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2016 (6) TMI 897 - GUJARAT HIGH COURT

2016 (6) TMI 897 - GUJARAT HIGH COURT - TMI - Application of AS-2 of ICAI in valuation of the inventories of the damaged goods - ITAT held that the entire loss or difference in valuation will not be allowable in the year under consideration - Held that:- Learned Counsel for the respondent has taken us to the evidence and contended that the appellant Company had gone into liquidation and therefore, the Tribunal has not committed any error in arriving at the conclusion as stated above. We have .....

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Tax Appeal No.136/2002, the Appellant - Company has challenged the common judgment and order dated 27.08.2001 of the Income Tax Appellate Tribunal, Ahmedabad Bench C in ITA No.3834/Ahd/1992 whereas Tax Appeal No.138/2002 is preferred by the Appellant against the above cited order in ITA No.3614/Ahd/1992 for the Assessment Year 1977-1978. 2. On 20.03.2002, the following questions were framed for consideration by this Court in both the Appeals :- Has the Tribunal erred in law and on the facts of t .....

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at the ITAT failed to appreciate that because of 'MAOCARO' [Manufacturing and Other Companies (Auditor's Report) Order, 1975] the company had to resort to the physical inventory in the Assessment Year 1977-78 for the first time and in the process, came to know of the substandard and damaged portion of the closing stock and therefore, in the circumstances the market value came to be taken. It is further contended that the ITAT failed to appreciate that there is no justification in law .....

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under:- 6. Having regard to the aforesaid factual position as well as of legal position, we are of the opinion that no substantial question of law arises for consideration. We may, however, discuss one argument addressed by the learned counsel for the Department. It is submitted that even as per AS-2, the travelling cost was to be included in the cost of inventories. The learned counsel referred to paragraph 6 of AS-2 which reads as under :- 6. The cost of inventories should comprise all costs .....

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elling which is to be included while computing the cost of inventories and indirect cost is not to be added. Paragraph 13 reads as under : 13. Exclusions from the cost of inventories. - In determining, the cost of inventories in accordance with paragraph 6, it is appropriate to exclude certain costs and recognize them as expenses in the period in which they are incurred. Example of such costs are : (a) abnormal amounts of wasted materials, labour, or other production costs ; (b) storage costs, u .....

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