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| The Tax Publishers2020 TaxPub(DT) 1443 (Bom-HC) INCOME TAX ACT, 1961
Section 145
Where ICAI mandates usage of exclusive method as per which the amount of excise duty actually paid on inputs cannot be debited to the profit and loss account, but this was an expenditure which had actually been incurred and thus, adjustment under Section 145-A should be allowed, therefore, appeal of Revenue was dismissed.
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Accounting Method - Estimation of income - Variation in excise duty paid by procuring raw materials and discharge of excise duty liability on non-finished goods -
Assessee was engaged in business of manufacturing and dealing in all types of marble and granite products. AO observed that assessee claimed reduction in profit due to adjustment under Section 145-A. Notice was issued to respondent to explain as to why the said adjustment should not be disallowed. After considering the reply of assessee, AO disallowed the claim of deduction. Held: Assessee had explained that ICAI mandates usage of exclusive method as per which the amount of excise duty actually paid on inputs cannot be debited to the profit and loss account. But this was an expenditure which had actually been incurred and thus, adjustment under Section 145-A should be allowed to assessee. Following decision in assessee's own case for the assessment year 2009-10 [2017 TaxPub(DT) 0390 (Mum-Trib)], first appellate authority took the view that deduction on account of adjustment under Section 145-A should be allowed. Therefore, appeal of Revenue was dismissed.
REFERRED : Pr. CIT v. Classic Marble Co. Ltd. [Income Tax Appeal No. 1400 of 2017, dt. 20-12-2018]; Asstt. CIT v. Classic Marble Co. Pvt. Ltd. 2017 TaxPub(DT) 0390 (Mum-Trib) and Hawkins Cookers Ltd. v. ITO 2008 TaxPub(DT) 2211 (Mum-Trib).
FAVOUR : In assessee's favour.
A.Y. : 2010-11
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