Excise duty to be included in value of closing stock even if it was due but not paid by assessee

[2019] 104 taxmann.com 206 (Allahabad)

IT: In terms of provisions of section 145A, true value of closing stock would include amount of any tax duty or cess having fully paid, payable or incurred by assessee to bring goods to place of its location and condition as on date of valuation, and, thus, it would be immaterial whether assessee has paid excise duty or not for purposes of arriving at correct valuation of closing stock

Section 145A of the Income-tax Act, 1961 – Method of accounting in certain cases (Valuation of closing stock) – Assessment year 1997-98 – Assessee-company was engaged in manufacture and sale of sugar – It filed return declaring certain loss – In course of assessment, Assessing Officer opined that while valuing closing stock of sugar and molasses, assessee had to include Central Excise Duty, Cess Duty etc. – Tribunal, however, held that excise duty payable could not be added in value of closing stock – Whether in terms of provisions of section 145A, true value of closing stock would include amount of any tax duty or cess having fully paid, payable or incurred by assessee to bring goods to place of its location and condition as on date of valuation – Held, yes – Whether, therefore, it would be immaterial whether assessee had paid excise duty or not for purposes of arriving at correct valuation of closing stock – Held, yes – Whether in view of aforesaid legal position, impugned order passed by Tribunal was to be set aside – Held, yes

Chhata Sugar Co. Ltd