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TMI Blog2010 (7) TMI 1069X X X X Extracts X X X X X X X X Extracts X X X X ..... id down in Chainrup Sampat Ram Vs. CIT [ 1953 (10) TMI 2 - SUPREME COURT] wherein it has been held that the value of stock cannot be appreciated higher than the cost because the closing stock is not the source of profit for the assessee. In the facts and circumstances of the present case, we are in conformity with the order of CIT(A) and uphold the same. There is no merit in adopting the weighted average cost method for valuation of inventory of stock in the circumstances of the case. We confirm the deletion of addition made by the AO totaling ₹ 52,23,753/-. The ground of appeal raised by the Revenue is thus dismissed - SHRI G.S.PANNU, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER For the Petitioner :Shri S.S.Khem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee vide reply dated 22.12.2009 stated that the closing stock is valued at cost price. It was further clarified that opening stock of 31904 gms of gold was valued at ₹ 1,53,85,902/-, cost price of which was ₹ 482/- per gram. The assessee claimed that the opening stock comprised of old conventional jewellery, was in least circulation and totally formed part of closing stock. It was further explained that out of the total jewellery acquired and purchased during the year, 60% was sold during the year and balance was part of closing stock, weighting approximately 22850 gms, which was valued @ ₹ 905/- per gm. The Assessing Officer observed that as per AS-2, the accounting standards issued by the Institute of Chartered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 3,79,84,232/- as against ₹ 4,32,07,985/- worked out by the Assessing Office and an addition of ₹ 52,23,753/- was made as income of the assessee. 4. Before the CIT(A), the plea of the learned counsel for the assessee was that the assessee was valuing its stock at cost following LIFO method, which was being followed regularly from year to year. In respect of the increased stock, the same was valued at cost price. It was pointed out to the CIT(A) that the assessments for Assessment Year 2005 06 and 2006-07 were completed u/s 143 (3) of the Act, in which the valuation of closing stock was accepted as declared by the assessee. It was further pointed out that AS-2 accounting standard was not binding on the assessee who was regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on 1.4.2007. The plea of the assessee in this regard was that revaluation in the present year would amount to double taxation. The CIT(A) observed that the assessee was consistently following the method of accounting which could not be disturbed and the valuation of closing stock could not be a source of profit. The CIT(A) further observed that in case the valuation of closing stock was disturbed, the value of opening of stock should correspondingly be adjusted and in the present case, the Assessing Officer had changed the value of closing stock but not that of opening stock. In view of the declaration of additional income by the assessee during survey conducted on 23.6.2009, it was held that further addition in the year would result in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 482/- per gram. The balance stock available out of the purchases made during the year was 22850 gms which was valued at cost price of ₹ 905/- per gram. The contention of the assessee was rejected by the Assessing Officer as according to the Assessing Officer the assessee was not following one of the methods specified in accounting standard AS-2 issued by the Institute of Chartered Accountants of India for determining the cost of inventories. The explanation of the assessee in this regard was that the opening stock of 31950 gms was valued at ₹ 482/- per gram and similar value be adopted to work out the value of closing stock. It as further explained that the said jewellery being old conventional jewellery was not sold during th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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