TMI Blog2019 (6) TMI 1428X X X X Extracts X X X X X X X X Extracts X X X X ..... to mention that when a firm is converted into company under Part XI, properties of the erstwhile firm vest in the company. The difference between vesting of property and distributions of property as discussed above does not permit section 45(4) to be invoked. In the instant case, since there was no sale or conveyance from the firm to the company, the partner s capital has not increased on account of sale on capital asset but it is only on account of revaluation of asset. The capital has been increased because of such conversion. The properties of the partnership firm have been vested with the company where all the assets and liability of the erstwhile firm also vested with the present company. We find no justification to hold that there was any transfer of asset and thus question of liability to pay tax on capital gain on the appellant firm does not and cannot arise at all. - Decided in favour of the assessee. Addition u/s 14A - HELD THAT:- We restrict the disallowance to dividend income earned by the assessee before us which is exempted from tax. Thus this ground of appeal filed by the assessee is allowed. Ad hoc disallowance being 1/5th of total expenses of tele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee to follow exclusive method of accounting for valuation of inventories in the light of AS-2 on Valuation of Inventories issued by ICAI. But in terms of Section 145A, and assessee is to follow inclusive method of accounting. Since there is no impact of profitability whether an assessee follows exclusive method or inclusive method no addition is called for u/s 145A - See M/S. AIA ENGINEERING LTD [ 2017 (9) TMI 1753 - ITAT AHMEDABAD ] Disallowance u/s 40A(2) - CIT(A) deleted such addition following the order passed in assessee s own case for A.Y. 2011- 12 - HELD THAT:- AR contention before us that since the order passed by the Learned CIT(A) in assessee s case for A.Y. 2011-12 has not been challenged before us following the principle of consistency, the department ought not to have challenged the issue in the instant appeal and DR failed to controvert such submission made by the Learned AR. We find substances in such submission made by the Learned AR. Taking into consideration the order passed by the Learned CIT(A) and the conduct of the Revenue in not preferring appeal in the previous A.Y.2011-12, we find no required. - Decided in favour of assessee. - ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt proceeding, it was observed by the Learned AO that the appellant firm had revalued one of its asset being the land value of ₹ 50,83,617/- as on 01.04.2010 to ₹ 29,40,31,218/- on the basis of valuation report made by the Government Registered Valuer whereby and whereunder the said property was valued at ₹ 29,38,68,000/- on 05.01.2011. Therefore, there was an increase in the value of land to the tune of ₹ 28,87,84,000/- due to its revaluation credited to the partners capital account in the profit sharing ratio. The appellant firm got converted into Private Limited Co. as also found by the Learned AR upon perusal of the record before him. The succeeding company, thereafter allotted shares worth ₹ 28,87,84,000/- on account of distribution of capital assets as per Section 45(5) of the Act. The assessee thereafter submitted the following before the Learned AO: 8.4 In reply to the above show cause, the assessee has filed a written submission on 11/02/2014, contents of which are reproduced, as it is, as under:- 8. Vide para 8 of letter dated 29/01/2014, it is the observation of Your Goodself that the Appellant firm is converted into Private Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes of computation of capital gains under section 48, the market value on the date of the transfer shall be deemed to be the full value of consideration received or accruing as a result of the transfer. 8.4 Now Your Goodselfs observation is that on conversion of firm to Part - IX Company and on allotment of shares to partners, the assets of the firm are distributed to partners so as to attract provisions of S.45(4) of the Act. 8.5 In the present case before Your goodself, it is not in dispute that that the assessee-firm is converted into Company under Part IX of the Companies Act. Now, section 45(4) clearly stipulates that there should be transfer by way of distribution of capital assets. Under Part IX of the Companies Act, when a Partnership Firm is treated as a Company, the properties of the erstwhile firm vests in the Company. The question is whether such vesting stands covered by the expression transfer by way ofdistribution section 45(4) of the Act. There is a difference between vesting of the property, in this case, in the Company and distribution of the property. On vesting in the Company under Part IX of the Companies Act, the properties vest in the company as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market value on the date of the transfer shall be deemed to be the full value of consideration received or accruing as a result of the transfer. Now, according to the Assessing Officer, in this case, on vesting of the properties of the firm in the Limited Company, there was a transfer by way of