BHARATI SAPRU, J. - (1.) The present Income Tax Appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') has been filed by the Revenue against the order dated 31.10.2006 passed by Income Tax Appellate Tribunal, Agra in ITA No.388/Agr. 2003 on an appeal filed by the revenue against the order of CIT (Appeals)- I, Agra dated 16.06.2003 in respect of the Assessment year 1997- 1998.
(2.) Following two questions of law have been framed by the Revenue for answering by this court:- "(i) Whether on facts and in the circumstances of the case, the ITAT is legally correct in holding that in the assessee's case excise duty payable at Rs. 2,59,82,452/- could not be added in the value of closing stock? (ii) Whether the Tribunal is legally correct in not appreciating that the excise duty incurred means excise duty payable and it becomes payable on completion of manufacture although the goods may be in the bonded warehouse and is, therefore, liable to be included in the value of closing stock?"
(3.) The respondent, M/s Chhata Sugar Company is a limited company engaged in the manufacture and sale of sugar. The respondent filed return of income for the assessment year 1997- 1998 on 28.11.1997 showing loss of Rs. 30,18,43,756/-. The retrun was processed under Section 143(1) of the Act on 13.03.1999. During the assessment proceedings, the respondent filed a revised return of declaring loss of Rs. 7,17,01,310. The assessment was finally completed under Section 143(3) of the Act vide order dated 24.02.2000 at a total loss of Rs. 7,15,13,989/-.;