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Judgment
Heard Sri Ashish Bansal, learned counsel for the assessee and Sri Manish Goel, learned counsel for the department as also perused the record.
This is an Income Tax Appeal filed by the assessee for the assessment year 2002-03. It is admitted on the following questions of law:-
"(I) Whether on a true and correct interpretation of the provisions of section 145A, the "ITAT" was legally correct in holding that the valuation of closing stock of ''sugar'' was liable to be increased by the element of Excise duty?
(ii) Whether the "ITAT" was legally correct that no corresponding adjustments was permissible in relation to the opening stock of sugar as brought forward from earlier year, even though the terminology used in the relevant section 145A is ''inventory'' which is referable to closing stock as well as opening stock?
(iii) Whether the "ITAT" was legally correct in holding that for the purposes of valuation of closing stock, other than adjustments on account of Excise duty, the selling price as on 31.3.2002 alone was relevant and the anticipated losses as represented by fall in the selling price, could not have been taken into consideration?"
The controversy in nutshell is whether while including the excise duty component in the value of closing stock, the assessee is entitled to the benefit of similar inclusion in the value of opening stock for the same year? While the Assessing Officer had in the assessment order granted the benefit to the assessee and thereby included the value of excise duty component in the value of opening stock, the CIT (Appeals) disallowed the same. The Tribunal appears to have upheld the order of the CIT appeals.
At the very outset, Sri Ashish Bansal has taken us to two judgments of this Court in Commissioner of Income Tax, Allahabad Vs. Sangam Structurals Ltd reported in (2013) (217) Taxman 82 (Allahabad), which was followed in Income Tax Appeal No.160 of 2007 (The Commissioner of Income Tax, Allahabad Vs. M/s Sangam Structurals Ltd) decided on 18.10.2016.
Following the above two decisions of this Court, we answer the questions of law in favour of the assessee and against the department.
The appeal is, accordingly allowed.