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TMI Blog2015 (12) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... is of the doctrine of consistency in relation to method of calculation of inventory as also the decision of the jurisdictional High Court in assessee's own case, recorded findings in favour of the assessee. - ITA No. 165 of 2014 (O&M) - - - Dated:- 8-9-2015 - MR. AJAY KUMAR MITTAL AND MR. RAMENDRA JAIN, JJ. For The Appellant : Mr. Yogesh Putney, Advocate For The Respondent : Ms. Radhika Suri, Senior Advoate with Ms. Rinku Dahiya, Advocate AJAY KUMAR MITTAL, J. 1. This appeal has been filed by the revenue under Section 260A of the Income Tax Act, 1961 (in short the Act ) against the order dated 23.9.2013 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Chandigarh Bench B , Chandigarh (hereinafter referred to as the Tribunal ) in ITA No. 705/CHD/2013 for the assessment year 2009- 10, claiming the following substantial question of law:- Whether on the facts and circumstances of the case, the Ld. ITAT was right in deleting the addition made u/s 145(3) at ₹ 58,28,390/- on account of valuation of closing stock by ignoring the fact that invoking of provisions of Section 145(3) were validly invoked as the assessee had valued the closing stock o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Income-Tax v. British Paints India Ltd. (1991) 188 ITR 44 in support of his contention. 4. Controverting the aforesaid submission, learned counsel for the assessee-respondent submitted that the Tribunal had recorded a finding of fact that the assessee had been following the LIFO method for earlier years as well and in such a situation, there was no occasion to deviate from the method of accountancy being followed by the assessee. The Assessing Officer has failed to show that the true value could not be determined except to urge so. Reference was made to the following judgments:- I. United Commercial Bank v. Commissioner of Income Tax (1999) 240 ITR 355 (SC); II. Commissioner of Income-Tax v. Sant Ram Mangat Ram (2005) 275 ITR 312 (P H); 5. After hearing learned counsel for the parties, we do not find any merit in the appeal. The assessee is engaged in the business of sale and purchase of jewellery. The Tribunal had noticed that the assessee was following LIFO method for valuing its closing stock from year to year which is one of the prescribed methods of accounting standards issued by the Institute of Chartered Accountants of India for valuation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was not found acceptable by the AO. The AO referred to A.S.-2, that specifies of only three methods of determining the cost of inventories i.e. specific identification method, FIFO and Weighted average cost method. The AO made an addition of ₹ 32,08,977/- following the weighted average cost method of the closing stock. The ld. CIT(A), on appreciation of the case laws and submissions filed before her, gave her findings in para 5.2 of the appellate order, which are reproduced hereunder:- 5.2. I have carefully considered the submissions filed by the appellant, it was informed that the AO has accepted the calculation error in the closing stock valuation and has rectified the same by passing order u/s 154 dated 30.06.2010 vide which the difference in stock stand reduced from ₹ 32,08,977/- to see that during the A.Y. 2003-04, 2005-06 and 2006-07 assessment for which was completed u/s 143(3), the method of valuation of closing stock has been accepted by the AO including by the AO who has passed the assessment order for the year under appeal. Therefore, the AO cannot reject the method of valuation of closing stock which is consistently followed by the appellant and ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle in the matter, we do not find any infirmity in the findings of the CIT(A), and hence, the same are upheld. Thus, the ground of appeal of the revenue is dismissed. 6. The Tribunal upheld the order of the CIT(A) in deleting the addition of ₹ 58,28,390/- by holding that the assessee had been consistently following the LIFO method of valuation of its inventory. 7. Apex Court in United Commercial Bank's case (supra) dealing with a case of valuation of stock held that a method of accounting adopted by the tax-payer consistently and regularly cannot be discarded by the revenue on the view that different method of keeping accounts or of valuation ought to have been adopted by the assessee. The broad principles of valuation of stock had been summarized by the Supreme Court as under:- (1) That for valuing the closing stock, it is open to the assessee to value it at the cost or market value, whichever is lower; (2) In the balance-sheet, if the securities and shares are valued at cost but from that no firm conclusion can be drawn. A taxpayer is free to employ for the purpose of his trade, his own method of keeping accounts, and for that purpose, to value stock ..... X X X X Extracts X X X X X X X X Extracts X X X X
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