Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (11) TMI 353 - AT - Income TaxDiminution of value and depreciation of closing stock - valuation of obsolete stock - disallowing depreciation on closing stock holding that the depreciation on the closing stock is not eligible deduction - HELD THAT:- CIT vs. Indian Sugar & Gen. Industry Export Import [2012 (4) TMI 281 - DELHI HIGH COURT] while considering the question of law whether the finding of Income-Tax Appellate Tribunal was right in accepting the NRV as declared by respondent/assessee and was right in not adopting the cost price for computation of closing stock held that the assessee could have adopted the NRV method for valuation of closing stock and whether it is mandatory to value the cost on cost basis, it was held that Hon’ble Apex Court in various decisions and observation that closing stock can be valued on cost price or market price, if the market price is less than the cost. However, the said principle does not apply, if the market value of the closing stock is more than the cost, as profit cannot be brought to tax on notional basis. The Hon’ble Bombay High Court in Alfa Laval (India) Ltd. [2003 (9) TMI 43 - BOMBAY HIGH COURT] also held that when assessee is valued the closing stock on obsolete items at 10% of the cost. Auditor’s report justifying the valuation. The items were in fact sold in the subsequent year at a price less than 10% of the cost. It could not be said that valuation of obsolete item made by assessee was not proper. In view of the aforesaid discussion, we affirm the order of ld. CIT(A). Addition in book profit under section 115JB - HELD THAT:- We find that we have affirmed the finding of ld. CIT(A) in deleting the addition. Therefore, the addition which was consequential to the addition of subject matter of Ground No.1. Therefore, this ground of appeal is also dismissed.
|