Decided on December 18,2002

South India Sugar Limited Respondents


- (1.)IN respect of Assessment Year 1992-1993 the assessment order was passed on 25/11/1994. The assessing officer computed the value of the closing stock of the manufacturing goods as far as the assessee was concerned by including the excise duty payable thereon. The assessee impugned this addition before the Commissioner (Appeals). By order dtd. 28/2/1995, the CIT (A) rejected the submission of the assessee that the quantum of excise duty was not includible in the computation of the value of the closing stock. The CIT (A), however, accepted the alternative submission of the assessee, namely, that if the cost of the goods had been enhanced by the excise duty correspondingly it should be allowed to claim the excise duty as an expense in the profit and loss account.
(2.)ACCORDINGLY the CIT (A) remanded the matter to the assessing officer for the purpose of determining whether in fact the assessee had paid any amount before the due date of filing of return towards excise duty which would entitle it to deduction under S. 43-B of the Act. The assessee was directed to produce datewise particulars of excise duty paid before the return of income for the assessment year in question and attributable to the closing stock with adequate evidence within two weeks of the order. The CIT (A) also directed that if such details were filed, the assessing officer would determine the same and allow the deduction of excise duty paid before the due date as a deduction in computation of income. Pursuant to the order of the CIT (A) by an order dtd. 26/4/1995 the assessing officer recomputed the total income at Rs. 2,42,15,720.00. The deduction under S. 43-B of the Act towards excise duty paid before the filing of the return was allowed to the extent of rupees one crore eighty-seven lakhs and fifty-seven thousand.
Aggrieved by the CIT's (A) order, the assessee had in the meanwhile preferred an appeal before the Income Tax Appellate Tribunal. The Tribunal, following a Special Bench decision of the Tribunal in Food Specialities, held that the excise duty was not part of the manufacturing goods and, therefore, there was no reason to include the same in the value of the closing stock. The Department took up the matter by way of reference before the High Court under S. 256(2) of the Act. The High Court rejected the reference.

(3.)WHILE the appeal was being argued before us, the learned counsel appearing on behalf of the assessee stated that the issue was in fact academic as his client was not seeking to contend, for the assessment year in question at least, that the excise duty should not have been included in the computation of the closing stock. It is stated that his client had already paid the excise duty before the filing of the return and had claimed deduction which has been allowed on such basis by the assessing officer. According to the learned counsel for the respondent the order dtd. 26/4/1995 concluded the issue so far as the assessee was concerned and the assessee was not interested in reopening the matter in respect of that assessment year.

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