TMI Blog2018 (2) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, direct the AO to compute the total income by adding cess, duty or tax paid incurred not only in closing stock but also in purchases, opening stock, sales, wherever such excise duty is already added. In respect of assessment years 2005-06, 2008-09, and 2009- 10, the Ld. CIT(A) has already allowed the claim of the assessee as we have held above. Therefore, on the same reasoning, Departmental appeals for all the three years are dismissed. - ITA No.1311 And 1539/Ind/2016 - - - Dated:- 31-1-2018 - SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Appellant : Shri K.G. Goyal, Sr. DR For The Respondent : Shri Manoj Fadnis, CA ORDER PER KUL BHARAT, J.M: These two appeals by the Revenue pertaining to the A.Ys. 2006-07 2011-12 directed against different orders of Ld. Commissioner of Income Tax-(Appeals)-I, Indore dated 16.08.2016 21.09.2016 respectively. Both the appeals were taken up together and are being disposed of by way of consolidated order for the sake of convenience. First we take ITA No.1311/Ind/2016 for A.Y. 2006-07 The Revenue has raised following grounds of appeal: 1. Whether in the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck to Bridgestone Corporation Japan on the maturity date i.e. January 2007 by Citi Bank at the prevailing rate of exchange and for this the premium of ₹ 1,93,48,000/- pertaining to the year under consideration was paid to Citi Bank. This amount was claimed as a deduction by the appellant under the head interest. In the alternative the appellant contended that the amount was otherwise allowable u/s 37 of the Act. The AO disallowed the claim holding that the amount of ₹ 1,93,48,000/- did not constitute interest allowable u/s 36(1)(iii) and was not allowable u/s 37 as it was in the nature of capital expenditure. The appellant has contended that the amount was allowable u/s 36(1)(ii) in view of the definition of interest u/s 2(28A) of the Act and was not covered by the proviso to section 36(1)(iii) as it was not for acquisition of capital asset. And otherwise also it was claimed by the appellant that the amount was not capital in nature and hence was allowable u/s 37 also as the expenditure was incurred for the purposes of business. The provisions of section 2(28A) of the Act are reproduced hereunder: Interest means interest payable in any manner in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and ground no.3 is general in nature needs no separate adjudication. 9. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and assessment u/s 143(3) r.w.s. 144C of the Income Tax Act, 1961 (hereinafter called as the Act ) was framed vide order dated 11.03.2015. The Assessing Officer while framing the assessment made addition on account of under valuation of closing stock by observing that taking into account of the fact that the assessee s method of valuation in the earlier assessment years adopted by the department on the basis of enhancing the value by incorporating of the excise duty hence same method is also being adopted in the assessment year under consideration. 10. Aggrieved by this the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) following the decision of the Tribunal in earlier year directed the assessee to adopt the working as per direction given by the I.T.A.T. in earlier years. Now Revenue is in appeal. 11. The Ld. DR supported the order of the Assessing Officer. On the contrary Ld. counsel for the assessee supported the order of ld. CIT(A) and submitted that the issue is covered in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct even form the wordings of section 145 of the I.T. Act wherein method of valuation will be applicable not only on closing stock but on inventory i.e. on opening closing stock as well as on both purchases sales. Therefore, AO was not correct in adding excise duty only in the closing stock of raw material incidental goods. AO is directed to redraw the profit loss account by adding cess, duty or tax paid or incurred in purchases, opening stock and sales, wherever such excise duty is not already added by the appellant. For doing so, the appellant s computation submitted u/s 145A of I.T. Act submitted in this office, as well as their contention that such adjustment in all the constituents will not change their profit, may also be taken into consideration. For arriving at this decision reliance is placed on the decisions on same issue in the cases of M/s Mahavir Aluminum Ltd. (2008) 214 CTR(Del.) 45, M/s. Mahalaxmi Glass works Pvt. Ltd. (2009) 318 ITR 116 (Bom), Indo Nippon Chemicals Co. Ltd. (2000) 164 CTR (Bom) 78 and Rajratan Gustav Wolf Ltd. (ITA No.768/In/2006) I.T.A.T., Indore. As a result this ground of appeal is allowed in principle for statistical purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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