Commissioner Of Income Tax, Udaipur v. Ms. Hindustan Zinc Limited, 6, New Fatehpura, Udaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR D.B. Income Tax Appeal No. 23 / 2003 Commissioner of Income Tax, Udaipur ----Appellant Versus Ms. Hindustan Zinc Limited, 6, New Fatehpura, Udaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. K.K.BissaFor Respondent(s) : Mr. Anjay Kothari _____________________________________________________ HON'BLE MR. JUSTICE GOVIND MATHUR HON'BLE MR. JUSTICE VINIT KUMAR MATHURJudgment 02/05/2017 This appeal is before us to adjudicate the followingsubstantial questions of law:- “(1) Whether on the facts and in the circumstances ofthe case the Assessing Officer was justified in makingadditions of Rs.476.84 lacs by disallowing assessee’sclaim for deduction from its profit on account ofprovision for loss in stores stock, raw material, finishedgoods provided in books of accounts? (2) Whether in the light of provisions contained insection 37(3) and 37(5) of the I.T. Act, 1961 thetribunal was justified in law in deleting additions madeby the Assessing Officer by disallowing the claim of theassessee to depreciation of assets used in guest houseamounting to Rs.17,28,684/-? (3) Whether in the facts and circumstances of the casethe tribunal was justified in upholding contention of theassessee for reducing profits of the company byadjusting the alleged loss amounting to Rs.78,43,000/-by excluding the interest on Government loan andoffice expenses from the cost of closing stock? (4) Whether the Assessing Officer was justified inmaking additions of Rs.8,38,30,000/- by increasingvalue of closing stock and discarding changed basis ofvaluing of closing stock by the assessee on the basis ofAuditor’s report and tribunal has erred in deleting suchadditions? (5) Whether the Tribunal was justified in sustainingorder of CIT appeals deleting additions made by theAssessing Officer on account of valuing stock and nonmoveable stores at less than 25% of its costs priceamounting o Rs.5.46 lacs? (6) Whether the Tribunal was justified in disallowingadjustment made in the book profit of company byreducing the amount of depreciation made by itamounting to Rs.1,20,23000/- as beyond the scope ofExplanation appended to Section 115J(JA)? (7) Whether the tribunal was justified in sustaining theorder of CIT Appeals for deleting the additions made onaccount of amortization expenses because in earliersome time excessive amortization expenses wereallowed as deduction and some times lesseramortization expenses were allowed as deduction? (8) Whether the interest under Section 234 B, 234Ccould be levied when assessment is made on the basisof book profit under Section 115-J?” The first question is relating to deletion of additionmade on account of provisions for losses in stores stock, rawmaterial, finished goods. This issue was earlier considered by theIncome Tax Appellate Tribunal between the same parties inIncome Tax Appeal No.321(JP)/96 for the assessment year 1992-93 under an order dated 17.10.2001. The order aforesaid came tobe affirmed by a Division Bench of this Court on 30.1.2009 and aSpecial Leave Petition giving challenge to that also came to bedismissed on 18.7.2011. In light of the judgment referred above,we are satisfied that the question sought to be agitated is no moreres-integra. In light of that the order passed by the Income TaxAppellate Tribunal deserves to be upheld to the extent it relates todeletion of addition made on account of provisions for losses instores stock, raw material and finished goods. So far as question No.2 is concerned, that pertains toguest house expenses which is disallowed in light of the provisionsof Section 37(4) of the Income Tax Act, 1961 (hereinafter referredto as ‘the Act of 1961’). The same question between the sameparties was examined by the Income Tax Appellate Tribunal inIncome Tax Appeal No.1106(JP)/94 for the account year 1991-92under an order dated 16.10.2001. An appeal giving challenge tothe order dated 16.10.2001 came to be rejected by a DivisionBench of this Court on 30.1.2009. Hon’ble Supreme Court inBritannia India Private Limited v. CIT, reported in (2005) 278 ITR(SC) 546, also arrived at the conclusion that the guest houseexpenses are not allowable for claiming depreciation of assets in light of the provisions of Section 37(4) of the Act of 1961. Thesecond question is also decided in the same terms. The question No.3 related to disallowance on account ofchange in valuation of closing stock. This issue too has alreadybeen settled by the Apex Court in the judgment reported in 318ITR (SC) 204 and 99 ITR (SC) 135, holding therein that closingstock becomes the opening stock of the next year and as such theIncome Tax Appellate Tribunal was justified to adjust the allegedloss of Rs.78,43,000/- by excluding the interest on governmentloan and office expenses from the cost of closing stock. The question No.4 pertains to valuation of closing stockof more cake etc. This issue has also been settled by the SupremeCourt in the judgment reported in 318 ITR (SC) 204 and 99 ITR(SC) 135, by holding that the closing stock becomes the openingstock of the next year. As such, this issue is also decided in termsof the finding given with regard to question No.3. The question No.5 also deserves to be decided in thesame terms as that pertains to a deletion of addition on account ofvaluation of closing stock of slow and non moveable stores andspares less by 25%. So far as questions No.6 and 7 are concerned, we arenot inclined to examine the same being purely of academic nature. The question No.8 pertains to deletion of levy ofinterest under Sections 234-B and 234-C when assessment ismade on basis of book profit under Section 115-J of the Act of1961. Hon’ble Supreme Court in (2006) 284 ITR (SC) 434, hasalready taken the view that in absence of specific provision in theAct for payment of advance tax in cases where income is taxedunder Section 115-J or 115-JA, the tax payer is not liable to payany advance tax. In light of it, in our considered opinion, theIncome Tax Appellate Tribunal has not committed any error in thisregard. In light of the findings given above, the appeal stands disposed of. (VINIT KUMAR MATHUR)J. (GOVIND MATHUR)J. MathuriaKK/PS