distribution of capital assets. Further, according to the Assessing Officer, on vesting of the properties of the firm in the company, there was a resultant dissolution of the firm. Therefore, according to the Assessing Officer, both the conditions under section 45(4) stood satisfied and, therefore, he was entitled to take the fair market value of the asset on the date of the transfer to be the full value of the consideration received as a result of the transfer. It is for this reason that the Assessing Officer has computed the capital gains under section 48 by referring to the comparative figures of the book value and the market value. As stated above, in this connection, the Assessing Officer has computed capital gains arising to the assessee-firm at ₹ 9 lakhs on the basis of the difference between the market value and the written down value. The Assessing Officer has taken the wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or body of individuals, of the previous year in which the said transfer takes place and, for the purposes of section 48, the fair market value of the asset on the date of such transfer shall be deemed to be the full value of the consideration received or accruing as a result of the transfer. 13. According to the aforesaid provision, the profits or gains arising from transfer of capital assets by way of distribution of those assets on dissolution of a firm or other association of persons or body of individuals (not being a company or a co-operative society) or otherwise shall be liable to tax as income of the firm, etc., of the previous year when such transfer takes place. Under section 48, the fair market value of the asset on the date of transfer shall be deemed to be the full value of the consideration received or accruing as a result of the transfer. 14. For applicability of section 45(4) of the Act, the following two conditions need to be fulfilled, namely:- (a) there must be a transfer of capital asset by way of distribution of capital assets, and (b) there must be a dissolution of a firm, assoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between vesting of the property, in this case, in the limited company and distribution of the property. On vesting in the limited company under Part IX of the Companies Act, the properties vest in the company as they exist. On the other hand, distribution on dissolution pre-supposes division, realisation, encashment of assets and appropriation of the realised amount as per the priority like payment of taxes to the Government, BMC, etc., payment to unsecured creditors, etc. This difference is very important. This difference is amply brought out conceptually in the judgment of the Supreme Court in the case ofMalabar Fisheries Co. v. CIT [1979] 120 ITR 49. In the present case, therefore, we are of the view that section 45(4) is not attracted as the very first condition of transfer by way of distribution of capital assets is not satisfied. In the circumstances, the latter part of section 45(4), which refers to computation of capital gains under section 48 by treating the fair market value of the asset on the date of transfer, does not arise. 17. The plea of applicability of section 45(1) read with section 2(47)(ii) of the Act was also negated with the following conclusion (page 35 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n received. This latter part of section 45(4) is not there in section 45(1). Therefore, one has to read the expression 'full value of the consideration received/accruing' under section 48 de hors section 45(4) and if one reads section 48 with section 45(1) de hors section 45(4) then the expression 'full value of consideration' in section 48 cannot be the market value of the capital asset on the date of transfer. 18. The aforesaid view has the acceptance of the legislative intent as the Finance (No. 2)Act, 1998, effective from April 1, 1999, has incorporated clause (xiii) to section 47 tothe following effect: Nothing contained in section 45 shall apply to the following transfers.- (xiii) where a firm is succeeded by a company in the business carried on by it as a resultof which the firm sells or otherwise transfers any capital asset or intangible asset to thecompany. 19. Now, the stage is set to analyse the case law relied upon by the counsel for the Revenue. 20. In Artex Manufacturing Go's case (supra), the Gujarat High Court was seized of the matter where the entire assets and liabilities of the partnership were not transferred to the limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribution of Capital assets, neither there was a dissolution of firm. The revaluation of the land held by the assessee firm increased the value but the same has been credited to capital account of partners when the assessee firm was converted into Private Limited Company under Part IX of the Companies Act, 1956. The assets and liabilities of such firm became the assets and liabilities of the Company. Further that shares in Company have been allotted to partners of erstwhile firm in their profit sharing ratio in the firm. It was further pointed out by the Learned AR that the partners of the firm have never received any consideration or benefit other than by way of allotment of shares in Company due to such