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2013 (3) TMI 352 - HC - Income TaxValuation of the closing stock - Addition on account of provisions for impairment of stock - ITAT deleted the addition - Held that:- The assessee can value the stock at the lower of the cost or the net realizable value as it is a recognized and accepted method. The finding of the Tribunal referred to the assessee's letter dated 27.12.2006 submitted before the AO along with the necessary details in support of the valuation unable to accept the contention of the revenue that the claim of the assessee remains unsupported. It is also to be noted that on a question of valuation of the closing stock, any alleged difference or discrepancy tends to balance itself out over a period of years if the same method is consistently followed. This is because the closing stock of one year becomes the opening stock of the succeeding year and any addition made to the valuation of the closing stock to increase the profits for that year automatically gets neutralised when the same figure of closing stock is taken as the opening stock of the succeeding year. There is also no finding to the effect that the true profits of the business cannot be determined having regard to the method of valuation of stock employed by the assessee. As decided in India Motor Parts & Accessories Pvt. Ltd. vs. CIT (1965 (2) TMI 84 - MADRAS HIGH COURT) the method of valuing the slow moving and obsolescent stock at a price below the cost was a recognized method in other countries and can be properly followed in India too - in favour of assessee. Addition on account of Sales of VSAT equipment - ITAT deleted the addition - Held that:- The addition was made on the basis of the sales tax assessment and that the Tribunal deleted the addition on the basis of the order passed by the Joint Commissioner of Sales Tax (U.P.) on 22.12.2006 in appeal by the assessee. The appellate authority by the aforesaid order had deleted the addition. The Tribunal, therefore, held that the addition made in the income tax assessment can no longer survive. It further noted that the assessing officer had no case that the service charges for installation and/ or de-installation of VSATs were not declared by the assessee in its books of accounts. Thus it was the view of the Tribunal that the amount of Rs.5 crores cannot also be added as service charges - in favour of assessee.
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