CIT Vs. VANAIK SPG MILLS LTD

JUDGEMENT

(1.) The revenue has filed the present appeal under Section 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:

(2.) 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 under Section 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 under Section 143(3) of the Act.

(3.) 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.