TMI Blog1989 (2) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... , which pertains to levy of interest u/ss 217 and 139(8), the learned counsel for the assessee, himself, was fair enough to say that the same is to be consequential. For the assessment year 1986-87, besides the dispute whether the company was the industrial company and dispute pertaining to interest, which action was admitted to be consequential by the learned counsel for the assessee, there are other disputes pertaining to valuation of closing stock ; sales promotion expenses ; and disallowance u/s 43-B, with which we shall be dealing separately seriatum, after we adjudicate the issue whether the company is an industrial company. 3. The learned counsel for the assessee submitted that assessee assembles diesel engines, styled asJacksonfor which different parts are purchased from different persons, which are number ten in all. He drew our attention to note claimed by the company for being considered as industrial undertaking. He submitted that assessee on one hand buys (i) engine ; (ii) alternators ; (iii) engine instrument panels ; (iv) base plate ; (v) fuel tank ; (vi) control panels ; (vii) batteries ; (viii) measuring instruments gauges ; (ix) radiators/silencers ; and other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, we find it gives details of very class and kinds of engines and alternators, procured and purchased by the assessee in the manufacture of diesel generating sets and all these engines have different capacities. The perusal of list of salaries and workers also shows that the assessee is using different components which may not be, technically speaking, raw material, but something between raw material and parts of engine, which are assembled and put together to make a diesel generating set. There is no controversy about the fact that the assessee-company purchases its alternators and engines separately from leading manufacturers, such as, Kirloskar, NGEF, Crompton Greaves, Jyoti Ltd. and Ashok Leyland etc. What the assessee assembles and manufactures through its assembling is not the same name which is assigned to the parts. The engine made by the assessee is known as diesel generating set. With this process in view and there being a separate name in the market for what the assessee makes, the assessee cannot be treated as non-industrial undertaking. When we peruse the order of the CIT (Appeals) and that of the ITO, we find that they are in error while distinguishing certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O to accept assessee's contention, regarding levy of concessional tax and its claim u/s 80-I and investment allowance. In course of discussion it was mentioned that though the assessee has mainly assembled diesel generating sets, some alternators were directly sold. In course of discussion the assessee's reply was that these were alternators which were utilised for assembling certain diesel generating sets at the place of the customers. Even this the ITO while giving effect to its order would see to it that assessee is an industrial undertaking ; is entitled to concessional rate of tax and benefit of investment allowance and 80-I, but would be at liberty to see that the percentage of trade is in conformity as warranted by the statutes. About the ground pertaining to charge of interest we have already stated above that the learned counsel for the assessee has himself admitted that the same is to be consequential after appeal effect of this order is taken into account. 4.3 Before we part with the matter we shall be failing in our duty in case we do not point out that the CIT (Appeals) in its order pertaining to assessment year 1985-86 has mentioned that he has followed the earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The learned D.R. on the other hand besides relying on the orders of the two lower authorities, submitted that if method was to be changed, it should have been for everything. 6. After taking into consideration the rival submissions and looking to the facts available on record, we are unable to uphold the finding of the CIT (Appeals). The assessee is entitled under law to adopt any method of account with regard to business activities and under the system of accounting adopted by an assessee he can also choose any method with regard to valuation of closing stock in trade. The stocks in trade at the end of the year may be valued either at cost or at market value or at lower of the two, all that is required under the law is that once the method is changed, it should be consistently followed thereafter. The assessee earlier was valuing his closing stock at cost price. Now the assessee has changed the method of valuing the closing stock at cost price or market value whichever is lower and there is no controversy about the fact that thereafter although the assessee has been consistently adopting the same. The assessee is a limited company and if some benefit is drawn in the year under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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