2014 (5) TMI 618 - AT - Income Tax

Method of valuation of closing stock FIFO Held that - It has been decided in the case of the assessee for the earlier assessment year, that the assessee has been following consistent method of valuation of closing stock the method adopted has been upheld the basis of valuation of closing stock of the assessee Revenue has not been able to show as to how position has varied in the present AY - the assessee has been consistently following FIFO method for the purpose of valuation of stock thus, there is no reason to interfere in the order of the CIT(A) Decided against Revenue.

Summary

Issues: Valuation of closing stock using FIFO method vs. LIFO method.

In this case, the appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) regarding the assessment year 2009-2010. The assessee, a trader in iron and steel goods, had filed its return declaring total income. The Assessing Officer rejected the FIFO method adopted by the assessee for valuing the closing stock and made his own valuation. The Commissioner of Income Tax (Appeals) allowed the appeal of the assessee, leading to the Revenue appealing before the Tribunal. The Revenue argued that the assessee had taken an inconsistent stand on the valuation of stock. On the other hand, the assessee contended that it had consistently followed the FIFO method for stock valuation, supported by a previous Tribunal decision for the assessment year 2008-2009. The Tribunal noted that the issue of stock valuation had already been decided in favor of the assessee by a co-ordinate bench for the previous assessment year. The Tribunal found no reason to interfere with the Commissioner of Income Tax (Appeals) decision and dismissed the Revenue's appeal as lacking merit.

The main issue in this case revolved around the valuation of closing stock using the FIFO method as opposed to the LIFO method. The Revenue challenged the Commissioner of Income Tax (Appeals) decision, arguing that the assessee had taken inconsistent positions on stock valuation. The assessee, on the other hand, maintained that it had consistently followed the FIFO method and cited a previous Tribunal decision in its favor for the assessment year 2008-2009. The Tribunal, after considering the arguments from both sides, upheld the Commissioner's decision, emphasizing that the issue had already been settled in favor of the assessee for the previous assessment year. The Tribunal found no grounds to overturn the decision and dismissed the Revenue's appeal for lacking merit.