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TMI Blog2016 (5) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... eunder : "2. On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) erred in law in directing the Assessing Officer to accept the value of closing stock at the value adopted by the assessee for the assessment year 1990-91 without appreciating the fact that in spite of the directions of the hon'ble High Court of Karnataka to the assessee to substantiate its claim with evidence before the Assessing Officer, the assessee has not produced any evidence except reiterating its earlier stand during the course of reassessment proceedings." 3. A reading of the above ground would show that the matter relates to the directions given by the hon'ble jurisdictional High Court on the Revenue's app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-company passed the resolution, which reads thus : 'Resolved that the closing stock of sugar for the accounting year ending on March 31, 1989, be valued at the cost price or market price, whichever is lower, and the same of valuation be followed for each accounting year ending subsequent to March 31, 1989.' In the case of CIT v. British Paints India Ltd. [1991] 188 ITR 44 (SC), the Supreme Court has held (page 52) : 'Valuation of stock-in-trade at cost or market value, whichever is lower, is a matter entirely within the discretion of the assessee but whichever method he adopts, it should disclose a true picture of his profits and gains.' 4. In the case on hand, apart from the resolution which has been extracted abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of the order in ITR No. 2 of 2003 and according to law. In this appeal, the assessee has called in question the method adopted by the assessee for evaluating stock-in-trade for the assessment year 1990-91. 2. In view of the orders passed in ITRC No. 2 of 2003, the orders passed by the authorities below are set aside and the matter is remanded to the Assessing Officer for reconsideration in terms of orders passed in ITRC No. 2 of 2003 according to law." 8. Accordingly, the matter was considered once again by the Assessing Officer. As per the Assessing Officer, despite a number of opportunities given, the assessee did not furnish any details in support of the change of method of accounting. He held that the assessee had nothing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year 1989-90 remitted the matter to the Assessing Officer. Assessment for the said year was still to be completed. According to him, since the issues arising for the impugned assessment year also was emanating from the change in the method of valuation effected for the first time by the assessee in the immediately preceding assessment year, the learned Commissioner of Income-tax (Appeals) fell in error in deleting the addition for the impugned assessment year. As per the learned Departmental representative, the assessee despite giving adequate opportunities by the lower authorities failed to justify its new method of accounting. Thus, according to the learned Departmental representative, the Commissioner of Income-tax (Appeals) err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was justified in deleting the addition. 12. We have perused the orders and heard the rival contentions. The hon'ble jurisdictional High Court had followed its own judgment for the assessment year 1989-90 while remitting the matter back to the Assessing Officer, in its judgment. For the assessment year 1989-90, the hon'ble jurisdictional High Court had held that the lower authorities did not consider the settled principles of law relating to valuation of stock. As per the Assessing Officer in the remand proceedings, the assessee failed to give the details regarding the change in method of valuation of stock. There can be no doubt that an assessee can change its method of valuation of stock, provided the new method which is adopted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court reproduced by us at paragraph six above. 13. In the result, though we hold that the assessee was justified in adopting a new method for valuation of stock, we are of the opinion that the matter requires a fresh look by the Assessing Officer for verifying the correctness of the value arrived at by the assessee. We, therefore, set aside the orders of the authorities below and remit it to the file of the Assessing Officer for consideration afresh. The Assessing Officer shall also consider the view taken by him for the assessment year 1989-90 while disposing of the remitted issues. 14. In the result, the appeal of the Revenue is treated as allowed for statistical purpose. 15. Order pronounced in the open court on 18th day of March, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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