TMI Blog2009 (1) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... certain estimate. - It has come on record that the assessee has valued the inventories such as nut, bolt, glass fuse, bearing bushes, lock pin, pipe, screw etc., which were rusted non-moving and unusable on account of obsolescence/damage/deterioration by efflux of lime at cost and net realization value, whichever is lower. - It is also not disputed before this court that the assessee had made the requisite efforts to dispose of the same. – Decided in favor of assessee - 105 of 2007 - - - Dated:- 14-1-2009 - A. M. KAPADIA and SANGEET LODHA JJ. K. K. Bissa for the appellant. Anjay Kothari for the respondent. JUDGMENT 1. This appeal under section 260A of the Income-tax Act, 1961 (for short "the Act of 1961" hereinafter), is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the amount of Rs. 68,59,108 written off as obsolete stocks claimed in profit and loss account under the head of "Plant and machinery repairs" was disallowed by the Assessing Officer and the same was added to the income of the assessee. 3. On appeal by the assessee, the Commissioner of Income-tax (Appeals) on the basis of the material on record arrived at the finding that most of the stock inventories which were treated as obsolete were either sold or consumed by March 31, 2004. From the details furnished by the assessee, the Commissioner of Income-tax (Appeals) found that on the sale of written down value of store inventories of Rs. 2.05 lakhs the assessee had made a profit of Rs. 1.41 lakhs. The Commissioner of Income-tax (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and spirit, and the provisions of the section 145A of the Income-tax Act ?" 6. It is contended by the learned counsel for the Revenue that the learned Income-tax Appellate Tribunal has grossly erred in law as well as in facts while holding that the revised AS-2 issued by the ICAI is mandatory for chartered accountants for finalisation of accounts but it is not mandatory for the Department. It is submitted by the learned counsel that since the assessee has valued its stores/inventories on the cost or market price, whichever is less, therefore, it cannot be now valued on realisation value. That apart, it is submitted by the learned counsel that the assessee has valued thousands of items at 5 per cent. of the cost irrespective of the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aforesaid factual position, the valuation of the stores at 10 per cent. of the cost made by the Commissioner of Income-tax (Appeals) confirmed by the Income-tax Appellate Tribunal cannot be faulted with and no substantial question of law arises for consideration of this court. 8. We have considered the rival submissions, and perused the impugned order and other material available on record. 9. As per the provisions of section 145A of the Act of 1961, the income from business under the head "Profits and gains from business" has to be computed in accordance with method of accounting regularly employed by the assessee. Similarly, section 145A of the Act of 1961 provides that the inventory shall be valued in accordance with the method ..... X X X X Extracts X X X X X X X X Extracts X X X X
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