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2018 (12) TMI 696 - MADRAS HIGH COURTValuation of the closing stock of shares on the basis of “since realized value” - whether Tribunal were right in coming to the conclusion that the method of accounting adopted by the assessee, is an unconventional method of accounting and an attempt to re-write his accounts? - whether the assessee should be precluded from reflecting the actual realised cost of share and should a figure which obviously does not match with the sale price realised, be relied on for the purpose of making the amount addition? - Held that:- In the case of CIT vs. Mahalaxmi Sugar Mills Co. Ltd [1992 (10) TMI 73 - DELHI HIGH COURT] Tribunal allowed the assessee's claim by examining the documents and found that the loss, in fact, was incurred and this is allowable as a deduction. The Tribunal pointed out that the method of valuation of the closing stock, which was adopted by the assessee, was that it would not take the value of the closing stock on the last date of the accounting year but, it took the estimated realisable market value by adopting the price of sugar subsequently realised or realisable before the balance sheet for the year in question was adopted. The Tribunal found this method to be scientific and accordingly, allowed the assessee's appeal. In our considered view, the decision in Mahalaxmi Sugar Mills Co. Ltd. (supra) would squarely apply to the case on hand. The Assessing Officer or the CIT(A) does not dispute the fact with regard to the loss suffered by the assessee. We say so after going through the factual matrix of the case, nor such a contention was advanced before us by the Revenue. From the assessment order, it is seen that for the subsequent year also, the assessee had generated huge loss from the share business and has settled all such loans from other incomes in various years. Thus, we are of the clear view that the 'since realised price', as adopted by the assessee, is the price realised by the assessee upon its sale and taking note of the law laid down in the aforementioned decisions, we hold that the method of valuation of the closing stock adopted by the assessee cannot be stated to be lacking in bona fides and the value adopted by the assessee is the value realised by the assessee upon sale of the share and such contingencies are clearly covered in Clause 8 of AS-4, which deals with events occurring after the balance sheet date. - Decided in favour of assessee
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