COMMISSIONER OF INCOME TAX Vs. SANGAM STRUCTURE LTD

JUDGEMENT

(1.) THE present appeal has been filed under section 260 A of the Income Tax Act, 1961 (hereinafter referred to as the Act) against the order dated 20.03.2009 passed by the Income Tax Appellate Tribunal, Allahabad. The Commissioner of Income Tax, Allahabad has proposed the following questions said to be substantial questions of law arising out of the order passed by the Income Tax Appellate Tribunal, Allahabad.

(2.) THE appeal relates to the Assessment year 2005 -06. The respondent assessee is a public limited company and is engaged in the business of manufacturing and galvanizing of towers of power supply, railways, etc. M.S. Channels, Angles, etc. The assessee filed its return of income tax on 28.10.2005 disclosing total income of Rs. 1,26,43,240/ - The regular assessment proceedings were initiated and during the course of assessment proceedings, it transpired that the assessee had not included the amount of excise duty on the raw materials while valuing closing stock. The Assessing Officer, therefore, included the excise duty in the closing stock of raw materials and determined the income accordingly. The assessee preferred an appeal before the Commissioner of Income Tax (Appeals) who vide order dated 14.08.2008 had accepted the contention of the assessee and had allowed the appeal. The Revenue feeling aggrieved preferred an appeal before the Tribunal. The Tribunal by the impugned order had dismissed the appeal.

(3.) SRI Chopra, learned counsel submitted that the Commissioner of Income Tax (Appeals) as also the Tribunal had erred in law in excluding the value of the excise duty while determining the closing stock of raw materials as it is well established that the excise duty forms part of the turnover and therefore it has to be included while valuing the closing stock. This principle does not admit of any doubt. But on the facts of the present case, it has no application for the simple reason that the Tribunal has found that the value of opening stock of raw material was disclosed after excluding the value of the excise duty and, therefore, the assessee was justified in not including the amount of excise duty while valuing the closing stock of raw materials.