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2007 (1) TMI 224 - AT - Income TaxMethod Of Accounting - trading addition - valuation of closing stock - HELD THAT:- Since the closing stock has to be valued at the end of the year, the natural corollary that follows is that the NRV is also be considered as at the end of the year and not the average selling price prevailing throughout the year. We, therefore, hold that the ld. CIT(A) was not justified in approving the rate of Rs. 17,473 as the basis for valuation. In our considered opinion, the rate of Rs. 17,500 PMT should be applied which represents NRV as at the end of the year. The Assessing Officer is directed to value the relevant closing stock at this rate and workout the sustainable addition. This ground is partly allowed. Disallowance of Mill Lining expenses - HELD THAT:- The position, which emerges is that the nature of mill lining expenses has been established to be a recurring cost, which falls upon the assessee from time to time and hence cannot be treated a capital expenditure. Once this conclusion is reached, there is no justification for making disallowance for the expenditure incurred in this year notwithstanding the fact that in the books of account a different treatment has been given. If the expenditure is of revenue nature, the same would call for deduction in the year in which it is incurred. In our considered opinion, the ld. CIT(A) was justified in granting deduction for this sum. Addition on account of 2/3rd disallowance out of ISO 9002 certification expenses - HELD THAT:- This certificate is basically issued and renewed from time to time to bring forth the fact that the systems and procedures of operations implemented in the organization are in accordance with the standards laid down. We note that by making payments for obtaining ISO 9002 certification, the fixed capital of the company has not enhanced in any manner. It rather created a positive image of the products of the assessee for the smooth conduct of the business. In our considered opinion, the ld. CIT(A) was justified in treating the entire amount as revenue in nature. This ground is, therefore, not allowed. Deduction u/s 80-IB(3)(ii) - HELD THAT:- The assessee has admittedly claimed this deduction in the preceding years, which was allowed by the Assessing Officer. It is only in this year that the claim was refused. The well-settled principle of consistency has been consistently followed by all the courts of the country to hold that the view adopted by the Assessing Officer in a particular year should not be deviated from in the subsequent years unless there is some change in the legal or factual scenario justifying departure therefrom. In the case of CIT v. A.R.J. Security Printers [2003 (3) TMI 41 - DELHI HIGH COURT] when the department wanted to negative the assessee's claim, which was accepted in the past, the Hon'ble High Court held that; "having accepted in three assessment years that the assessee's business activity of printing lottery tickets fall within the ambit of section 80-I, the revenue cannot be allowed to turn around and contend that the deduction under the said section is not allowable in respect of the assessment years in question". In the case of CWT v. M.K. Gupta[1990 (1) TMI 29 - DELHI HIGH COURT] the Tribunal applied the same value of property which was considered in the case of other co-owners. The Hon'ble High Court declined to interfere with the Tribunal's view by dismissing the revenue's appeal. In view of the foregoing legal position emanating from the judicial pronouncements, it is clear that the principle of consistency does not empower the Assessing Officer to deviate from the stand taken by him in the previous year unless factual or legal position justifies departure in the instant year. In our considered opinion, the ld. CIT(A) was not justified in refusing deduction u/s 80-IB. This ground is allowed. In the result, the appeal of the revenue is partly allowed.
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