TMI Blog1993 (3) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... e said amount? 2. This reference arises out of the income-tax assessment of Delta Plantation Ltd., which was formerly known as Khari Katia Tea Estates (P.) Ltd. for the assessment year 1982-83 corresponding to the previous year being calendar year 1981. The main source of income of the assessee-company during the relevant previous year was cultivation, manufacture and sale of tea. The assessee-company used to value its closing stock of tea at the end of each year at selling price. From the calendar year 1981, the assessee-company decided to change its basis of valuation of stock of tea and start valuing it at 'since realised' or the 'estimated realisable value'. It was explained to the ITO in the course of assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the ITO and confirmed the disallowance of ₹ 4,46,180 added by the ITO. 4. On further appeal before the Tribunal, it was, inter alia, contended that the change in the method of stock valuation cannot be disallowed merely because it results in loss to the revenue. The Tribunal found that there could be no effective loss of revenue on account of change in the system of stock valuation since the closing stock of one year is necessarily the opening stock of another year. The Tribunal also found that this system of valuing the closing stock of tea is a recognised practice followed in the tea industry and accepted by the Tribunal in a number of cases. The Tribunal, therefore, reversed the order of the ITO as well as of the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in tea companies, it is a recognised practice to bring stock of tea into account at the prices realised subsequent to the balance sheet date, less only selling costs. By this means, the whole of the profit is shown in the period in which the crop is reaped. It is further stated that this method of stock valuation has come to be accepted as customary in the tea industry. 8. In this case the assessee-company has changed its method of stock valuation of tea from selling price to 'since realised' and/or 'estimated realisable value', which is nothing but net realisable value. This method of stock valuation is customarily followed in the entire tea industry as found by the Tribunal. This method is also recognised by the Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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