The Tax Publishers2020 TaxPub(DT) 3581 (Bang-Trib) : (2020) 185 ITD 0551

INCOME TAX ACT, 1961

Section 145A

Where AO made disallowance of interest on allegation that while valuing inventory, assessee failed to take into consideration, interest attributable to bringing inventory to its present location in terms of section 145A, considering that there is no such provision in section 145A to include interest cost in the value of inventory, disallowance was invalid.

Accounting method - Valuation of inventory - Addition towards interest attributable to bringing inventory to its present location -

Issue was as regards disallowance of interest made by AO on allegation that while valuing inventory, assessee failed to take into consideration, interest attributable to bringing inventory to its present location and condition in accordance with explanation to section 145A. Held: Valuation of inventory should be in accordance with the method of accounting regularly employed by assessee and was to be further adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation. As per Explanation to section 145A, 'any tax, duty, cess or fee (by whatever name called) under any law for the time being in force and it shall include all such payments notwithstanding any right arising as a consequence to such payment.' However, there is no such provision in section 145A to include interest cost in the value of inventory.

Followed:CIT v. DLF Universal Ltd. TS 5387 ITAT 2016 (Delhi) : 2016 TaxPub(DT) 5215 (Del-HC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2009-10

INCOME TAX ACT, 1961

Section 133(6)

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