TMI Blog2015 (11) TMI 1360X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, as the shares represented its stock in trade. As per the advice of the statutory auditors, which was duly supported by the relevant guidelines issued by the RBI as well as Accounting Standard-2 issued by the ICAI, the assessee, therefore, changed the method of valuation of stock of shares from "at cost" to "either cost or market price whichever lower" and since the new method adopted by the assessee was more proper and correct and the same was consistently followed by the assessee in the subsequent years, I am of the opinion that there was no justification on the part of the AO to reject the same merely because it had resulted in loss. CIT(A) appreciated all the relevant facts of the case in proper perspective and allowed the claim of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s adopted at cost. However, the statutory auditors during the year under consideration pointed out that the valuation of stock in trade should be adopted at cost or market price whichever is lower. Since this opinion of the auditors was based on guidelines issued by the Reserve Bank of India for non-banking finance companies as well as accounting standard issued by the Institute of Chartered Accountants of India, the assessee changed the method of valuation of stock of shares from at cost to cost or market price whichever is the lowest , which resulted into loss. This explanation offered by the assessee to justify the change in the method of valuation of stock by the assessee was not found acceptable by the AO. According to him, the meth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation of shares has been done to fall in line with the present day requirements. In the light of the above discussion and finding, after considering the facts of the case and the submissions made, I am of the considered opinion that the change in the system of valuation of shares which has been effected in this year in relation to those shares which have been appearing in the Books of the appellant under the head 'quoted shares' is as per the guidelines of the Reserve Bank of India and, accordingly, also viewed in the context of the subsequent years system of valuing the shares there being no change effected, I uphold the working of the closing stock as made out by the appellant and delete the addition of ₹ 17,34,218/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of statutory auditors, which was duly supported by the relevant RBI guidelines as well as AS- 2 issued by the ICAI. According to him, the change in the method of valuation of closing stock thus was fully justified by the assessee and since the same was consistently followed in the subsequent years, there was no justification on the part of the AO to reject the same merely because it has resulted in loss. He contended that the ld. CIT(A) has rightly accepted the change in the method of valuation of closing stock of shares as the new method adopted by the assessee is duly recognized. 6. I have considered the rival submissions and also perused the relevant material available on record. It is a basic principle for accounting that the valua ..... X X X X Extracts X X X X X X X X Extracts X X X X
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