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The ACIT Circle-1 Bhavnagar Vs. M/s.P.R. Patel & Co. 400, Vijayrajnagar Street No.4, Bhavnagar
June, 15th 2012
              " B " BENCH, AHMEDABAD

                 ./I.T.A.          No.1350/Ahd/2010
                 Assessment Year : 2007-08)

 The ACIT                      /
                   M/s.P.R. Patel & Co.
 Circle-1      Vs. 400, Vijayrajnagar
 Bhavnagar         Street No.4, Bhavnagar
                 PAN/GIR No. : AACFP 5361 P
 ( /Appellant) ..       (/Respondent)

                 Appellant by      :   Shri B.K.S.Pandya, CIT-DR
                    Respondent by :      Shri Sunil H.Talati, AR

                 Date of Hearing
                                       : 13/6/12
                 Date of Pronouncement : 13/6/12

                             /O R D E R


   This appeal filed by the Revenue on 29.4.2011 is against the order of
CIT(Appeals)-XX, Ahmedabad dated 27.01.2010, raising following
grounds :-
      1.       The Ld. CIT(A)-XX, Ahmedabad has erred in law and on
              facts in deleting the addition of Rs.5,96,722/- made by the
              AO on account of under valuation of the closing stock,
              without properly appreciating the facts of the case and the
              material brought on record by the Assessing Officer.

      1.2.    In doing so, the Ld.CIT(A) has erred in law and on facts in
              not appreciating that the assessee had not included the
                                                     ITA No.1350/Ahd/2010
                                               ACIT vs. M/s.P.R.Patel & Co.
                                                        Asst.Year ­ 2007-08

             labour charges incurred by it for converting the raw
             material into work-in-progress while valuing the work-in-
             progress and therefore the said labour expenses were rightly
             included by the AO for valuing the closing stock.

      1.3.   In doing so, the Ld.CIT(A) has erred in law and on facts in
             observing that the AO had not brought any material or
             evidence of actual incurring of labour charges on the
             material lying in stock as on 31.3.2007, without
             appreciating that the stock of material could not have been
             converted into work-in-progress without the incurring the
             labor charges.

2.    The facts of the case are that the assessee is engaged in the
business of construction work.       The assessee filed its return of income
for the year under consideration on 27-09-2007 declaring total income of
Rs.78,39,350/- and the assessment was completed u/s. 143(3) of the Act
on 03.12.2009 determining total income at Rs.84,36,070/-. Aggrieved,
the Assessee went in appeal before the first appellate authority.

3.    The ld. CIT(A) has decided the appeal in favour of the assessee
with the following observations :-

      "4.2. In view of the above I hold that when the appellant had not
      incurred any overheads like labour charges on the stock of
      building material purchased during last few days of the last month
      of the previous year, the entire approach of allocating pro-rata
      labour charges on such closing stock is not justified and cannot be
      approved. I, therefore, direct the Assessing Officer to delete the
      said addition of Rs.5,96,722/-."

4.    From the side of the respondent-assessee, a preliminary objection
was raised in respect of the tax involved in this appeal of the Revenue.
Learned Authorised Representative Mr.Sunil H. Talati has stated that this
                                                  ITA No.1350/Ahd/2010
                                            ACIT vs. M/s.P.R.Patel & Co.
                                                     Asst.Year ­ 2007-08

appeal of the Revenue deserves to be dismissed in limine because the tax
effect of Rs.2,17,940/- which is below the limit prescribed by several
CBDT Circulars.

5. A query was raised by the Bench as to the maintainability of the
appeals, in view of recent CBDT circular restricting filing of appeal by
the Revenue, the learned DR did not controvert the same, and stated that
the tax effect in the present case is below the tax limit prescribed the
CBDT; refer page one of the nomenclature of CIT(A) order.

6.    After having heard both parties, considering the material available
on record and the CBDT Circulars on this issue, we find that the tax
effect in this case is less than Rs.3 lacs. So after considering the
submissions of ld. DR and going through the materials on record, we are
of the view that the Department ought not have filed the appeal. Our
view is supported by the decision of Hon'ble Delhi High Court in the
case of CIT vs. Manglam Ricinus Ltd. (2008) 174 Taxman 186 (Del)
and Instruction No.3/2011 [F.No.279/Misc.142/2007-ITJ] dated
9-2-2011.    As the appeal so filed is against the executive instructions
which are binding on the Department, we dismiss the appeal in limine.
7.    In the result, the appeal filed by the Revenue is dismissed.

      Order pronounced in the Open Court on 13/06/2012

            Sd/-                                  Sd/-
        (..)                                (   ^)
    ( T.R. MEENA )                   ( MUKUL Kr. SHRAWAT )
.., .../T.C. NAIR, Sr. PS
                                                              ITA No.1350/Ahd/2010
                                                        ACIT vs. M/s.P.R.Patel & Co.
                                                                 Asst.Year ­ 2007-08

      Copy of the Order forwarded to :
1.     / The Appellant
2.     / The Respondent.
3.       / Concerned CIT
4.     () / The CIT(A)-XX, Ahmedabad
5.     ,   ,  / DR, ITAT, Ahmedabad

6.    [  / Guard file.
                                                                         / BY ORDER,

                  //True Copy//
                                                      /  (Dy./Asstt.Registrar)
                                                ,  / ITAT, Ahmedabad

     1. Date of dictation / (copied matter 13.6.12 )
     2. Date on which the typed draft is placed before the Dictating Member
        13.6.12.................. Other Member.....................
     3. Date on which the approved draft comes to the Sr.P.S./P.S.................
     4. Date on which the fair order is placed before the Dictating Member for
     5. Date on which the fair order comes back to the Sr.P.S./P.S.........14.6.12
     6. Date on which the file goes to the Bench Clerk..................... 14.6.12
     7. Date on which the file goes to the Head Clerk..................................
     8. The date on which the file goes to the Assistant Registrar for signature
        on the order..........................
     9. Date of Despatch of the Order..................
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