TMI Blog2018 (12) TMI 1720X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, we justify the decision of ld. CIT(A) in allowing the claim of the assessee of depreciation @ 60% on the computer software. Accordingly this ground of revenue is dismissed. Addition u/s. 145A - AO noticed that assessee has shown amount receivable on account of un-utilized/closing balance on account of MODVAT/CENVAT credit under loan and advances and the same was not included in the value of closing stock - HELD THAT:- Assessee was following similar method in the preceding years and there were notes in the audit report that if the adjustment on account of section 145A was made, there would be no effect on the income. It is noticed that the assessee is following exclusive method of accounting for last many years and all purchases and sales of goods are accounted net of MODVAT including inventory i.e. opening stock and closing stock. On this issue the Hon'ble ITAT Bench of Ahmedabad in the case of Alpanil Industries V. ACIT [ 2009 (9) TMI 1008 - ITAT AHMEDABAD] for A.Y. 1999-2000 2000-2001 has discussed the principle related to valuation of closing stock u/s 145A - As perused the material on record carefully. After considering the finding of the ld. CIT(A) along w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore we don't find error in the decision of learned CIT(A), therefore the ground of appeal of the revenue is dismissed Addition on account of expenditure on purchase of computer software - allowable revenue expenses - HELD THAT:- We have noticed that depreciation on the computer software is allowable @ 60% as adjudicated supra in this order, therefore, we are inclined with the ld. CIT(A) for allowing the depreciation @ 60%. Therefore, appeal of the revenue is dismissed on this issue. Addition on account of foreign exchange fluctuation - HELD THAT:- Assessee has submitted the corresponding detail demonstrating that the amount computed by way of difference between rate at which the contract was entered into and the rate on the last day of the previous year has been debited in respect of forward contract entered into by the assessee for underlying export transaction which was outstanding as on 31st March, 2009. Similarly, the amount in respect of reinstatement of export receivable and creditors for import as on 31st March, 2009 were reinstated at the foreign exchange rate prevailing on 31st March, 2009. It is also noticed that the foreign exchange rate differences had b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w and on facts in deleting the total addition of ₹ 55,28,040/- made u/s. 145A of the Act, [ with respect to the untilised balance of Modvat / Cenvat credit of ₹ 21,94,236/- and balance with the Excise Authorities of ₹ 33,33,804/-, totaling to ₹ 55,28,040/-: 3). The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the addition of ₹ 41,41,869/- made on account of undervaluation of stock. 4). The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the addition of ₹ 11,97,747/- out of total addition of ₹ 14,36,110/-on account of foreign travel expenses which remained with regard to business purpose. 5). The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the total addition of ₹ 7,65,007/- made on account of Commission expenses, under the Head : 'Commissions to others' even though no proof of genuineness of Services rendered was filed. 6). The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income tax purposes. Therefore, the assessing officer has held that the application software being license are intangible asset and they are eligible for depreciation u/s. 32 of the act @ 25%. Consequently, the assessing officer has disallowed the excess claim of depreciation of ₹ 2,24,464/- added to the total income of the assessee of the assessee. The assessee has preferred appeal before the ld. CIT(A). The ld. CIT(A) has allowed the appeal of the assessee 5. We have heard rival contentions and perused the material on record. It is noticed that as per rule 5 of income tax rules 1962 depreciation allowance u/s. 32 of the income tax act shall be calculated at the percentage specified in the second column of the table in Appendix 1 effective from assessment year 2006- 07 on wards depreciation is to be calculated @ prescribed in new appendix-1 entry at serial no. 5 of part-III (which deals with rate depreciation on machinery and plant) of the said table referred to computer, including computer software and the rate of depreciation prescribed in the said table against this entry is 60% . As per note 7 below the said table computer software means any computer progra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on account of section 145A was made, there would be no effect on the income. It is noticed that the assessee is following exclusive method of accounting for last many years and all purchases and sales of goods are accounted net of MODVAT including inventory i.e. opening stock and closing stock. On this issue the Hon'ble ITAT Bench of Ahmedabad in the case of Alpanil Industries V. ACIT in ITA No. 169/AHD/2005 and 170/AHD/2005 for A.Y. 1999-2000 2000-2001 has discussed the principle related to valuation of closing stock U/S.145A of the Act. The relevant portion is reproduced as under:- Section 145A requires revaluation of not inventory alone but also requires revaluation of purchase and sales. On revaluation of purchase by including the amount of excise duty in respect of which Modvat Credit is available to the assessee, the purchase of the assessee will increase resulting in corresponding decrease in the profit of the assessee. The assessee 's contention that value of closing stock is credited in the profit and loss account to set off the value of unconsumed items of purchase and therefore, both should have same basis cannot be controverted. The only exceptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank did not match with the value of stock reflected in the balance sheet of the assessee company. On further verification, the assessing officer noticed that assessee has shown the value of stock in bank statement submitted for the month of March, 2009 to the bank at ₹ 9,63,99,250/- whereas in the books of the assessee the total value of stock as on 31st March, 2009 was shown at ₹ 9,22,57,381/-. Consequently the difference in stock to the amount of ₹ 41,41,869/- was treated by the assessing officer as undervaluation of stock by the assessee and the same was added to the total income of the assessee. Assesse filed appeal before the ld. CIT(A). The ld. CIT(A) has deleted the appeal. 10. We have heard rival contention and perused the material on record. It is noticed that the assessee has filed stock statement to the bank reflecting the position of closing stock as on 24th March, 2009. However, in the balance sheet of the assessee, the position of stock was shown as on 31st March, 2009. The assessing officer has not disproved these material facts that the difference in the valuation of closing stock was arisen because of difference in the dates as per whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout considering the evidences placed on record and without disproving the details and evidences submitted by the assessee. In the light of the above facts and circumstances, we are inclined with the finding of learned CIT appeal. therefore, we do not find any merit in the appeal of the revenue and the same is dismissed. Addition of ₹ 7,65,007/- on account of commission expenses 13. During the course of assessment proceedings, the assessing officer noticed that assessee has claimed expenses on account of commission paid to other at ₹ 7,65,007/- apart from commission paid to selling agent M/s. ATE Enterprises Ltd. at ₹ 2,22,16,970/-. However, in case of commission paid to others, the assessee has neither submitted copy of agreement nor submitted any proof of services as cited by the assessing officer, therefore, the assessing officer has disallowed the assessee s claim of payment of commission to other and added to the total income of the assessee. Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has allowed the appeal of the asessee. 14. We have heard the rival contentions and perused the material on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same as of notional/contingent nature. Aggrieved assessee has filed appeal before the ld. CIT(A) . The ld. CIT(A) has allowed the appeal of the assessee. 17. We have heard the rival contentions on this issue and perused the material on record carefully. It is noticed that loss on account of exchange rate of ₹ 1,56,439/- comprised of two items, ₹ 1,23,001/- in respect of forward contract entered by the assessee company for underlying export contract and ₹ 33,428/- in respect of reinstatement of export receivable and creditors for import of goods outstanding as on 31st March, 2009. We consider that assessee has submitted the corresponding detail demonstrating that the amount computed by way of difference between rate at which the contract was entered into and the rate on the last day of the previous year has been debited in respect of forward contract entered into by the assesse for underlying export transaction which was outstanding as on 31st March, 2009. Similarly, the amount in respect of reinstatement of export receivable and creditors for import as on 31st March, 2009 were reinstated at the foreign exchange rate prevailing on 31st March, 2009. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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