conversion of the assessee firm into Private Limited Company. The Learned Counsel also relied upon the judgment passed in the matter of Alta Interchem Industries reported 20 ITR(T) 103 (Ahd), in the matter of Gulabdas Printers reported in 4 ITR(T) 264 (Ahd), Well Pack Packaging reported in 130 Taxman 215 (Ahd). All these judgments laid down the ratio in favour of the assessee on the point of law as discussed above as also been placed by the Learned AR. He, therefore, relied upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land due to revaluation to the partners capital account in their profit-sharing ratio. Subsequently the appellant firm got converted into a Private Limited Company and accordingly the shares equivalent to the capital of the partner were allotted to them. That AO held that the appellant firm had distributed capital assets to its partner and made the addition of capital gain on account of distribution of capital assets by applying the provisions of section 45(4) of the Act. He held that the assets belonging to the firm got revalued, the revalued amount got distributed to *he partners by crediting the capital account and the value of the asset stood and hence the increase in value got distributed by the assessee form to the partner thus increasing the capital accounts. He further held that sharesof the enhanced value allotted to the erstwhile partners worth increased value and thus increasing the value of capital in the hands of the partners and accordingly it was held by him that the capital gain arose on distribution of assets that is land to the partners by the assessee firm, due to revaluation and subsequent allotment of-share's. He made the addition by splitting the reva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lysing several other cases decided by the other Tribunals and High Courts on the issue, that when a firm becomes a Limited Company under Part -IX of the Companies Act 1956, section 45 (4) is not attracted as the very first condition of transfer by way of distribution of assets was not satisfied. For the sake of clarity the facts of the case, in brief, are reproduced as under: - The assessee-firm was consisted of sixteen partners. The assets of the assessee were revalued on 31-7-1994 and thereafter on 1-8-1994, the assessee was converted info joint stock company. The effect of revaluation was given in the books of assessee by crediting partners' account in their profit-sharing ratio. On conversion of the firm the shares were issued to sixteen partners of the assessee in the same proportion of partners' capital account. Originally the assessment was completed under section 143(1)(a). However, later on, the Assessing Officer found that the partnership firm was converted into a company under Part IX of the Companies Act, and the firm had revalued the depreciable assets and enhanced their value. The Assessing Officer took the view that on conversion there was extinguishment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under Part IX. Thus, since there is no transfer on conversion of the firm into company under Part IX of the Companies Act, there does not arise any question of applicability of section 50 or 45 or any other provision of the Act. In the instant case, there was no sale or conveyance from the firm to the company and the firm had neither been dissolved nor came to an end on account of conversion into a joint stock company under Part IX of the Companies Act. It was also important to note that the erstwhile partners of the firm had not been allotted shares of the company in question of the value revalued but only of ₹ 1crore so that it clearly indicated that the assets were of taken over at the revalued price and it had not referred to the value allotted o different assets. As such, it could not be said that the firm through their partnersreceived price equal to the revaluation on conversion. Further, a business undertaking as a going concern includes all rights, assets contingent or definite and all interest in the present or future. It also includes the management, executive employees and anything which goes as part of organisation including the potentiality of the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer that if the full contributions of the partners are taken, it was noticed that the shares in the company have not been allotted in the same proportion as the capital accounts of the partners as they stood in the books of the firm on the date of succession. Therefore, it was the case of the Assessing Officer, that proviso (b) to section 47(xiii) is squarely applicable to the assessee's case which made the transfer of the assets and liabilities of the firm liable to capital gains tax. He had also further stated that if it were to be held at the appellate stage that the two capital accounts were indeed separate, even then the conditions prescribed in the proviso (c) to section 47(xiii) was not met. The said proviso says that the partners of the firm will not receive any consideration or benefit directly or indirectly, in any form or manner from the company except by way of allotment of shares. However, in the present case all the eight partners' current capital account has been taken by the company as loan and so