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2021 (6) TMI 54 - AT - Income TaxAddition made on account of revaluation of stock - method of valuation adopted by assessee - HELD THAT:- The closing stock of raw materials and finished goods was reflected at the reduced value which had resulted in increase in loss for the year. We find that the assessee had pleaded that the method of valuation adopted by it was in consonance with Indian Accounting Standard – 2 on “Inventories” issued by the Institute of Chartered Accountants of India (ICAI) which is mandatorily to be followed by the assessee. As brought to the notice of the ld. CIT(A) by the assessee that the same issue had cropped up in assessee’s own case for A.Y.2014-15 and the ld. AO had not made any disallowance on account of stock in A.Y.2014-15. We find that assessee has been consistently following the same method of accounting for valuation of inventories in earlier as well as subsequent years. We find that the lower authorities had grossly erred in not understanding the accounting practice followed by the assessee for valuation of inventories which is normally accepting accounting practice prevailing in India. No infirmity in the valuation method adopted by the assessee which has resulted in claim of expenses due to valuation of stock at lower of cost or net realizable value. Accordingly, the grounds raised by the assessee are allowed.
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