9911796707
TMI Blog1966 (5) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... been made to this court is the year 1949-50 for which the relevant previous year ended on the 30th September, 1948, and began on the 1st of October, 1947. The dispute relates to the valuation of the opening stock of sugar. For the earlier assessment year 1948-49, for which the relevant previous year closed on the 30th September, 1947, the closing stock of sugar was valued by the assessee at market rate at a figure of Rs. 5,09,974. The same amount was shown as value of the opening stock in the relevant previous year now in question on the 1st October, 1947. For the purpose of computing the profits for the assessment year now in question, the assessee chose to value his closing stock at the end of the previous year on September 30, 1948, at c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the method of valuation of opening and closing stocks. This court held : " Two principles have now become well settled : (1) that the assessee is entitled to value the closing stock either at cost price or market value, whichever is lower, and (2) that the value of closing stock must be the value of opening stock in the succeeding year, that is, an assessee cannot close his accounts and value his stock at a particular figure and the next morning on the first day of the next year he cannot value it at a different figure. " In the present case, the assessee followed the second of these two principles enunciated in that case. The closing stock on the 30th September, 1947, was valued at the market rate at the figure of Rs. 5,09,874, and the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs are concerned. It was urged that, if the closing stock is allowed to be valued at cost, it should be permissible to the department to revalue the opening stock and calculate its value at the same rate at which the closing stock is being valued. His submission was that for purposes of calculation of profit the rate which is to be applied must be the same for both the opening stock and the closing stock. We do not think that there is any such principle in law which is necessarily enforceable. On the other hand, in the case cited above, it was already recognised by this court that an assessee has a right to value his stock at market price or cost price whichever is lower if he desires to do so. This principle was also recognised by the Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that " while the valuation of the unsold stock at the end of each year at market rate which was less than cost was accepted, the valuation of the unsold goods carried over as opening stock of 1922 at Rs. 6 a piece consistently with their valuation as the closing stock of 1921 was insisted upon in order to rectify the distorted picture of the trading results of 1921 which were not correctly reflected in the accounts by reason of the assessee having adopted the lower market rate instead of cost as the value of the closing stock in 1921. " They further held that " if the market rate had risen to, say, Rs. 15 instead of to Rs. 8-8-0 a piece at the end of 1922, then, on the principles indicated above, it would have been open to the assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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