2012 (4) TMI 652 - AT - Income Tax

Summary

Issues Involved:
The judgment involves the issue of confirming an addition on account of work-in-progress for the assessment year 2006-07.

Details of the Judgment:

Issue 1: Addition on Account of Work-in-Progress
- The assessee, engaged in job work of dyeing fabrics, challenged the disallowance of the claim for closing stock of work-in-progress.
- The assessee argued that the valuation method of work-in-progress at cost or market value, whichever is lower, was consistently followed.
- It was emphasized that until the job work was completed, no payment was received from the parties, and thus, no valuation could be attached to work-in-progress.
- The appellant provided confirmation letters from parties assigning job work and highlighted discrepancies in the valuation method used by the Assessing Officer.
- The Tribunal referred to a similar case where the addition on account of work-in-progress was deleted, supporting the appellant's argument.
- Following the precedent, the Tribunal allowed the appeal and directed the deletion of the addition made on account of work-in-progress.

Conclusion:
The Tribunal allowed the appeal of the assessee and directed the Assessing Officer to delete the addition on account of work-in-progress, in line with the consistent valuation method followed by the appellant.