9911796707
TMI Blog1985 (10) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... p; Rs. 1973-74 2,74,764 1974-75 1,70,035 &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcept for what the assessee considered as obsolete stock. The Commissioner (Appeals) accepted the assessee's submission that the reason for obsolescence could be design modification, quality improvement, discontinuation of products and models, cost reduction and the like. He pointed out that up to the assessment year 1972-73 the assessee had not made any attempt to identify such obsolete stock probably because there was only a steady growth in the turnover of the company and probably obsolete items lying in closing stock were not very substantial. Even so, the Commissioner (Appeals) found that the assessee had been making a reserve for obsolescence right from the assessment year 1968-69 with the exception of 1969-70 and that various amounts had been transferred to the reserve for inventory of obsolescence, though the amounts transferred to the reserve were always offered for taxation. The Commissioner (Appeals) noticed that there were as many as 30 models of air compressors and over 125 models of pneumatic tools manufactured by the assessee and that these compressors and pneumatic tools are tailor-made to meet the requirements of the consumers. The Commissioner (Appeals) pointed ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f its customer service. The Commissioner (Appeals) found that from the assessment year 1975-76 the method followed by the assessee was to identify the stocks which were of little use or no use and thereafter write off their value in the books. The Commissioner (Appeals) held that no serious exception can be taken to this procedure though the assessee has not made any attempt of finding out the scrap value of such stock, because once the scrap value is determined, the stock that has been considered as obsolete, will have to be kept separately and when the same has been sold the scrap value will have to be adjusted from the sale proceeds. He pointed out that this would involve avoidable labour and also maintenance of list of obsolete stock. The Commissioner (Appeals) was of the opinion that there cannot be any serious objection to an assessee changing the method of valuation of closing stock, if such change in the method is a bona fide change and has been followed consistently thereafter, and that in the present case it is even doubtful whether there has been a change in the method of valuation of closing stock. According to the Commissioner (Appeals), what the assessee has been doin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders and has again come up in appeal to the Tribunal. 7. We have heard Shri D.A. Kamat, the learned departmental representative, and Shri S.E. Dastur, the learned counsel for the assessee, and carefully considered their submissions. In our view the decision of the Commissioner (Appeals) is right and does not call for any interference at our hands. We are unable to agree with the revenue that the Commissioner (Appeals) had not examined the case in the light of the directions given by the Tribunal in the earlier order dated 17-5-1978. Apart from making a general submission, the revenue was unable to pin-point in what respect or aspect the Commissioner (Appeals) failed to follow the directions given by the Tribunal. On the contrary, a perusal of the entire order of the Commissioner (Appeals) from paragraph 2 to paragraph 2.6 would show that the Commissioner (Appeals) had applied his mind to every aspect of the case that has been pointed out by the Tribunal while remanding the case for the assessment year 1973-74. We have not burdened this order with the submissions urged on behalf of the assessee before the Commissioner (Appeals) which are set out in great detail in sub-paragraphs 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not based on any material, but on mere surmises and conjectures. 8. We are also unable to accept the contention of the revenue that the Commissioner (Appeals) has not applied his mind to the last aspect stated by the Tribunal in paragraph 26 of their order, namely, whether the entire claim of loss was allowable in the assessment year 1973-74 as it may pertain to stock which had become obsolete in the earlier years. This argument of the revenue overlooks the fact that the Commissioner (Appeals) had relied upon two decisions of the Madras High Court in the case of K. Mohammad Adam Sahib v. CIT [1965] 56 ITR 360 and in India Motor Parts & Accessories (P.) Ltd. v. CIT [1966] 60 ITR 531. Apart from these decisions, the following decisions relied upon by the learned counsel for the assessee, Shri Dastur, also support the assessee's case. 9. The first decision is of Indo-Commercial Bank Ltd. v. CIT [1962] 44 ITR 22 (Mad.). In this case it was held that the method an assessee adopted for valuing his closing stock was a 'method of accounting', within the meaning of section 13 of the Indian Income-tax Act, 1922, and that at any rate it was an integral part of the mercantile system of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
