TMI Blog2006 (11) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... as the valuation of work-in-progress will not prejudice either side. Admittedly, the particular work contract was not completed and it comes under the category of work-in-progress. There is also no dispute that the ultimate liability of the assessee as regards tax will be dependant upon the total (fixed) amount received by the assessee against the particular work contract. We, therefore, hold that the income-tax authority has no option/jurisdiction to meddle in the matter either by directing the assessee to maintain its accounts in a particular manner or adopt a different method for valuing the work-in-progress. We reiterate the decision in Doom Dooma India Ltd.[ 1992 (12) TMI 41 - GAUHATI HIGH COURT] and hold that an assessee has as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided therein. The assessing authority issued a notice under section 143(2) of the Act and thereafter completed the assessment holding-inter alia, that the submissions made by the assessee are not acceptable. The assessing authority held, inter alia : The assessee has debited all the expenses inquired in respect of the work-in-progress account, when the work has progressed and all expenses have been debited, there is no reason why profit should not be determined on the basis of the entire work-in-progress. If in the process the assessee had derived profit then the same should be assessed as income. Similarly, if in the process, the assessee incurs loss the same will also have to be considered. There is no question of deferment. The c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of the case, the Tribunal was right in not accepting the valuation of closing work-in-progress in accordance with accounting standard (AS-7) as laid down by the Institute of Chartered Accountants of India and to work out the profit on the basis of the accounts maintained ? 7. Learned counsel for the appellant has produced before us the text of accounting standard AS-7 issued by the Institute of Chartered Accountants of India. It shows that this system was introduced in the year 1983 and it was made mandatory in the year 1990. There is no dispute at the Bar that this accounting system is an approved system of maintenance of accounts applicable to construction works contract. Sri Bhuyan learned counsel for the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deems reasonable and appropriate. He may opt to adopt the manufacturing cost price method or the market price method provided the method is followed in regard to both the open ing stock and the closing stock. It is not open to him to adopt one method for valuing the opening stock and a different method for valuing the closing stock so as to intentionally suppress the income derived or derivable in the particular previous year. Even where an assessee has adopted a particular method for a period of years, there is no provision of law which prevents him from changing to any other method, provided the change-over is not made in the same assess ment year. The proviso to sub-section (1) empowers the Assessing Officer to compute the income on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the view that he should have adopted a different method of keeping account or of valuation. The method of accounting regularly employed may be discarded only if in the opinion of the taxing authorities income of the trade cannot be properly deduced therefrom. Valuation of stock at cost is one of the recognized methods. No inference may, therefore, arise from the employment by the company of the method of valuing stock at cost, that the stock valued was not stock-in-trade. 12. As stated above, the accounting system AS-7 is an approved system of accounting by the Institute of Chartered Accountants of India and as such the authenticity of the said accounting system is not under challenge. The assessee-firm/appellant being a private Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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