COMMISSIONER OF INCOME TAX Vs. INDIAN TELEPHONE INDUSTRIES

JUDGEMENT

(1.) This appeal is filed by the revenue being aggrieved by the order passed by the Income-tax Appellate Tribunal (hereinafter referred to as 'the Tribunal'), Bangalore Bench 'A', in I.T.A. No. 2572/Bang/2004, dated 29-3-2007 reversing the order of the Appellate Commissioner confirming the order passed by the Joint Commissioner of Income-tax (Asst.), Special Range-H, Bangalore.

(2.) The substantial question of law that arises for determination as per the appellants is as to whether the excise duty actually paid by the assessee need not be added in the valuation of the closing stock as per section 145A of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') when the item of stock continued to lay with the assessee during the assessment year.

(3.) The assessee filed a return of income for the assessment year 1997-98 dated 26-11-1997 and in valuing the closing stock, had not taken into consideration the excise duty and assessment order was passed by the Assessing Officer - Joint Commissioner of Income-tax (Asst.) on 28-3-2000 holding that the excise duty leviable on the finished goods should be taken into consideration for computing the closing stock as per the judgment of the Hon'ble Supreme Court in the case of CIT v. British Paints India Ltd, 1991 188 ITR 44. The Appellate Commissioner by order dated 7-7-2004, upheld the finding of the Assessing Officer. Being aggrieved by the same, appeal was filed by the assessee before the Tribunal and the Tribunal held that the excise duty actually paid by the assessee need not be added in the valuation of the closing stock as per section 145A of the Act when the item of stock continued to lay with the assessee during the assessment year.