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2015 (11) TMI 1360 - AT - Income TaxDisallowance of loss in respect of valuation of closing stock - change in the method of valuation of stock of shares - CIT(A) deleted the addition - Held that:- It is a basic principle for accounting that the valuation of stock in trade has to be done "at cost or market price, whichever is lower" and the same is in consonance with other important accounting principle that anticipated loss is required to be considered, while drawing the final accounts. In the present case, the assessee however was earlier following the method of valuing the stock of shares at cost which, in my opinion, was not correct method followed by the assessee, as the shares represented its stock in trade. As per the advice of the statutory auditors, which was duly supported by the relevant guidelines issued by the RBI as well as Accounting Standard-2 issued by the ICAI, the assessee, therefore, changed the method of valuation of stock of shares from "at cost" to "either cost or market price whichever lower" and since the new method adopted by the assessee was more proper and correct and the same was consistently followed by the assessee in the subsequent years, I am of the opinion that there was no justification on the part of the AO to reject the same merely because it had resulted in loss. CIT(A) appreciated all the relevant facts of the case in proper perspective and allowed the claim of the assessee for loss as a result of change in the method of valuation of closing stock, which was fully justified. No justifiable reason to interfere with the order of the ld. CIT(A) giving relief to the assessee on this issue. - Decided against revenue.
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