TMI Blog1973 (11) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... wrong appreciation of the law and practice of valuation of closing stock ? 2. Was there any material on which the Tribunal could hold that the closing stock must necessarily include the customs duties and incidental charges ? 3. Was the Tribunal justified in law in holding that on no account the opening stock could be revalued to make it consistent with the system adopted for valution of closing stock ? 4. Was there any evidence on which the Tribunal could hold that the credit of pound 607 12s. 6d. has in fact been given by the foreign party from whom the purchases had been made even though the said party had reversed the entry in the statement of account submitted to the assessee ? 5. Was the Tribunal justified in law in valuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents and other materials had given a credit for pound 607 12s. 6d. in a statement of account sent by them to the assessee which had not been accounted for in the assessee's books. The Income-tax Officer, therefore, asked the assessee-company to explain the above two discrepancies. The assessee claimed that the closing stock of the imported items was valued at invoice cost plus appropriate customs duty and other charges thereon as at the close of the year ending on December 31, 1959, on an ad hoc basis and the same was brought forward as the opening stock on January 1, 1960. This was done on the suggestion of the auditors, who had made a remark to this effect in the balance-sheet. As the imported components and other materials were too nu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of closing stock would be just. Out of Rs. 1,00,000, he apportioned Rs. 40,000 towards the under-valuation of the closing stock. The addition of the balance of Rs. 60,000 was also confirmed on the ground that all the credits on account of the purchases had not been accounted for. He, however, stated that the book results were not being rejected on the basis that the gross profit disclosed or the turnover returned did not compare favourably with either the past results or with other similar businesses. In second appeal, the Income-tax Appellate Tribunal confirmed the decision of the Appellate Assistant Commissioner in respect of the under-valuation of the closing stock. The Tribunal observed that both the opening stock and the closing sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d should, according to him, be the one that would be most appropriate on the facts and in the circumstances of a particular case. In the present case, there is no controversy about the principle that the opening stock cannot be valued in a manner different from the valuation of the closing stock. Both have to be valued on the basis of the same principle. The opening stock for the year under reference was loaded with the value of the proportionate costs of customs duty, freight and handling charges. The closing stock did not have such an addition made to it. In order to bring the two on the same level, it was necessary to disturb the valuation either of the opening stock or of the closing stock. The Tribunal preferred to disturb the closi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal on behalf of the assessee was to deduct the sum of Rs. 40,000 from the purchases. There was no suggestion to make a suitable deduction from out of the value of the opening stock, as now suggested and as envisaged in question No. 3. The Tribunal has not applied its mind to the suggestion of a deduction from the opening stock and has said nothing about this in its order. Question No. 3, as reproduced above, therefore, cannot be said to arise out of the order of the Tribunal. Realising this difficulty, Mr. Karkhanis contended that reference of question No. 2 would be sufficient for his purpose. We are afraid, question No. 2 does not arise in the case. Mr. Karkhanis agrees that the opening stock includes customs duty and incident ..... X X X X Extracts X X X X X X X X Extracts X X X X
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