reflected in the balance-sheet. Therefore, it was observed by the Assessing Officer, the erstwhile partners have received consideration in the form of int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Unity Care and Health Services (supra) had observed as under (page 130) : When a conversion of a firm into company takes place under the provisions of the companies law, such conversion can be construed only as occasioned by operation of law. Hence, no controversy could arise on the application of this principle even for purposes of capital gains under section 45(4). By insertion of section 47(xiii), it cannot be said that the conversion of a firm into a company under Part IX is to be first treated as dissolution of firm within the meaning of section 45(4) and only if the condition as contained in section 47(xiii) are complied with, the exemption will be available. Section 47(xiii) applies only to a case of transfer by sale, but there is no authority for capital gain at all in the absence of a transfer under Part IX of the Companies Act inasmuch as such conversions do not fall within the definition of 'transfer' under section 2(47). While disposing of the Revenue's reference application against the Tribunal's order, the hon'ble Karnataka High Court had, in I.T.A. No. 3170 of 2005 dated July 5, 2010, ruled as under : (On page 6) 5. In the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm in terms of section 45(4). We have, with due respects, perused the findings of the hon'ble Bench and of the considered view that it has no relevance to the issue under consideration. In that case, consequent on the retirement of a partner from the partnership of two partners, the assets were taken over by another partner who continued the business as a sole proprietor and, thus, there was a dissolution of the erstwhile firm whereas in the case under consideration, there was no dissolution of the firm, but, conversion of the firm into a company. Thus, we are of the considered view that the case law relied on by the Revenue cannot come to its rescue. (2) Goel Udyog (supra) : The finding of the hon'ble Tribunal of Delhi C Bench is not applicable to the issue under consideration in the sense that in that case, on dissolution of firm and distribution of assets to partner excess of market value over book value with regard to land and building and plant and machinery has to be assessed as capital gain as per section 45(4). However, the issue before us, as already mentioned, is on a different footing and, thus, the case law quoted by the learned Departmental repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partners is sought to be evaded against the provision and intent of the law is not correct. We would like to mention that when a firm is converted into company under Part XI, properties of the erstwhile firm vest in the company. The difference between vesting of property and distributions of property as discussed above does not permit section 45(4) of the Act to be invoked. In the instant case, since there was no sale or conveyance from the firm to the company, the partner s capital has not increased on account of sale on capital asset but it is only on account of revaluation of asset. The capital has been increased because of such conversion. The properties of the partnership firm have been vested with the company where all the assets and liability of the erstwhile firm also vested with the present company. We find no justification to hold that there was any transfer of asset and thus question of liability to pay tax on capital gain on the appellant firm does not and cannot arise at all. We find no infirmity in the order passed by the Learned CIT(A) which is in consequence with the ratio laid down by the Co-ordinate Bench in the judgment as discussed above so as to warrant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the assessment proceeding, upon verification of the books and accounts and the details filed by the assessee, it was found by the Assessing Officer that the assessee has invested ₹ 2,60,00,000/- in Reliance Liquid Fund and also earned dividend income of ₹ 2,09,251/-. The Learned AO took a view that borrowed funds were utilized for making such investment yielding exempt income and therefore disallowance of ₹ 4,01,147/- as worked out u/s 14A r.w.r. 8D of the Act was made, which was, in turn, confirmed by the Learned CIT(A). Hence, the instant appeal. 10. It is the case of the assessee that such investment in question was made out of the credit balance available with the assessee in the cash credit account details whereof has been annexed with the Paper Book, available at Page 13 to 16 of the same. Since no interest was charged by the Bank in case of such credit balance in cash credit accounts, such funds cannot be treated as borrowed funds . Further that, since there is no opening balance or closing balance of investment, disallowance under Rule 8D(ii) 8D(iii) is not permissible as the case made out by the assessee both before the authorities below and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is that the disallowance made should not exceed the exempt dividend income of ₹ 33,445/-. 