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2017 (12) TMI 1704 - AT - Income TaxValuation of closing stock - assessee following weighted average method - AO rejected the valuation made by assessee and instead applied FIFO method - books of accounts have been rejected by AO to the extent of the valuation of stocks - HELD THAT:- Statutory provisions for computation and disclosure of income chargeable under the head profit and gains of business or profession, we find that undisputedly assessee has been following weighted average method in valuing the closing stock in the previous years which has not been disturbed by revenue authorities. Weighted average method is also considered to be one of the method which reflects the fairest possible approximation of cost incurred, by the Institute of Chartered Accountants in their Accounting Standards. Therefore we do not find any justification in rejecting this method of valuation by AO. Moreover AO has also not furnished any reasonable explanation for rejecting the method consistently adopted by assessee. We are therefore inclined to allow this ground raised by assessee. As we have upheld the weighted average method for valuation of closing stock, we allow ground raised by the assessee wherein the books of accounts have been rejected by Ld. AO to the extent of the valuation of stocks.
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