Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2010 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2010 (11) TMI 691 - AT - Income TaxValuation closing stock - As per the decision of the Hon'ble Supreme Court in the case of CIT vs. British Paints India Ltd. [Method of valuation of Stock ] wherein the Hon'ble Supreme Court once again considered it to be a well recognised principle of commercial accounting to enter in the P and L Account the value of stock-in-trade at the begging and end of the accounting year at cost or market price, whichever lower - In view of this accounting principle, held that the assessee has correctly valued the stock at the realisable value which is lower than the purchase cost. Loss on account of transit and storage loss - the assessee is only a trader and has imported goods of RBD Palmolein which was not sold during the year at all and Degummed Soya Bean Oil was partly sold during the year. Since the assessee does not have any storage facilities it has kept at Kakinada, Mumbai and a third party surveyor has surveyed the stock by physical verification and another party has furnished the realizable value. On the basis of these, the assessee made adjustments in the accounts on account of transit and storage loss. This is an incidental loss in the import and storage of assessee's trading business and without any reason the CIT(A) has rejected, eventhough the assessee's books of account indicate that there was excess stock as far as Degummed Soya Bean Oil is concerned and shortage of RBD Palmolein - Held that the assessee's claim on account of transit and storage loss of net amount at Rs.11,35,089/- also was an eligible loss. Reopening assessment - Held that there is fall in net realisable value and loss due to transit has not been placed on record and this cannot be noticed unless the A.O. exercise little more effort - Since the A.O. neither enquired about the valuation, eventhough purchase of goods from sister concern has been referred to Transfer Pricing Officer, are of the opinion that the A.O. has not found any opinion at the time of completion of original assessment with reference to closing stock valuation and accordingly reopening on the issue of closing stock valuation is justified.
|