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2015 (11) TMI 1294 - ITAT DELHI

2015 (11) TMI 1294 - ITAT DELHI - TMI - Addition on account of valuation of closing stock by following FIFO method - Held that:- The Assessing Officer made addition on account of valuation of closing stock by following FIFO method which is one of the accepted methods of valuation of closing stock. The appellant had adopted inconsistent stand, on one hand he submits that he was following FIFO method, and on the other hand he submits that he followed weighted average cost method. In the Tax Audit .....

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ad miserably failed to demonstrate before us that it was following continuously weighted average cost method for the purpose of valuation, we have no option but to confirm the action of the Assessing Officer in this regard. - Decided against assessee - ITA No. 2647/Del/2013 - Dated:- 2-9-2015 - SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER For The Appellant : Sh. Rajiv Saxena & Sumangla Saxena, Advocates For The Respondent : Sh. Ravi Jain, CIT-DR ORDER PER INTU .....

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,64,195/- and has further erred in not appreciating the WEIGHTED AVERAGE METHOD adopted for valuing of Closing Stock by the appellant. 2.2 The Lower Authorities has erred in not appreciating that the appellant has been valuing the Closing Stock at WEIGHTED AVERAGE METHOD and following this method consistently in the preceding and succeeding years and has further erred in making the impugned addition without pointing out any defect in the method of valuation of Closing Stock consistently followed .....

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company is engaged in business of manufacturing and sale of gold and silver ornaments. The return of income was filed for the assessment year 2009-10 on 29.09.2009, disclosing loss of ₹ 1,98,806/-. The case was selected for scrutiny assessment and finally the assessment was completed under section 143(3) of the Income-tax Act, 1961 (for short the Act ) at a total income of ₹ 11,65,390/- vide order dated 28.12.2011. The disparity between the returned income and the assessed income is .....

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is reproduce below: 5. I have carefully considered the submissions made by the Ld AR and have gone through the assessment order. It is observed that the appellant company has valued its closing stock by adopting weighted average method. The submission made by the Ld AR is same as made before the AO. The AO while making the addition has made the following observation in Para 6 of her assessment order. I have considered the reply of assessee. In his reply, the assessee has submitted that he is ad .....

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d of valuation of closing stock has been followed by the assessee, the auditor is silent on that point. Further, as per the general market practice and trend, FIFO method must be employed to evaluate the correct value of stock, therefore on the basis of given facts and circumstances, the submission of the assessee is not found to be enable, hence rejected. In view of the facts as discussed above, the value of closing stock is considered at ₹ 12106107/- in place of ₹ 10741912/- (as di .....

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g stock by adopting weighted average method whereas on the other hand it's claimed to value its stock on FIFO method. Further, the tax auditors of the appellant company in clause 12(a) of the tax audit report have not mentioned any method which has been followed by the assessee for the valuation of closing stock. The accounting standard 2 of the ICAI prescribes FIFO method to be employed to evaluate the correct value of stock. This accounting standard is being followed as general practise. I .....

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