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2011 (3) TMI 655 - DELHI HIGH COURTValuation of stock - Market price or cost - stock was received by the assessee on dissolution of the firm M/s Mehrae-Di-Hatti on 10.11.1979 - Conversion of stock into stock in trade - Valuation of inventories is subject matter of AS-2 issued by the ICAI. AS-2 prescribes valuation of inventories at cost or net realisable value whichever is less - Held that:- In the instant case, the erstwhile firm disappeared on its dissolution. The proprietorship business gave birth to new business, in a different form. A somewhat similar situation obtained in A.L.A. Firm’s (1991 -TMI - 5330 - SUPREME Court) case, where the court was called upon to determine the value of the closing stock though of the dissolved firm. A converse situation arose in Sakthi Trading Co. Ltd. (2001 -TMI - 6026 - SUPREME Court) case where substantially both in terms of its physicality and form the business remained the same. We are thus of the opinion that the Tribunal’s decision to value the stock at cost rather than the market value cannot be sustained. - Decided in favor of the assessee
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