9911796707
TMI Blog2012 (5) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 questions of law have been raised:- 1.Whether on the facts and in the circumstances of the case, the Tribunal was legally justified in deleting the additions made on account of under valuation of Closing Stock which was correctly made by the Assessing Officer after recalculating cost of production? 2.Whether on the facts and in the circumstances of the case the Tribunal was legally justified in not appreciating the facts that the Assessing Officer worked out cost of production in accordance with the ratio of order of Hon'ble Supreme Court in 188 ITR 45? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee has been maintaining the account books as per the accounting standard adopted by the assessee and it is not permissible to include the interest and depreciation in the closing stock. Considered the respective submissions of the learned counsel for the parties and perused the record. A perusal of the order of Tribunal would show that there is not much discussion on the point. The Tribunal has simply relied upon its earlier order given in the case of the assessee. The Tribunal has observed that the decision in ITA No.823 and 824 (Del)/1992 and 1496 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blish 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 wherein it was held that the value of the closing stock must be the value of the opening stock in the succeeding year. In a recent decision in the case of CIT Vs. Indian National Tannery Pvt. Ltd., (2005) 278 ITR 213, the following two principles have been reiterated:- That an assessee is entitled to value the closing stock either at cost price or market price whichever is lower; and That the value of the closing stock must be the value of the opening stock in the succeeding year, i.e. an assessee cannot close his accounts and value his stock at particular figure and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermine. 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 below the cost price except where there is actual and anticipated loss. It was held that the deduction in value on the basis of international rate of the closing stock is not proper. In this case, it has considered its earlier judgment in the case of British Paints India Ltd. (supra) relied upon by the learned counsel for the department. In the case of British Paints India Ltd. (supra) the assessee was manufacturer of paints. The assessee therein, on its own showing valued the stock in trade at 84.9% representing the actual cost of the raw material. The overhead charges rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 accounting require that in the profit and loss account of a merchant's or manufacturer's business the values of the stock-in-trade at the beginning and at the end of the period covered by the account should be entered at cost or market price, whichever is the lower, although there is nothing about this in the taxing statutes........." In view of the fact that the assessee respondent is following Accounting Standard and is valuing the closing stock of finished goods and stock in process at costs, there was no justification to include the amount of interest and depreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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