TMI Blog2012 (5) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... not disclosed – against revenue. - INCOME TAX APPEAL DEFECTIVE No. - 115 of 2001 - - - Dated:- 24-4-2012 - Ashok Bhushan, Prakash Krishna, JJ. Petitioner Counsel :- A.N. Mahajan,B.J.Agarwal Respondent Counsel :- Piyush Agarwal Heard Sri Shambhu Chopra, learned counsel for the department in support of the appeal and Sri Piyush Agrawal, learned counsel for the respondent assessee. The present appeal has been filed against the order dated 18th of January, 2011 passed by the Income Tax Appellate Tribunal in ITA No.5611/Del/95 connected with ITA No.5584/Del/95 both relating to the assessment year 1992-93 whereby the Tribunal has allowed the assessee's appeal in part. In the memo of appeal, the following substantial questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmed the assessment order so far as the closing stock is concerned. The matter was carried further in appeal before the Tribunal and the Tribunal by the order under appeal has granted the relief and deleted the addition made in the closing stock. Sri Shambhu Chopra, learned counsel for the department has placed reliance upon a judgement of the Apex Court in Commissioner of Income Tax Vs. British Paints India Ltd., (1999) 188 ITR 44. He submits that in view of judgment of Apex Court in CIT Vs. British Paints India Ltd. (supra) the valuation of closing stock was not properly done by the assessee and the Assessing Officer was justified in making the additions therein. In contra, the learned counsel for the assessee submits that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is not following the Accounting Standard or the true income has not been worked out. Our Court in the case of Ram Swarup Bengalimal Vs. CIT, (1954) 25 ITR 17 has held that when an assessee has been valuing the closing stock at cost price for several years in the past and in the relevant accounting year he values a stock at the market price and it is found that it is lower than the cost, it cannot be inferred therefrom that he is changing his method of valuation. If the Income Tax Department alleges that the assessee has changed his method it is apt to establish that in any of the preceding year the market price was less than the cost price. The said decision has been followed in Ram Luxman Sugar Mills Vs. CIT, (1967) 63 ITR 51 wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable in judging whether there has been income or not, but, in every case, it must be applied with care and within recognized limits. (5) Whether the income has really accrued or arisen to the assessee must be judged in the light of the reality of the situation. (6) Under section 145 of the Act, in a case where accounts are correct and complete but the method employed is such that in the opinion of the Income-tax Officer, the income cannot be properly deduced therefrom, the computation shall be made in such manner and on such basis as the Income-tax Officer may determine. In Commissioner of Income-tax, Udaipur Vs. M/s. Hindustan Zinc Ltd., (2007) 291 ITR 391 the Apex Court has held that ordinarily good should not be written down bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on places have always to be kept in mind. In the first place, the profits of any particular year or accounting period must be taken to consist of the difference between the receipts from the trade or business during such year or accounting period and the expenditure laid out to earn those receipts. In the second place, the account of profit and loss to be made up for the purpose of ascertaining that difference must be framed consistently with the ordinary principles of commercial accounting, so far as applicable, and in conformity with the rules of the Income-tax Act, or of that Act as modified by the provisions and schedules of the Acts regulating excess profits duty, as the case may be. For example, the ordinary principles of commercial a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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