TMI Blog1988 (3) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... with the closing stock when it wants to adopt the method known as 'works cost' method for the assessment year 1979-80 ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding that the guarantee commission constitutes revenue expenditure ? " We may dispose of the second question first, since it is represented that it is covered by the decision of this court in favour of the assessee, viz., Addl. CIT v. Akkamba Textiles Limited [1979] 117 ITR 294. Having regard to this representation, we answer the second question in the affirmative, i.e., in favour of the assessee and against the Revenue. So far as the first question is concerned, a few facts may be noticed The assessee was valuing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of the " works cost " method. The Income-tax Officer replied in the affirmative. While thus recording a finding that the assessee did not change its method of valuation of closing stock for any ulterior purpose or for reducing income for income-tax purposes, the Commissioner directed that the opening stock of the relevant accounting year should also be valued on the same "works cost" basis and the difference reckoned after the opening stock was revalued should be added. The assessee objected to the direction of the Commissioner of Incometax by filing an appeal before the Tribunal, and submitted that where, on an investigation and inquiry, the Revenue authorities are satisfied that the change in the method of valuation of closing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of the Commissioner of Income-tax to revalue the opening stock also on the same basis was uncalled for. The Commissioner felt aggrieved by the decision of the Tribunal and sought for the present reference and that is how question No. 1 was referred to this court. We have not the slightest doubt that the view of the Tribunal was correct. In the face of the finding that the change adopted by the assessee was for bona fide purposes and was not actuated by considerations of reducing the income for income-tax purposes, the Revenue has no right to interfere with the change in the method of valuation of the closing stock. The Tribunal had referred to a long list of cases supporting the above view and we are in entire agreement with the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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