Case: Commissioner of Income Tax, New Delhi Vs. Shri Ram Honda Power Equipment Limited

The Civil appeal filed by the Department concerns Assessment Year 1995-1996. The judgment of the Bombay High Court in CIT v. Indo Nippon Chemical Co. Ltd. (2000) 245 ITR 384 (Bom) squarely applies to this case and the same has been affirmed by this Court in CIT v. Indo Nippon Chemicals Co. Ltd. (2003) 11 SCC 452 : (2003) 26 ITR 275). The assessee followed the net method of valuation of closing stock. The authorities below are right in coming to the conclusion that MODVAT credit is excise dutycivil appeals filed by the Department concern Assessment Year 1997-1998. The assessee (s) follows net method of valuation of closing stock [see note of the Auditor in Civil Appeal arising out of SLP (C) No. 35282 of 2010 at p.civil appeal filed by the Department concerns Assessment Year 1997-1998. The assessee follows net method of valuation of closing stock (see note of the Auditor at p.25, para 8 of the additional affidavit filed on behalf of the respondent).

Reasoning:
per the practice consistently followed, excise duty payable estimated at Rs.1,43,66,145 on finished goods held in factory are neither included in expenditure nor valued in such stocks but are accounted for on clearance of goods from factory. This accounting treatment however has no impact on the profit for the year.– The Company has been accounting liabilities for excise duty on furnished products lying in the factory when clearance is made. The liabilities in respect of the finished products lying at the factory at the close of the year has not been provided for in the books of accounts and hence not included in the valuation of inventory of the finished products. However non-provision of the excise duty as stated above has no impact on the profit of the