TMI Blog1966 (5) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... of the opening stock ? " The brief facts relevant to answering this question are that the assessment year in respect of which this reference has 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court in the case of Ramswarup Bengalimal v. Commissioner of Income-tax. In that case also, the question that came up for consideration related to 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 pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, was valued at cost, and that method of valuation has now been permitted by the income-tax authorities, and has become final so far as these proceedings 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 assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the unsold pieces were again valued at the market rate of Rs. 8-8-0 a piece. Their Lordships held that the income-tax authorities were right in holding 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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