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2018 (11) TMI 505 - AT - Income TaxAddition towards the value of closing stock of land - value of closing stock of land determined by the Ld.AO at ₹ 53,03,690/-, which was not disclosed by the assessee in her return of income - Held that:- When the assessee had incurred expenditure towards development of the land, definitely it is only with a view for bringing the land to marketable conditions. However we find that the Ld.Revenue Authorities had estimated the value of the land at ₹ 345 per sq.ft., being the sale price of the land sold in the earlier instance and also included the development cost of ₹ 153.41 per sq.ft.. No merit in the same. The sale value of the land will fluctuate from one plot to another due to various reasons. Therefore the earlier sale value of the land cannot be taken as a decisive factor to estimate the value of land that remains to be sold viz., the closing stock of land. Further when the development cost is also added to the earlier sale price of the land then the value of land becomes inflated. According to prudent accounting principles which is generally accepted is to value the closing stock at cost or market price whichever is less. In this situation, in the case of the assessee, it would be appropriate to value the closing stock of land based on the market value determined by the State Government Authorities in the Revenue records. Hence we hereby direct the AO to value the closing stock of land as per the market value stated in the Revenue records of the State Government Authorities or the actual cost of the land including development charges whichever is less.
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