TMI Blog2014 (3) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... atorily 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 advisory status of a technical body. So far as its application vis-a-vis Income tax provisions are concerned, the method of valuation by a particular method is based on commercial consideration. Any method which can give a proper computation of income for the previous year as per I.T. Law is a good method. The method of valuing the stock at "cost or market price whichever is less" has been accepted by different judicial forums and such change can be rejected only after bringing on record that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 before the Hon'ble Tribunal. 2. The assessee is an individual who is also a partner in M/s. Soham Engineering Sales and Services, a firm engaged in the business of trading and pumps. The assessee is also a whole time director of Soham Surface Coatings Pvt. Ltd., a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 such change in method of accounting especially if the change towards a more appropriate, correct and recognized method. Accordingly, the order of CIT(A) be upheld, pleaded on behalf of learned Authorized Representative. 4. After going through the rival s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 ₹ 21,88,917/-. For arriving at this conclusion, the Assessing Officer has basically tried to depend on two arguments i.e. the change has been made after following the earlier method consistently in the last many years and the change has been effected in a year in which there was a crash in the stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness 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 advisory status of a technical body. So far as its application vis-a-vis Income tax provisions are concerned, the method of valuation by a particular method is based on commercial consideration. Any method which can give a proper computation of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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