TMI Blog2017 (11) TMI 1557X X X X Extracts X X X X X X X X Extracts X X X X ..... sting the values of opening stock, purchases, sales as well as closing stock and has directed the AO to verify the working submitted by assessee before Income Tax Appellate Tribunal. Applicability of section 145A to the value of closing stock on the ground of its overriding effect on the provisions of section 145. In this regard it is difficult to understand as to how the revenue can be said to be aggrieved by Income Tax Appellate Tribunal’s order, because the Income Tax Appellate Tribunal in expressed terms has already held that the provisions of section 145A has overriding effect on the provisions of section 145 but has further held that the said provisions are applicable not only on closing stock but on inventory i.e opening and closi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n consideration were completed by the Assessing Authority under Section 143(3), making additions on the ground of under valuation of closing stock. 04- According to AO after insertion of section 145A in the Income Tax Act, 1961, the value of closing stock is required to be adjusted to include the amount of Excise Duty paid. Aggrieved by the additions made by the AO, the assessee preferred appeal before CIT(A), Indore, who partly allowed the appeals vide his order dated 09/05/2014. The learned CIT(A) while partly upholding the addition made by AO in value of closing stock deleted the addition in subsequent years. 05- Both respondent as well as revenue preferred appeals before Income Tax Appellate Tribunal, Indore Bench, Indore. The sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t justified in adding Excise Duty only in closing stock of raw material and incidental goods and has accordingly directed the AO to compute total income by adding Cess, duty or tax paid not only in closing stock but also in purchases, opening stock and sales . 09- The Income Tax Appellate Tribunal has thus, remanded the matter back to AO with above direction to adjust the values of opening stock, purchases, sales and closing stock with the amount of Excise Duty paid. Since the assessee has furnished the working regarding such valuation the Income Tax Appellate Tribunal directed the AO to verify such working. It is this order of the Income Tax Appellate Tribunal by which the revenue is aggrieved as according to revenue the substantial que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lude the amount of any cess, duty or tax actually paid or incurred. The above provision has overriding effect on Section 145. The assessee's contention that as per the audit report, the assessee has accounted these purchases of raw materials and incidental goods net of excise duty as Cenvet is available. Therefore, the assessee submitted that if the excise duty is added only to the closing stock of raw material and incidental goods, then it will result to distortion of profit unless purchases and opening stock are increased by component of excise duty. We are of the view that as per Section 145A of the Income Tax Act, 1961, wherein method of valuation will be applicable not only in closing stock, but on inventory i.e. opening and closin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt made in the opening stock as on 1st April, 1998. Para 23.14 of the Guidance Note postulates that adjustment should be made in such a manner that no double deduction is claimed for the same expenditure. In the present case, the question of double deduction does not arise, since no adjustment was made by the assessee in the profit and loss account for the year ending 31st March,1998. Tribunal was correct in law in allowing the adjustment of ₹ 54,83,272 to the assessee in the opening stock for the previous asst. yr. 1998-99 (being a transitional year) under s.145A. 13- Needless to say that the ground and the question sought to be raised by revenue is misconceived and without appreciation of the operative part of the Income Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16- The relevant extract of provisions of section 145A as also extract of Circular No.772 dated 23/12/1998 are on record as Annex.-R/1 R/2. As to the applicability of the circulars of CBDT, the legal position is well settled that the circulars issued by CBDT are binding upon the officers and persons employed in execution of the Act. 17- The apex Court in the case of Navnit Lal C. Javeri Vs. K.K. Sen AAC of Income Tax reported in (1965) 56 ITR 198 has held that the circulars issued by CBDT are binding on all officers and persons employed in the execution of the Income Tax Act under Section 5(8) of the Act. A similar view has been taken by the Hon'ble Supreme Court in the case of Jay Kishan Gopi Kishan Sons Vs. CIT reported in ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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