2002 (10) TMI 73 - HC - Income Tax

(1) Whether, Tribunal was right in law and had enough materials to hold that the fair market value of the closing stock of jewellery as on the date of retirement of partner, Shri G. Mahalakslimi Ammal, has to be adopted on the basis of wholesale rate and further deduction of 10-15 per cent. has to be allowed in respect of wastage as against the actual market rate quoted on the date of retirement? - (2) Whether, Tribunal was right in law and had enough materials to hold that the original assessment order was neither erroneous nor prejudicial to the interests of the Revenue? - (3) Whether, Tribunal was right in law in holding that the Commissioner of Income-tax was not justified in initiating revisionary proceedings under section 263 and setting aside the original assessment order? - In the absence of any finding that there is loss of revenue, interference under section 263 was not justified. Questions Nos. 2 and 3 are answered in favour of the assessee and against the Revenue. - As regards the first question, it is returned unanswered as we do not have proper material before us that question being essentially one of fact.

Summary

The High Court of Madras ruled in favor of the assessee in a case concerning the valuation of closing stock of jewelry upon a partner's retirement. The court found that the original assessment order was not erroneous or prejudicial to the Revenue's interests. The Commissioner's decision to initiate revisionary proceedings was deemed unjustified. The court highlighted that the deductions made by the assessee were justified due to impurities and change of fashion, and there was no evidence of loss of revenue. The first question regarding the fair market value of the closing stock remained unanswered due to insufficient material.