Vinodkumar (supra) in the Revenue's favour would not by itself govern the issues arising herein. This is so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of plant and machinery amounting to ₹ 4,42,922/-. The facts relating to this issue are that the AO noted that the assessee has claimed a sum of ₹ 97,15,541/- on repairs and maintenance of plant and machinery. The AO disallowed a sum of ₹ 4,42,922/- as the assessee failed to produce bills of the said amount to Topwin Equipment System. When the matter went before the CIT(A), the CIT(A) confirmed the addition. The learned A.R. before us vehemently contended that the assessee has produced the bills before the AO. The amount of ₹ 4,42,822/- relates to the repairs of the plants which were duly accounted and paid after deduction of TDS by the assessee. The learned D.R., on the other hand, relied on the order of the AO. We, therefore, in the interest of justice and fair play to both parties set aside the order of the CIT(A) on this issue and restore this issue to the file of the AO with direction that the AO shall verify whether the assessee had made the payment to these parties through an account payee cheque and has duly accounted for the payment after deducting TDS on the bills. In the case the AO is not satisfied he may make and independent inquiry from the co ..... 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