TMI Blog2018 (12) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... see’s own case for AY 2008-09 [2017 (9) TMI 726 - ITAT MUMBAI] held 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 the 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 - decided in favour of assessee - ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons of his dissatisfaction with the claim made by the Appellant in the return of income. v. The CIT(A) failed to appreciate that investments made in subsidiaries and associates are for strategic purposes and not with the intention to earn exempt income or dividend hence disallowance of expenses with reference thereto is unwarranted. 3. The assessee filed its return of income for the assessment year (AY) 2007-08 on 31.10.2007 declaring total income at ₹ 49,41,63,984/-. The Assessing Officer (AO) completed the assessment on 20.12.2010 determining the total income at ₹ 54,03,40,178/-. In appeal filed by the assessee, the Ld. CIT(A) partly allowed it. Aggrieved by the order of the Ld. CIT(A), the assessee filed an appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, the 1st ground of appeal is allowed. 7. The 2nd ground of appeal Addition on account of cenvat credit in valuation of Stock i. The CIT(A) failed to appreciate that even if the Appellant followed the inclusive method of accounting as contemplated under section 145A, there would be no effect to the total income as even certified by the Tax Auditor in Form 3CD. In view of the above, the CIT(A) ought to have deleted the addition of ₹ 3,55,56,741/-. 8. The above issue pertains to adjustment made u/s 145A of the Act, wherein the AO has added the value of CENVAT credit availed, to the value of closing stock and accordingly increased the profits for the year under consideration. The ITAT has set aside the issue to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in assessee s own case for AY 2008-09 and also the decision in CIT v. Diamond Dye Chem Ltd. (2017) 88 taxmann.com 499 (Bom). On the other hand, the Ld. DR supports the order passed by the Ld. CIT(A). 11. We have heard the rival submissions and perused the relevant materials on record. Similar issue arose before the ITAT E Bench, Mumbai in assessee s own case for AY 2008-09 in ITA No. 4116/Mum/2013. At para 9 of the said order, the Tribunal held as under: 9. We heard the rival submissions and gone through the orders of the tax authorities below. We noted that provisions of Section 145A were effective from 01.04.1999 and applies from A.Y. 1999-200 onwards. The scope and effect of section 145A have been elaborated by the Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 corr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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