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2018 (4) TMI 1625 - AT - Income TaxValuation of closing stock of gold jewellery - LIFO or FIFO method - accounting standard - Held that:- We find that the CIT-A had correctly deleted the addition on the ground that the assessee company had been regularly employing LIFO method for the purpose of valuation of its stocks since its inception and there is no deviation of the same during the year and the said method had been accepted by the revenue in the earlier years. We find that the entire issue under dispute is squarely covered by the decision of this tribunal in the case of ACIT vs Jewell India Jewellers [2016 (7) TMI 376 - ITAT KOLKATA] as held method of accounting regularly employed by the assessee for valuation of closing stock of Gold and other jewellery. It is quite natural that jewellery being a fashion industry, the old stocks would most of the times remain with the assessee and the revenue cannot expect the old stocks to be sold out first though it would remain in the wish list of the jeweller. We find that the aforesaid valuation exactly fits into the accepted method of valuation for a jeweller as approved in the case of Cochin Tribunal in the case of ITO vs Sree Padmanabha Jewellery Mart[1986 (8) TMI 120 - ITAT COCHIN ] In any event, we hold that no addition could be made towards value of stock because the closing stock cannot be construed as a source of profit for the assessee - assessee has been consistently following LIFO method of accounting for valuation of its closing stock of gold which has been accepted by the department in the earlier years even in scrutiny assessment proceedings of the assessee. Then there is no justifiable reason to reject the same method during the year under appeal. - Decided against revenue Addition towards making charges included in valuation of closing stock - Held that:- We find that the assessee had stated that it had included making charges in the closing stock. But this statement made by the assessee has been accepted by the CITA without verifying the said fact. Thus remand this issue to the file of the AO, with a direction to verify the fact of inclusion of making charge in the valuation of closing stock - grounds raised by the assessee and revenue as above are allowed for statistical purposes. MAT addition u/s 115JB - addition towards closing stock valuation and towards making charges not included in closing stock to the book profits computed u/s 115JB - Held that:- We have held that LIFO is also a recognized method of accounting. Hence it cannot be said that the valuation method is not in consonance with the accounting standards and Part II and Part III of Schedule VI of the Companies Act. Hence no such addition could be made to the book profit u/s 115J. With regard to the other item of making charges inclusion in the closing stock of ₹ 10,96,584/- , the assessee had stated that it had already included the making charges including wastage (i.e amount paid to karigars) in the valuation of closing stock, which has been directed to be verified by the ld AO in the earlier grounds supra by us. AO would decide this ground vis a vis inclusion of the same in the book profits u/s 115JB accordingly. If any addition is sustained under the normal provisions of the Act, the same addition need to be made in the computation of book profits u/s 115JB - Decided partly in favour of revenue partly for statistical purposes
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