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TMI Blog2014 (3) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... ing stock of shares by change in method of valuation. 2. On the facts and in the circumstances of the case and in law, the Learned CIT(A)-I, Pune has erred in not considering the fact that accounting standard AS-2 is silent as far as valuation of shares and securities is concerned and the assessee should have followed the method of valuation consistently which has been followed by the assessee from the beginning 3. For these and such other grounds as may be urged at the time of hearing, the order of the Ld. Commissioner of Income-tax(Appeals) may be vacated and that of the Assessing officer be restored. 4. The appellant craves to add, amend, alter or delete any of the above ground of appeal during the course of appellate proceedings b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of CIT(A) and submitted that the Assessing Officer erred in adding Rs. 21,88,917/- on account of alleged understatement of closing stock of shares by change in method of valuation from at cost to at cost or market value whichever is lower. The Assessing Officer erred in not appreciating that the method of valuing stock at cost or market value whichever is lower is more appropriate and universally adopted as against valuation of stock / inventory at cost, Accounting Standard (AS-2) valuation of inventories also mandatorily provides that cost or market price whichever is lower is the correct method for valuing inventories. The assessee is entitled to make a bonafide change in method of valuation of stock and department should not reject suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ethod is being followed regularly. The CIT(A) found it undisputed that the method adopted by the assessee in the assessment under consideration has been universally acknowledged to be a more prudent and reasonable method of valuation of closing stock and even the Assessing Officer has not stated in the assessment order that the changed method is not a proper method. The rejection of the change is primarily based on the assumption that the same has not been driven by bonafide reasons because it was stated by Assessing Officer to have been done in the year when the stock market has crashed and the change in the method of valuation of closing stock was resulting into a lowering of profit by Rs. 21,88,917/-. For arriving at this conclusion, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, it is a settled fact that section 145 of I.T. Act deals with method of accounting and this section has been substituted by the Finance Act, 1995 w.e.f. 01.04.1997 and thereafter sec. 145(1) mandates that the income chargeable under the head business and profession or income from other sources has to be computed either under the cash method or mercantile system of accounting. Sub-section (2) mandates the Central Government to notify in the Official Gazette, the Accounting Standards which are mandatorily required to be followed by any class of assessee or in respect of any class of income. The Central Government has so far notified only AS-1 and AS-2 and other Accounting Standards issued by the Institute of Chartered Accountants, has only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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