INCOME TAX ACT, 1961

--Accounting method--Tax, duty, cess, etc., under section 145ATreatment of amount of excise duty and VAT in closing stock--The assessing officer observed that the assessee had not included the excise duty in the valuation of closing stock. Under the provisions of section 145A, the assessee should include the excise duty component of purchase price of raw material while valuing closing stock of raw material, work-in-progress (WIP) and finished goods. The assessee claimed that non-inclusion of the same will have no effect on its profits. The assessing officer while rejecting the claim of the assessee, applied the provisions of section 145A and discussed the issue at length at pages 2 to 13 of the assessment order and added same to the total income of the assessee. The Commissioner (Appeals) held that no separate addition in respect of the amount of closing stock was called for. Held: There is no dispute that the assessing officer while making the addition of closing stock, inter alia, observed that the similar addition was made in assessment year 2006-07. The Commissioner (Appeals) granted relief against which the department has filed appeal before the Tribunal. Further, it is also not in dispute that the Tribunal on the appeal filed by the Revenue, has upheld the order of the Commissioner (Appeals) in deleting the addition made by the assessing officer. Following the consistent view of the Tribunal and also keeping in view that the assessee is following consistent method of accounting and there is no change in system of accounting followed by the assessee in the year under consideration, the Commissioner (Appeals) was fully justified in deleting the addition.

Income Tax Act, 1961, Section 145A

INCOME TAX ACT, 1961