TMI Blog2018 (7) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the purposes of arriving at the correct valuation of the closing stock. Even if the excise duty has not been paid and the assessee has postponed its payment, the valuation of the goods will not get affected. Accounting system of the assessee would be of no consequence to arrive at the true and correct valuation of the closing stock. - Decided in favour of the Revenue - Income Tax Appeal No. 140 of 2007 - - - Dated:- 16-7-2018 - Hon'ble Bharati Sapru And Hon'ble Dinesh Kumar Singh, JJ. For the Appellant : C.S.C.,Krishna Agarwal For the Respondent : R.B. Khare,Rajendra Kumar Srivastava ORDER 1. The present Income Tax Appeal under Section 260-A of the Income Tax Act,1961 (hereinafter referred to as 'the Act') has been filed by the Revenue against the order dated 31.10.2006 passed by Income Tax Appellate Tribunal, Agra in ITA No.388/Agr. 2003 on an appeal filed by the revenue against the order of CIT (Appeals)-I, Agra dated 16.06.2003 in respect of the Assessment year 1997-1998. 2. Following two questions of law have been framed by the Revenue for answering by this court:- (i) Whether on facts and in the circumstances of the case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. The CIT(Appeals)-I, Agra vide order dated 16.06.2003 held that the excise duty was a part of cost of finished goods and was, therefore, includible in the value of closing stock. The CIT(Appeals)-I, Agra further held that Section 145-A of the Act which was inserted w.e.f. 01.04.1999 was of clarifactory in nature and it would be applicable for the earlier assessment years as well. However, in further discussion CIT(Appeals)-I, Agra directed the Assessing Officer to determine whether the excise duty had been paid/incurred or not and recompute the value of closing stock accordingly. 6. The Revenue preferred an appeal against the aforesaid order of CIT (Appeals)-I, Agra on the ground that the CIT (Appeals)-I, Agra had erred in directing the Assessing Officer to recompute whole income by allowing the incurred excise duty under Section 43-B of the Act in the finished goods which were added by the Assessing Officer in the valuation of the stock, ignoring the fact that the assessee had not credited any liability for the same and the assessing officer had not made any addition out of outgoings but it was a result of assessing at the correct valuation of the closing stock of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale is not a necessary condition for charging excise duty. 10. Learned counsel for the Revenue further submits that the assessing officer is duty bound under the provisions of the Act while exercising his statutory powers to arrive at the correct taxable income. Under Section 145 of the Act, the assessing officer needs to make computation in such manner as to deduce the correct profits and gains of an assessee for the assessment year. Learned counsel has placed reliance on the judgment of Supereme Court in support of the aforesaid submission in the case of Commissioner of Income Tax vs. British Paints India Ltd. (1991) 54 Taxman 499 (SC). Paras 16 to 21 of the aforesaid judgment are extracted hereinbelow:- 16. The Income Tax Act does not contain any specific provision for the valuation of stock. Income, profits and gains must, however, be computed in the manner provided by the Act. It is the duty of the officer to determine the profits and gains of a commercial adventure according to the correct principle of accounting. In doing so, he might, dependent on the nature of the business and its special character, allow certain adjustments, but his primary purpose and duty is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k [(1888) 13 AC 418, 424 : 4 TLR 500] observes: (AC p. 424) The profit of a trade or business was the surplus by which the receipts exceeded the expenditure necessary for the purpose of earning those receipts .... 19. What is the profit of a trade or business is a question of fact and it must be ascertained, as all facts must be ascertained, with reference to the relevant evidence, and not on doctrines or theories: no assumption need be made unless the facts cannot be ascertained, and then only to the extent to which they cannot be ascertained. There is no room for theories as to flow of costs .... [Minister of National Revenue v. Anaconda American Brass Ltd., 1956 AC 85 : 1956 ITR 84, 99]. 20. Section 145 of the Income Tax Act, 1961 confers sufficient power upon the officer -- nay it imposes a duty upon him -- to make such computation in such manner as he determines for deducing the correct profits and gains. This means that where accounts are prepared without disclosing the real cost of the stock-in-trade, albeit on sound expert advice in the interest of efficient administration of the company, it is the duty of the Income Tax Officer to determine the taxable i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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