A. Kalyanasundharam, Accountant Member -
(1.) THE assessee. a limited company, has filed this appeal and has raised twelve grounds in this appeal, claiming reliefs under different provisions of Income-tax Act, 1961. THE assessee-company is engaged in the business of manufacture of electronic typewriters.
Amongst the few issues that have been raised in this appeal, there are five important issues. THE first issue, relates to the claim of investment allowance on the ground that, it is a small scale industrial undertaking. THE second issue, is claim of deduction under Section 80-1, that is dependent on the outcome of the claim of investment allowance. THE third issue, is claim of deduction under Section 80HH, that is dependent the profit derived from the industrial undertaking. THE fourth issue, of classification as a manufacturing company for levy of tax at a lower rate, is dependent on the outcome of the third issue. THE fifth issue is whether, the excise duty actually paid in the accounting year, which is so allowed to be deducted on payment basis only, could be included as part of the value of unsold stocks at the close of the accounting year.
(2.) We shall first deal with the issue of the valuation of closing stock of finished goods. It is an accepted position that, on these finished goods, excise duty had been paid, at: the time of removal of the goods. The objection raised by the assessee, is that, when Section 43B of the Income-tax Act, 1961, allows deduction of duty, on the consideration of it having been paid in the accounting year, relevant to the assessment year, then so much of the duty as paid in the accounting year, should not be included in the value of unsold stocks, because, otherwise it would amount to not allowing of deduction of the duty according to the provisions of that section of the Act.
The counsel for the appellant, Shri Ganesan, placed on our record, a copy of the order of the Special Bench of the Tribunal in the case of the appellant company for the assessment year 1984-85 in ITA No. 3483/Delhi of 1983, dated 28-1 -1994. He submitted that, the Special Bench, had examined the indentical claim and it had been held that, the valuation of stocks of finished goods on which excise duty had been actually paid in the year, has to be so made, by excluding the element of excise duty, by giving active consideration to the provisions of Section 43B of the Act, which permitted allowing of deduction of duties, paid in the accounting period, irrespective of the fact, as to which year it relates to or pertains to. The Senior Departmental Representative (Sr. DR), Mrs. Sinha, submitted that, the claim as advanced by the appellant company, in the present appeal stands squarely covered by the said decision of the Special Bench of the Tribunal.
The rival submissions on this issue have been very carefully considered and the order of the Special Bench in the case of the assessee also, is perused. The excise duty of Rs. 59,99,463, has been paid on the stocks manufactured in the year, that remained unsold at the close of the accounting year. Section 43B of the Act (effective from assessment year 1984-85), provides that, duties, etc., would be allowed to be deducted, in computing the income from profits or gains from business or profession, on the sole consideration that, they are actually paid in the accounting year relevant to the assessment year. The decision of the Special Bench (supra) is that, in valuating unsold stocks at the close of the accounting period, the element of excise duty so paid in the year, relatable to such unsold stocks, has to be excluded. Respectfully following the said decision, we hold in the instant case that, the valuation of the unsold stocks as at the end of accounting period, should be reduced by Rs. 59,99,463, which is the element of duty relatable to such unsold stocks. This would have the corresponding effect of reduction in the value of the opening stock for the following accounting period, by the like amount. This issue, is accordingly decided in favour of the assessee, and against the revenue.
Shri Ganesan did not press the issues relating to the non-allowing of deduction by the application of Section 43B, represented by unpaid taxes, etc., penalties & fines, the disallowance of Rs. 12,060 and the levy of interest under Section 20(1A) of the Act, and accordingly, these four issues are dismissed.
(3.) THE learned Counsel for the assessee-eompany, Shri Ganesan submitted that, Section 37(3A) of the Act, had been invoked about the expenses of Rs. 2,26,217 incurred on conferences for training of company's officials. He fairly submitted that, the identical claim of the appellant company, for the earlier assessment year, did not find favour with the Special Bench (supra). THErefore, respectfully following the said decision, we reject this claim of the assessee, for the present assessment year under appeal.;