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Issues:
1. Whether the Appellate Tribunal was correct in upholding the deletion of additions made by the Income-tax Officer towards the Molasses Storage Fund by the assessee. 2. Whether the Appellate Tribunal was correct in directing the Income-tax Officer to allow the deduction claimed by the assessee for the difference in stock valuation. Analysis: Issue 1: The case involved the assessment years 1978-79 and 1979-80 where the assessee credited amounts to the Molasses Storage Fund for erecting storage facilities as per government orders. The Commissioner (Appeals) and the Appellate Tribunal held that these amounts did not constitute income as they were diverted by statutory orders. The court cited a previous case supporting this view and ruled in favor of the assessee, upholding the deletion of additions to the Molasses Storage Fund. Issue 2: A sum of Rs. 8,03,130 was disallowed by the assessing authority for the assessment year 1978-79 due to a change in stock valuation method. The assessing authority disallowed the claim, but the Commissioner (Appeals) and the Appellate Tribunal accepted the change as bona fide and in compliance with statutory requirements. The new valuation method was found to reflect the true income of the assessee, leading to a reduction in book value. The court emphasized the importance of reflecting real income and upheld the decision to allow the deduction claimed by the assessee for the difference in stock valuation. The court highlighted the discretion of the Income-tax Officer to determine the true income based on the method of accounting adopted by the assessee. It was noted that the method should reflect the real income, and the stock should normally be valued at cost. The court referenced a Supreme Court case emphasizing the duty of the assessing officer to ensure that the books disclose the true state of accounts. In this case, the Appellate Tribunal found the new valuation method to be reasonable and reflective of the true income, thus ruling against the Revenue's contention. The court did not find it necessary to consider another case cited by the assessee, ultimately answering both questions against the Revenue. In conclusion, the court ruled in favor of the assessee on both issues, emphasizing the importance of reflecting true income and the reasonableness of the new valuation method adopted by the assessee.
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