TMI Blog2008 (2) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... , Advocate for the appellant-revenue. JUDGMENT The judgment of the court was delivered by Rakesh Kumar Garg, J .- 1. This judgment will dispose of ITA Nos.503, 370, 387 and 399 of 2007 as similar question of law is involved in all these appeals. However, the facts are taken from ITA No.503 of 2007. 2. The revenue has filed the present appeal under Section 260A of the Income Tax Act, 1961 (for shot the 'Act') against the order dated 12.8.2005 passed by the Income Tax Appellate Tribunal Chandigarh Bench, Chandigarh in ITA No.750/Chandi/2002 for the assessment year 1999-2000 raising the following substantial question of law: "Whether on the facts and the circumstances of the case, the Hon'ble ITAT was right in law in holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng stock, which is not intended by the Legislature. 7. The Tribunal while dismissing the appeal filed by the revenue relied upon its earlier decision in the case of Asstt. Commissioner of Income Tax, Central Circle-V, Ludhiana vs. M/s Nahar Spinning Mills Ltd in ITA No.750/Chandi/2002. The relevant part of the findings of fact given by the Tribunal in the case of Asstt. Commissioner of Income Tax, Central Circle-V, Ludhiana vs. M/s Nahar Spinning Mills Ltd in ITA No.750/Chandi/2002 is reproduced:- "We have given our careful consideration to the rival contentions. The issue before us is as to whether the method adopted by the assessee in valuation of the Closing Stock and adjustment of the opening stock gives a distorted picture of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty paid. In that event Closing Stock was also required to be valued including the element of excise duty paid. So however, the assessee neither debited the excise duty element in the purchases of inputs, nor was the excise duty taken into account in valuation of the Closing Stock. In the year under appeal, the assessee has made adjustment on account of un-utilized MODVAT credit in the valuation of the opening stock. It could be argued that by enhancing the value of the opening stock in the year under reference, the assessee has escaped taxation in the preceding year in so far as the value of the Closing Stock in that year was disclosed at lesser value. So however, it is not so. If the adjustment was made in the preceding year according t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-Tax v. Indo Nippon Chemicals Co. Ltd. (2003) 261 ITR 275 (SC) wherein it has been held that merely because the Modvat credit was an irreversible credit available to the manufacturers upon purchase of duty-paid raw material, that would not amount to income which would liable to be taxed under the Act. The said income was not generated to the extent of the Modvat credit on unconsumed raw material. It has been further held in this case that the Assessing Officer is bound to adopt the method of computation of income regularly employed by the assessee. However, if he comes to the conclusion that the method of accounting employed by the assessee makes it impossible to correctly compute the income, then the Assessing Officer is entitled to ado ..... X X X X Extracts X X X X X X X X Extracts X X X X
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