9. We find force in the contention of the assessee. Recently, Mumbai Bench of the Tribunal in the case of Daga Global Chemicals P. Ltd. Vs. DCIT vide its order dated 1.1.2015 passed in ITA No.5592/Mum/2012 held that disallowance under section 14A read with Rule. 8D cannot exceed the exempt income. Respectfully following the same, we direct the AO to restrict the disallowance on account of interest and administrative expenses to ₹ 33,446/-. Thus, the grounds of the appeal of the assessee are partly allowed. 10. In the result, the appeal of the assessee is partly allowed. Respectfully relying upon the judgment, we restrict the disallowance to the tune of ₹ 2,09,251/- i.e. dividend income earned by the assessee before us which is exempted from tax. Thus this ground of appeal filed by the assessee is allowed. 12. Ground No.2 The assessee has challenged ad hoc disallowance of ₹ 2,24,276/- being 1/5th of total expenses of telephone, mobile, insurance, vehicle, repair and maintenance, interest on car loan and depreciation on account of personal use. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Objection is thus partly allowed. 15. Ground No.3 to 5The issues raised by the Assessee in ground Nos. 3 to 5 are either general or consequential in nature. Therefore no separate adjudication is required. Therefore, the grounds raised by the assessee in his cross objection are dismissed. ITA No.2945/Ahd/2015 for A.Y. 2008-09 16. The instant appeal has been filed by the assessee with the following grounds: 1. The ld. CIT(A) has erred in law and on the facts of the case in disallowing ₹ 20,08,977/- on the account of commission byholding that activities done by the agent on 'behalf of the appellant do not fall within the ambit of services so as to make the claim of commission eligible for deduction u/s 37 of the Act. 2. Both the lower authorities have passed the orders without properly appreciating the fact and that they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o both the parties to be non-genuine and hence he disallowed the same. 8.2 The Appellant has placed on record following details / information regarding the commission paid to the commission agents : (a) Debit Note -cum- Confirmation of Basic Wind Energy Pvt. Ltd. including details of PA No., name and confirmation -cum - ledger account of parties to whom sales have been made through it (pl. refer pg. nos. 42-49 of P/B);.and (b) Debit Note -cum- Confirmation of Shri Upendrasingh D. Darbar including details of PA No., name and confirmation - cum - ledger account of party to whom sales have been made through it (pl. refer pg. nos. 50-52 P/B). 8.3 The Appellant would like to submit that the Appellant has placed on record various evidences as mentioned above to establish that in consideration to the services provided by the commission agents for procuring orders from various customers, the Appellant has paid commission. It is submitted that the as per the mutual terms and conditions of the Appellant and the commission agents, they were to provide the information of potential customers as well as to solicit the order. The commission agents were also required to provide any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 59 ITR 843 8.4 In view of above made factual and legal submissions, it is submitted that the Appellant has placed each and every evidences to establish that the commission agents has provided services to the Appellant and therefore, the commission expenditure is genuine and not fictitious as alleged by the Id. AO. The Appellant has also placed reliance on various authorities, who have taken a view that even introduction of the customers to the assesses is itself the provisions of services and therefore the consideration paid thereto cannot be negated or disallowed merely on the ground that there was no written agreement or reply wasnot received from the said commission agents. Insofar as the observation of the ld. AO that the said commission agents have not replied to the notices issued by him is concerned, it is most respectfully submitted that merely because they could not reply to the notice issued by the ld. AO the expenditure claimed by the Appellant would not become non-genuine. It is further submitted that the Appellant was never informed that the said commission agents have not replied to the notice issued to them by the ld. AO. Had it been the case, the appellant was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n deleting the addition of ₹ 62,93,378/- made on account of under valuation of closing stock. The addition was made on account of clear provisions of Section 145A for including tax, duty, cess, etc. 3. The Ld. CIT(A) has erred in law and on facts in deleting the addition of ₹ 2,25,530/- made u/s.40a(2)(B) of the Act and not consider that the assessee has not prove the nexus between interest free and interest bearing funds. 4. On the facts and circumstances of the case, the Ld. Commissioner of Income Tax(A) ought to have upheld the order of the Assessing Officer. 5. It is, therefore, prayed that the order of the Ld. Commissioner of Income Tax(A) may be set-aside and that of the Assessing Officer be restored. 21. Ground No.1 relates to the deletion of addition of ₹ 2,11,26,463/- made on account of difference in job work receipts. 