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Issues involved:
1. Change in method of valuation of closing stock 2. Treatment of cash payments for medical expenses Change in method of valuation of closing stock: The case involved a scheduled bank incorporated in the United Kingdom with branches in India, claiming a change in the method of valuation of closing stock for the assessment year 1968-69. The bank sought to value the closing stock at the lower of market value or cost, reducing assessable profit by Rs. 2,06,452. The Income Tax Officer (ITO) initially rejected this claim, but the Appellate Assistant Commissioner (AAC) allowed the change in valuation method. The Tribunal also ruled in favor of the bank, leading to the Revenue challenging the decision. The Revenue argued that there was no actual change in the method of accounting as the shares were consistently shown as capital assets. However, the Tribunal found that the bank's valuation method was bona fide, consistent, and well-known in accounting practices. Citing various legal precedents, the High Court upheld the Tribunal's decision, concluding that there was no error of law in the Tribunal's approach. Treatment of cash payments for medical expenses: Regarding the treatment of cash payments for medical expenses of employees, the Tribunal's decision was influenced by a previous judgment related to a similar issue. The High Court referred to the case of Indian Leaf Tobacco Development Co. Ltd. v. CIT [1982] 137 ITR 827 (Cal), where it was established that such cash payments should not be included in the value of benefit, amenity, or perquisite for the purpose of disallowance under specific sections of the Income-tax Act, 1961. Following this precedent, the High Court answered this question in the affirmative and in favor of the assessee. Separate Judgment: A separate judgment was delivered by SABYASACHI MUKHARJI J., who agreed with the conclusions reached in the main judgment.
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