Commissioner Of Income-Tax-I,Ludhiana v. M/S. Arihant Industries Ltd.ludhiana

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ----- Income-tax Appeal No. 100 of 2004Date of decision: 21.7.2010 Commissioner of Income-tax-I,Ludhiana --- Appellant Versus M/s. Arihant Industries Ltd.Ludhiana --- Respondent --- CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- PRESENT:Mr. R.P. Sawhney, Senior Advocate withMr.for the appellant-Revenue. --- AJAY KUMAR MITTAL, J. ThisappealfiledunderSection 260 Aofthe-Income tax Act, 1961 (for short “the Act”) at the instance of-the Revenue is directed against the order of the Income taxAppellateTribunal, ChandigarhBench ‘B’, Chandigarh (for-short “theTribunal”) passedon 16.9.2003, in Income taxAppeal No. 1128/CHANDI/98, for the assessment year 1992-93. The assessee company sends goods for processing to its processing house. While getting the goods back, theassessee pays excise duty and such duty increases the costof the manufactured and processed goods and, thus, becomespartofthesaleprice. Theassessee, however, does notincrease the value of the closing stock by the amount paidonaccountofexcisedutyandyetclaimsdeduction underSection 43Bonthebasisofactualpayment. Fortheassessment year 1992-93, the assessee filed return declaringtotal income as Nil. The return was processed under Section143(1)( ) aoftheActandassessmentwas completed videorderdated 25.1.1995 afterallowingdepreciationand-brought forwarddepreciationtotheextentofRs. 2,86,73,294/-. ItwasnoticedduringthecourseofassessmentproceedingsthattheassesseehadclaimeddeductionunderSection 43Bamounting to Rs.20,14,444/-onaccountofexcisedutypaidandmentioningitasrecoverable. The assessee claimed that amount as its loss inand that too, in respect of the goods which had not beensoldandwerelyingwithitinitsclosingstock. Theassessing officer disallowed the deduction so claimed by theassessee on the aforesaid count. Theviewoftheassessingofficerwasupset inappealcarriedbytheassesseeandtheCommissioner of-Income tax (Appeals) Ludhiana [(in short “the CIT ( ) ], A ”videorder dated 21.7.1998 deleted the disallowance claimed underSection 43 , Bmade by the assessing officer. While doing so,theCIT A( ) observedthatearlieraswell, . . i efortheassessment years 1984-85 and 1985-86 in the case of theassesseeitself, thesamequestionhadarisenforconsideration before the Tribunal and the Tribunal had orderedtheexclusionoftheexcisedutypaidbutnotclaimed asdeduction from the value of the closing stock. . This is how the matter came to be carried before the Tribunal at the instance of the Revenue. The Tribunal,after following its own decision in the case of the assesseeitself, fortheassessmentyears 1985-86 and 1986-87,upheld the order of the CIT ( ), Avide order dated 16.9.2003.It is all that prompted the Revenue to file the instant appealproposing that the following substantial question of law arisesfor determination by this Court: “Whether in view of the circumstances and facts of-the case, the Hon’ble Income tax Appellate Tribunalerredindeletingthedisallowancemadeby theAssessingOfficeramountingto Rs. 20,14,444/-on account of excise duty claimed as deduction butnot included in the value of closing stock? Learned counsel for the parties are agreed thattheTribunal, whilehearingtheappealcarried at theinstance of the Revenue for the assessment year 1992-93-had relied upon its own decision in Income tax Appeal Nos.912, 652 and 1408/Chandi/89 rendered in the case of the “Whether in view of the circumstances and facts of-the case, the Hon’ble Income tax Appellate Tribunalerredindeletingthedisallowancemadeby theAssessingOfficeramountingto Rs. 20,14,444/-on account of excise duty claimed as deduction butnot included in the value of closing stock? Learned counsel for the parties are agreed thattheTribunal, whilehearingtheappealcarried at theinstance of the Revenue for the assessment year 1992-93-had relied upon its own decision in Income tax Appeal Nos.912, 652 and 1408/Chandi/89 rendered in the case of the presentassesseeitselfpertainingtotheassessment years1985-86 and 1986-87 and had, vide order dated 16.9.2003,ordered exclusion of the excise duty paid but not claimed asdeductionfromthevalueoftheclosingstock, and out of-which Income tax Reference Nos. 573 to 575 had arisen. Ithas been further agreed that question Nos. 1 and 3 raised inthoseReferencesaresimilartotheoneproposed in thisappeal. The counsel also agreed that in view of decision oftheapexCourtinoftheapexCourt inCITvs. AlomExtrusions Ltd. (2009) 319 ITR 306 (SC) , and order of this-CourtinIncome taxReferenceNos. 573-575 of 1993-(CommissionerofIncome tax I- , vs. M s/ . Arihant IndustriesLtd. Ludhiana , )ofevendate, theissuestandsconcludedagainsttheRevenue. Accordingly, thesubstantialquestionproposed in this appeal is decided against the Revenue andin favour of the assessee. The appeal stands disposed of accordingly . (AJAY KUMAR MITTAL) JUDGE July 21, 2010*rkmalik* (ADARSH KUMAR GOEL) JUDGE