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2021 (11) TMI 628 - AT - Income TaxValuation of investments held as stock in trade - whether the loss of in account of valuation of stock can indeed be allowed as a deduction in computation of business income? - HELD THAT:- Right from Hon'ble Supreme Court's landmark judgment in the case of Chainrup Sampatram [1953 (10) TMI 2 - SUPREME COURT] the law is very well settled, duly recognizing the principle of conservatism embedded in the accountancy practices, that if there is any anticipated loss, whether crystallized or not the same is to be allowed as the deduction while anticipated profits are not be taken in to account for this purpose. Whether the loss is crystallized or not as long as it can be reasonably anticipated, on the basis of the situation as it prevails at the year end, which is what is reflected by the fall in value of stock indicates, the same is taken in account for computation of business loss. In the case of United Commercial Bank [1999 (9) TMI 4 - SUPREME COURT] Hon'ble Supreme Court has taken notes of this foundational legal position and held that loss on all in value of investments which are held as stock and trade by the bank constitute and admissible deduction. The the action of the Assessing Officer, which has been upheld by the learned CIT(A) in a very mechanical manner without application of mind, cannot meet our judicial approval. We reverse the stand of the authorities below, and direct the Assessing Officer to delete the impugned disallowance - Decided in favour of assessee.
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