Commissioner of Income Tax vs Vanaik Spg. Mills Ltd.

Rakesh Kumar Garg, J.—The revenue has filed the present appeal u/s 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act) against the order dated 14-2-2007 passed by the Income Tax Appellate Tribunal, Chandigarh Bench A, Chandigarh in ITA No. 363/CHD./2006 for the assessment year 1999-2000 raising the following substantial question of law:

Whether on the facts and the circumstances of the case, the Honble ITAT was right in law in holding that no undue advantage has been taken by the assessee by adjusting the unutilized MOD VAT credit in the revaluation of opening stock.

The respondent-assessee, which is a company, had filed its return of income for the assessment year 1999-2000 showing income of Rs. 81,31,560 on 30-12-1999. The return was processed u/s 143(1)(a) of the Act on 9-3-2000. During the course of assessment proceeding the assessing officer noticed that the MODVAT of Rs. 50,060 was available to the respondent. On 1-4-1998 which had not been included in the value of closing stock as on 31-3-1998. Instead the opening stock had been increased by that figure. The assessing officer held that the effect of Section 145A of the Act on the profit will be equivalent to the effect of excise duty on opening stock, i.e., Rs. 50,060. Accordingly, addition of Rs. 50,060 on account of effect of Section 145A of the Act was made apart from making other additions/disallowance and assessment was completed at an income of Rs. 91,04,680 vide order dated 28-2-2002 u/s 143(3) of the Act.

Aggrieved against the aforesaid assessment order, the assessee preferred an appeal before Commissioner (Appeals), Ludhiana, who vide his order dated 29-3-2005 upheld the order of the assessing officer and dismissed the appeal of the assessee.

Feeling aggrieved by the order of Commissioner (Appeals), Ludhiana, the assessee preferred an appeal before the Income Tax Appellate Tribunal, Chandigarh who vide its order dated 14-2-2007, allowed the appeal of the assessee.

In support of his contentions, Counsel for the revenue had contended that Section 145A provides for valuation of the Closing Stock and it has not provided any adjustment to be made in the valuation of the opening stock. According to the learned departmental Representative the assessee has got undue benefit by revaluation of the opening stock, which is not intended by the Legislature.

We have heard learned Counsel for the revenue and perused the record.

At the outset, Mr. Sanjiv Bansal, Advocate appearing for the revenue has very fairly conceded that the controversy in the matter stands settled by a judgment of this Court in CIT v. Nahar Spg. Mills Ltd. IT Appeal No. 503 of 2007 (Punj. & Har.), dated 25-2-2008 wherein after relying upon the judgment of the Honble Apex Court in Commissioner of Income Tax Vs. Indo Nippon Chemicals Co. Ltd., , this court has dismissed the appeal of the revenue.

Thus, in view of the fair stand taken by the Counsel for the revenue-appellant, no substantial question of law arises in this appeal for determination of this Court.

Consequently, the appeal is dismissed.