Commissioner of Income Tax vs Gokul Metalizers Pvt. Ltd.

K.S. Jhaveri, J.—By way of these appeals, the Appellant-Revenue in Tax Appeal No. 347/2002 has challenged the judgment and order dated 30.10.2001 passed by the Income Tax Appellate Tribunal, Ahmedabad in ITA No. 3972/Ahd/1995 for AY 1992-93, in Tax Appeal No. 96/2006 has challenged the judgment and order dated 5.7.2005 passed by the Income Tax Appellate Tribunal, Ahmedabad in ITA No. 850/Ahd/1999 for AY 1994-95, in Tax Appeal No. 97/2006 has challenged the judgment and order dated 5.7.2005 passed by the Income Tax Appellate Tribunal, Ahmedabad in ITA No. 851/Ahd/1999 for AY 1995-96, and in Tax Appeal No. 536/2006 has challenged the judgment and order dated 16.8.2005 passed by the Income Tax Appellate Tribunal, Ahmedabad in ITA No. 685/Ahd/1999 for AY 1993-94. In all these appeals, the respondent-assessee is same, therefore, all these appeals are disposed of by this common judgment.

While admitting Tax Appeal No. 347/2002, this Court has framed the following substantial question of law:

"Whether the Appellate Tribunal was right in law and on facts in deleting the addition of Rs. 12,99,928/- and holding that the unutilized evaporation boats were spare parts and, therefore, would not be included in the closing stock at the end of the year, contrary to the provisions of section 145 of the Income-tax Act, 1961?"

While admitting Tax Appeals Nos. 96/2002 and 97/2002, this Court has framed the following substantial question of law:

"Whether the Appellate Tribunal was right in law and on facts in deleting the addition of Rs. 7,73,391/- and holding that the unutilized evaporation boats were spare parts and, therefore, would not be accountable in the closing stock at the end of the year, contrary to the provisions of section 145 of the Income-tax Act, 1961?"

While admitting Tax Appeal No. 96/2002 and 97/2002, this Court has framed the following substantial question of law:

"Whether the Appellate Tribunal was right in law and on facts in holding that the unutilized evaporation boats were spare parts and, therefore, would not be accountable in the closing stock at the end of the year, contrary to the provisions of section 145 of the Income-tax Act, 1961?"

The facts of the present case are that the assessing is carrying on the business of manufacturing of Aluminium Metalised Polypropylene Films. It is used in making electronic capacitors. The respondent-company is buying the raw film made of polypropylene which is mostly imported from out of India. On this film, a thin layer of aluminium is coated through evaporation process. This manufacturing process is carried out in the plant and machinery in which the machinery spare parts called evaporation boats are being fitted for the manufacturing process which are made of ceramic. The evaporation boats are also imported. These E-boats are fitted in the vacuum drum and used as a support for passing the Aluminum wire which are evaporated due to high temperature of about-1500C. Initially, the assessee purchased 1800 nos of E- boats forming part of plant and machinery. The cost of such E boats were capitalised on which the assessee claimed depreciation. The assessee purchased 1000 nos of E boats during the year under consideration and has claimed the entire purchase price thereof as allowable expenditure. The E-boats purchased by the assessee remained in closing stock. The company filed its return for AY 1992-93 on 28.12.1992 declaring total income of Rs. 1,12,03,307/-. The return was processed u/s. 143(1), wherein, the deduction u/s. 80C for Rs. 1,66,719/- was disallowed by way of prima facie adjustments. The adjusted total income of Rs. 1,13,48,856/- was worked out and a sum of Rs. 2,30,430/- (including additional tax of Rs. 19,173/-) was determined as payable by the assessee as per intimation dated 11.3.1992. Thereafter, as per CIT(A)''s order, the deduction u/s. 80G was granted and a refund of Rs. 94,036/- was determined as per order dated 11.8.1994 which was granted to the assessee by way of adjustment with the demand for AY 1991-92 on 19.10.1994. In response to notice u/s. 143(2), the assessee has furnished necessary details. Thereafter, after considering the material on record, the assessment order came to be passed. Against the said order, the assessee has preferred an appeal before the CIT(A) which was partly allowed.

Being aggrieved and dissatisfied with the said order, the Revenue has preferred an appeal before the ITAT, which was partly allowed. Against the said order, the Revenue has preferred the present Tax Appeals.

Heard the learned advocates appearing for the parties and considered the submissions. Learned advocate Mr. Karia for the respondent-assessee has pointed out the observations made by the Tribunal in para 4.2, which reads as under:

"4.2 On the basis of the entry in the Depreciation Table, the learned counsel contended that E Boats are required to be treated as machinery spare parts and not item of inventory (stock-in-trade) as contended by the AO. The learned counsel further stated that in AY 1996-97 a similar show cause notice was issued by the AO to the assessee company as to why an addition on account of closing stock of the E-boats should not be made as made in earlier asstt. Year viz. AYs 1992-93 to 1995-96. The respondent Company submitted a detailed reply dated 17.12.1998 a copy whereof has been placed at page 145 to 149 wherein it was explained that no addition is required to be made on account of closing stock of E Boats and on the contrary the respondent company would get deduction which would entitle them to have income tax refund. The AO after considering the detailed reply so submitted by the assessee dropped the proposal of making the addition on account of closing stock of E Boats for AY 1996-97. The learned counsel contended that no such addition made in AY 1997-98 also."

In that view of the matter, considering the finding recorded by the Tribunal, we concur with the view taken by the Tribunal and in view of fact that the earlier decision of the same assessee was accepted by the Department, and therefore, only on that ground, the present appeals are deserve to be dismissed. In the peculiar facts and circumstances of the case, it may not be treated as precedent. The question in all these Tax Appeals is answered against the Department and in favour of the assessee. All these Tax Appeals are dismissed.