22. The assessee filed its return of income on 05.09.2008 declaring total income at ₹ 1,10,63,150/- followed by revised return on 23.01.2009 without changing the amount of income. Under scrutiny such income was accepted by the Learned AO u/s 143(3) of the Act. Subsequently, a notice u/s 263(3) of the Act was issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that count by the Learned AO. Taking into consideration this particular aspect of the matter, Learned CIT(A) rightly deleted the impugned addition as also submitted by the Learned AR before us. On the contrary the Learned Representative of the Department relied upon the order passed by the Assessing Officer. 24. We have heard the rival submissions; we have also perused the relevant materials available on records. It appears from the records that while dealing with the issue and finalizing the same in favour of the assessee, the Learned CIT(A) observed as follows: 3.3 Decision: I have considered the facts of the case and the submissions of the appellant.The Assessing Officer has made the impugned addition of ₹ 2,11,26,463/-on the count that appellant had disclosed job-work receipts at ₹ 3,54,04,388/- whereas total receipts from job-work as per Form 26AS were ₹ 5,65,30,851/-. The appellant had furnished reconciliation statement during the course of hearing completely reconciling the aforesaid difference of ₹ 2,11,26,463/-. From the said reconciliation statement, it is apparent that such differential sum of ₹ 2,11,26,463/- has been credited in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be sustained same amount requires to be reduced from sales so as to avoid double taxation he thus deleted the addition. The clarification so given by the CIT(A) is according to us just and proper and without any infirmity the same is confirmed. The revenue s appeal is dismissed. 25. Ground No.2 relates to deletion of addition of ₹ 62,93,378/- made on account of under valuation of closing stock u/s 145A of the Act. 26. During the course of assessment proceeding, the Learned AO found that the assessee company is following exclusive method of accounting for valuing inventory of goods. It was the observation of the Learned AO that the assessee had added the said amount of ₹ 6,66,004/- to the closing stock for an invoice amounting to ₹ 8,01,763/- undervalued the closing stock. In response thereof it was submitted that the valuation of closing stock has been taken at cost in the books of accounts. The appellant has not added VAT or Cenvat to closing stock as it is not any income or expenses and that the assets and liabilities are shown in the balance sheet and have not been considered in opening stock, purchase sales and closing stock. An amount of ₹ 1,35,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , perused the material available on record and gone through the orders of the authorities below. The issue in the present case is with respect to the addition of unutilised CENVAT credit to the closing stock. We find that the ld.CIT(A) while deciding the issue in favour of ITA No. 1122/Ahd/2015 DCIT vs. AIA Engineering Ltd Assessment year: 2006-07 Page 2 of 2 assessee has given a finding that assessee is following exclusive method of accounting whereby the excise duty is not included in the valuation of stock and raw-materials as the excise duty paid and collected is not made part and parcel of the Profit Loss A/c. He has further given a finding that assessee has complied with the provisions of section 145A of the Act and the effect of including excise duty in valuation of closing stock does not affect the profit and is Revenue neutral. He has further relied on the decision of Hon'ble Gujarat High Court in the case of Narmada Chematur Petrochemicals Ltd.(supra). Before us, Revenue has neither controverted the finding of ld.CIT(A) nor has placed any contrary binding decision in its support. We further find that the Hon'ble Apex Court in the case of Indo Nippo Chemicals (20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and the effect of including excise duty in valuation of closing stock does not affect the profit and is Revenue neutral. He has further relied on the decision of Hon ble Gujarat High Court in the case of Narmada Chematur Petrochemicals ITA No.2387/Ahd/2013 ITO vs. Mamata Brampton Engg.Pvt.Ltd. Asst.Year 2008-09 - 8 - Ltd.(supra). Before us, Revenue has neither controverted the finding of ld.CIT(A) nor has placed any contrary binding decision in its support. We further find that the Hon ble Apex Court in the case of Indo Nippo Chemicals (2003) 261 ITR 375 has held that unavailed MODVAT credit cannot be construed as income and there is no liability to pay tax on such unavailed MODVAT credit. In view of the aforesaid facts, we find no reason to interfere with the order of the ld.CIT(A). Thus, this ground of Revenue is dismissed. 6. In the result, appeal of the Revenue is dismissed. Since the issue is found to be consequently covered by the two judgments, we find no reason to interfere with the order passed by the Learned CIT(A) which is in coherence with the ratio laid down by the judgment passed by the Co-ordinate Bench as discussed above. The revenue s appeal is thus fou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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