2011 (5) TMI 1000 - AT - Income Tax

Summary

Issues involved: The only issue involved in the appeal is the addition of Rs. 2,67,740/- to the total taxable income of the assessee u/s work in progress.

Facts and Decision:
- The assessee, a private limited company, processes art silk cloth on a job work basis.
- The AO calculated work in progress at Rs. 2,67,740/- based on certain parameters.
- The ld. CIT(A) upheld the addition, citing the decision of the Hon. Supreme Court regarding the true purpose of crediting the value of unsold stock.
- The assessee argued that the method of valuing stock was consistent and legal.
- The Tribunal referred to previous cases where similar issues were decided in favor of the assessee.
- The Tribunal concluded that the issue was covered by previous decisions and allowed the appeal filed by the assessee.

Key Points from Tribunal's Decision:
- The Tribunal highlighted that in cases where business is done on a job work basis, work-in-progress may not be applicable.
- The Tribunal emphasized the importance of consistent accounting methods and the lack of justification for disturbing such methods.
- The Tribunal referred to specific accounting principles to support the assessee's position.
- The Tribunal dismissed the Revenue's appeal based on the precedent set by previous cases.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, ruling in favor of the consistent accounting method and previous decisions supporting the assessee's position on work-in-progress valuation.